Prepared by MERRILL CORPORATION




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IDEC PHARMACEUTICALS CORPORATION

a Delaware corporation  


 and  


 MELLON INVESTOR SERVICES LLC

a New Jersey limited liability company  


 Rights Agent  




 Amended and Restated Rights Agreement  


 Dated as of July 26, 2001  









 
 

TABLE OF CONTENTS    
  



	 
	 	 
	 	Page

	1.	 	Certain Definitions	 	1
	

2.	
 	

Effective Date; Rights Agent	
 	

4
	

3.	
 	

Issue of Rights Certificates	
 	

4
	

4.	
 	

Form of Rights Certificates	
 	

5
	

5.	
 	

Countersignature and Registration	
 	

6
	

6.	
 	

Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	
 	

7
	

7.	
 	

Exercise of Rights; Purchase Price; Expiration Date of Rights	
 	

7
	

8.	
 	

Cancellation and Destruction of Rights Certificates	
 	

9
	

9.	
 	

Reservation and Availability of Preferred Stock	
 	

9
	

10.	
 	

Preferred Stock Record Date	
 	

10
	

11.	
 	

Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	
 	

11
	

12.	
 	

Certificate of Adjusted Purchase Price or Number of Shares	
 	

17
	

13.	
 	

Consolidation, Merger or Sale or Transfer of Assets or Earning Power	
 	

17
	

14.	
 	

Additional Covenants	
 	

19
	

15.	
 	

Fractional Rights and Fractional Shares	
 	

19
	

16.	
 	

Rights of Action	
 	

20
	

17.	
 	

Agreement of Rights Holders	
 	

21
	

18.	
 	

Rights Certificate Holder Not Deemed a Stockholder	
 	

21
	

19.	
 	

Concerning the Rights Agent	
 	

21
	

20.	
 	

Merger or Consolidation or Change of Name of Rights Agent	
 	

22
	

21.	
 	

Duties of Rights Agent	
 	

23
	

22.	
 	

Change of Rights Agent	
 	

24
	

23.	
 	

Issuance of New Rights Certificates	
 	

25
	

24.	
 	

Redemption, Termination and Exchange	
 	

25
	

25.	
 	

Notice of Certain Events	
 	

28
	

26.	
 	

Notices	
 	

28
	

27.	
 	

Supplements and Amendments	
 	

29
	

28.	
 	

Determination and Actions by the Board	
 	

29
	

29.	
 	

Successors	
 	

30
	

30.	
 	

Benefits of This Agreement	
 	

30
	

31.	
 	

Severability	
 	

30
	

32.	
 	

Governing Law	
 	

30
	

33.	
 	

Counterparts	
 	

30







	

34.	
 	

Descriptive Headings	
 	

30
	

Exhibit A—Form of Rights Certificate	
 	

A-1
	

Exhibit B—Form of Summary of Rights	
 	

B-1








  



 
 

AMENDED AND RESTATED RIGHTS AGREEMENT    
  


    THIS AMENDED AND RESTATED RIGHTS AGREEMENT (this "Agreement") is dated as of July 26, 2001 (the
"Effective Date"), between IDEC PHARMACEUTICALS CORPORATION, a Delaware corporation (the
"Company"), and MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company, as Rights Agent
(f/k/a ChaseMellon Shareholder Services, LLC, the "Rights Agent"), and is entered into with reference to the following facts: 


    A.  On
July 22, 1997, the Company and the Rights Agent entered into that certain Rights Agreement, as amended from time to time, (the
"Original Agreement") pursuant to which the Company distributed a dividend of one Right (as hereinafter defined) for each share of Common Stock, par
value $0.0005 per share, of the Company (the "Common Stock") outstanding as of the close of business on August 11, 1997 (the
"Record Date"). The Original Agreement also contemplated the issuance of one Right (subject to adjustment as provided herein) for each share of Common
Stock issued between the Record Date and the earlier of the Distribution Date and the Expiration Date (as such terms are hereinafter defined), with Rights also to be issued in connection with certain
issuances of Common Stock after the Distribution Date (as provided more fully herein). Each Right (collectively, the "Rights") originally represented
the right to purchase one one-thousandth of a share of a new series of preferred stock of the Company, designated the Series X Junior Participating Preferred Stock (the
"Preferred Stock") and having the rights, powers and preferences set forth in a Certificate of Designation filed by the Company with the Secretary of
State of the State of Delaware (which has since been incorporated into the Company's Restated Certificate of Incorporation). 


    B.  For
various reasons (including, without limitation, splits of the Common Stock which have, pursuant the terms of the Original Agreement, adjusted the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of a Right), the Board of Directors of the Company (the "Board")
has determined that it is in the best interests of the Company and its stockholders to make certain changes to the Original Agreement (as amended to date). These changes are reflected in this
Agreement and include, without limitation, (i) an adjustment in the number of one one-thousandths of a share of Preferred Stock issuable upon the exercise of a Right (resetting such
number to one (1) as of the Effective Date—but subject to adjustment from and after the Effective Date as set forth herein), (ii) an extension of the final expiration date
for the Rights and (iii) an increase in the Exercise Price (as hereinafter defined). 


    NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto hereby agree as follows (including, without limitation, that the
Original Agreement shall be amended and restated to read as set forth herein): 


    1.  Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 



    (a) "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of fifteen
percent (15%) or more of the shares of Common Stock then outstanding or who was such a Beneficial Owner at any time on or after the Record Date, whether or not such Person continues to be the
Beneficial Owner of fifteen percent (15%) or more of the outstanding shares of Common Stock. Notwithstanding the foregoing: 



	(i)
	in
no event shall a Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of less than fifteen
percent (15%) of the outstanding shares of Common Stock become an Acquiring Person solely as a result of a reduction of the number of shares of outstanding Common Stock, including repurchases of
outstanding shares of Common Stock by the Company, which reduction increases the percentage of 




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outstanding
shares of Common Stock Beneficially Owned (as such term is hereinafter defined) by such Person; provided, however, that any subsequent
increase in the amount of Common Stock Beneficially Owned by such Person, together with all Affiliates and Associates of such Person, without the prior written approval of the Board shall cause such
Person to be an Acquiring Person (unless, measured at such time, such Person would not be an Acquiring Person); 



	(ii)
	the
term Acquiring Person shall not mean: (A) the Company; (B) any Subsidiary (as such term is hereinafter defined) of the Company;
(C) any employee benefit plan of the Company or any of its Subsidiaries; (D) any entity holding securities of the Company organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan; or (E) any underwriter acting in good faith in a firm commitment underwriting of an offering of the Company's securities pursuant to
arrangements with the Company that have been approved by the Board (however, the exception provided by this clause (E)  shall no longer be available in
the event that any such underwriter is otherwise an Acquiring Person on or after the date which is forty (40) days after the date of
initial acquisition of the Company's securities by such underwriter in connection with such offering);



	(iii)
	no
Person shall be deemed to be an Acquiring Person if: (A) any Schedule 13D under the Exchange Act (as hereinafter defined), or any
comparable or successor report, filed (or required to be filed) by such Person does not (or would not) state any intention to or reserve the right to control or influence the management or policies of
the Company or engage in any of the actions specified in Item 4 (or any comparable or successor Item) of such Schedule 13D (other than the disposition of Common Stock), (B) either
(x) within two (2) Business Days of being requested by the Company to advise the Company regarding the same, such Person certifies in writing to the Company that such Person acquired
Beneficial Ownership of fifteen percent (15%) or more of the outstanding shares of Common Stock
inadvertently or without knowledge of the terms of the Rights, or (y) the Board determines in good faith that such Person has become an Acquiring Person inadvertently, (C) such Person
divests as promptly as practicable (as determined in good faith by the Board) a sufficient number of securities so that such Person would not be deemed to be an Acquiring Person pursuant to the first
sentence of this Section 1(a) (or such other provisions of this Section 1(a) as may be
applicable) and (D) promptly following such Person's divestiture of such securities, such Person certifies to the Board that such Person would no longer be deemed an Acquiring Person as defined
pursuant to the first sentence of this Section 1(a) (or such other provisions of this Section 1(a)  as may be applicable). 





    (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the Effective Date. 


    (c) A
Person shall be deemed the "Beneficial Owner," and shall be deemed to "Beneficially
Own" or have "Beneficial Ownership," of any securities: 



	(i)
	which
such Person or any of such Person's Affiliates or Associates is deemed to beneficially own (within the meaning of
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the Effective Date);



	(ii)
	which
such Person or any of such Person's Affiliates or Associates has (A) the right or obligation to acquire (whether such right or
obligation is exercisable or effective immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, 




2





 



exchange
rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed (under this  clause (A)) the "Beneficial Owner," and shall not be deemed (under this  clause (A)) to "Beneficially Own"
or have "Beneficial
Ownership," of securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for payment or exchange; or (B) the right to vote or dispose of pursuant to any agreement, arrangement or understanding (whether or not in writing);  provided, however, that a Person shall not be deemed the "Beneficial Owner," and shall not be deemed to
"Beneficially Own" or have "Beneficial Ownership," of any security under this  clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor report); or 



	(iii)
	which
are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or with which such Person or any of such Person's Affiliates or Associates have otherwise formed a group, for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any securities of the
Company. 





    (d) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State
of California are authorized or obligated by law or executive order to close. 


    (e) "Close of Business" on any given date shall mean 5:00 p.m., San Francisco time, on such date;  provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m., San Francisco time, on the next succeeding Business Day. 



    (f)  "Common Stock" shall mean the Common Stock, par value $0.0005 per share, of the Company or any other shares of
capital stock of the Company into which such Common Stock may be reclassified or exchanged, except that "Common Stock" when used with reference to stock
issued by any Person other than the Company shall mean the capital stock with the greatest Voting Power, or the equity securities or other equity interest having power to control or direct the
management, of such Person or, if such Person is a Subsidiary of another Person, of the Person which ultimately controls such first-mentioned Person and which has issued and outstanding such capital
stock, equity securities or equity interests. 


    (g) "Distribution Date" shall have the meaning set forth in  Section 3(a) hereof. 


    (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 


    (i)  "Permitted Offer" shall mean a tender or exchange offer for all outstanding shares of Common Stock at a price and
on terms determined, prior to the date of the first acceptance of payment for any of such shares, to be fair to and in the best interests of the Company and its stockholders (other than the offeror or
any Affiliate or Associate thereof) by at least a majority of the members of the Board who are not (i) officers of the Company, (ii) the offeror, (iii) Acquiring Persons or
(iv) Affiliates or Associates of the offeror or any Acquiring Person. 


    (j)  "Person" shall mean any individual, firm, corporation, partnership, limited liability company, joint venture,
association, trust or any other entity. 



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    (k) "Preferred Stock" shall mean the Series X Junior Participating Preferred Stock, par value $0.001 per share,
of the Company. 


    (l)  "Stock Acquisition Date" shall mean the first date of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such. 


    (m) A
"Subsidiary" of any Person shall mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or voting interests is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person. 


    (n) "Triggering Event" shall mean a Section 11 Event (as defined in  Section 11(a) hereof) or a Section 13 Event
(as defined in  Section 13(a) hereof). 


    (o) "Voting Power" shall mean the voting power of all securities of the Company then outstanding and generally entitled
to vote for the election of directors of the Company. 




    2.  Effective Date; Rights Agent. 



    (a) As
of the Effective Date, the Original Agreement is superceded and replaced in all respects by this Agreement. Without limiting the foregoing, (i) the number
of one one-thousandths of a share of Preferred Stock issuable upon the exercise of a Right (when and if exercisable as provided herein) is, as of the Effective Date, reset at one
(1) (subject to adjustment from and after the Effective Date as set forth herein) and (ii) the number of Rights associated with each share of Common Stock outstanding on the Effective
Date is confirmed to be (and, if applicable, reset at) one (1) (subject to adjustment from and after the Effective Date as set forth herein). 


    (b) The
Rights Agent shall continue to act as agent for the Company in accordance with the terms and conditions of this Agreement. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable upon written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be
liable for, the acts or omissions of any such co-Rights Agent. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agents and
any co-Rights Agents shall be as the Company shall determine. 




    3.  Issue of Rights Certificates. 



    (a) Until
the earlier of (i) the Stock Acquisition Date or (ii) the Close of Business on the tenth (10th) Business Day (or such later date
as may be determined by action of the Board) after the date of the commencement (determined in accordance with Rule 14d-2 of the General Rules and Regulations under the Exchange Act
as in effect as the Effective Date or, if no longer applicable, the intent of such Rule 14d-2 as in effect on the Effective Date as determined in good faith by the Board) by any
Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any of its Subsidiaries, or any entity organized, appointed or established by the Company or
any of its Subsidiaries for or pursuant to the terms of any such plan) of a tender or exchange offer (other than a Permitted Offer) the consummation of which would result in such Person becoming an
Acquiring Person (the earlier of such dates being herein referred to as the "Distribution Date"), (x) the Rights shall be evidenced by the
certificates for Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate
certificates and (y) the Rights (and the right to receive certificates therefor) shall be transferable only in connection with the transfer of the underlying shares of Common Stock. As soon as
practicable after the Distribution Date, the Company shall provide the Rights Agent with a list of holders of Common Stock and the Rights Agent shall send, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a 



4





 


certificate for Rights, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held (subject to adjustment as provided herein). As of and after the Distribution Date, the Rights shall
be evidenced solely by such Rights Certificates. 




    Promptly
following the Effective Date, the Company shall send a copy of a Summary of Rights, in substantially the form attached hereto as  Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder
of the Common Stock at the address of such holder shown on the records of the Company. Until the Distribution Date (or earlier redemption, expiration or termination of the Rights), (1) the
Rights shall be evidenced by certificates for the Common Stock and the registered holders of the Common Stock shall also be the registered holders of the associated Rights and (2) the surrender
for transfer of any certificate for the Common Stock shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. 



    (b) Certificates
issued for Common Stock (including, without limitation, certificates issued upon transfer or exchange of Common Stock) after the Effective Date, but
prior to the earlier of the Distribution Date or the Expiration Date, shall have impressed, printed, stamped, written or otherwise affixed onto them the following legend: 



This
certificate also evidences and entitles the holder hereof to certain Rights as set forth in an Amended and Restated Rights Agreement between IDEC Pharmaceuticals Corporation (the "Company") and
Mellon Investor Services LLC (f/k/a ChaseMellon Shareholder Services LLC, the "Rights Agent") originally dated as of July 22, 1997, and amended and restated as of July 26, 2001 (the
"Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may expire or may be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, Rights "Beneficially Owned" by "Acquiring Persons" (as such
terms are defined in the Rights Agreement) or certain related parties, as well as subsequent holders of such Rights, may become null and void. 





    With
respect to such certificates containing the foregoing legend, until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the Rights associated
with the Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. 


    4.  Form of Rights Certificates. 



    (a) The
Rights Certificates (and the forms of election to purchase shares and of assignment and certificates to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, and do not affect the rights, duties or responsibilities of the
Rights Agent, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or interdealer quotation
system on which the Rights may from time to time be listed or traded, or to conform to usage. Subject to the provisions of Section 11 and  Section 23 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Effective Date, and on their face shall entitle the
holders thereof to purchase such number of one one-thousandths of a share of Preferred Stock as shall be set forth therein at the price per one one-thousandth of a share set 



5





 


forth therein (the "Purchase Price"), such Purchase Price to be initially equal to the amount set forth in  Section 7(b) below but the number of one
one-thousandths of a share and the Purchase Price shall be subject to adjustment as provided
herein. 


    (b) Any
Rights Certificate issued pursuant to Section 3(a) hereof that represents Rights Beneficially Owned by an
Acquiring Person or any Associate or Affiliate thereof, any Rights Certificate issued at any time upon the transfer of any Rights to such an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and any Rights Certificate issued pursuant to Section 6,  Section 11
or Section 23 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain the following legend: 



The
Rights represented by this Rights Certificate were issued to a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement. This Rights Certificate and the Rights represented hereby may become null and void under the circumstances specified in Section 7(e) of the Rights Agreement. 





The
provisions of Section 7(e) hereof shall be operative whether or not the foregoing legend is contained on any such Rights Certificate. 


    5.  Countersignature and Registration. 



    (a) The
Rights Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its President, its Chief Financial Officer or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any Person who, at the actual
date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the Effective Date any such Person was not such an officer. 


    (b) Following
the Distribution Date and receipt by the Rights Agent of any necessary information, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 



6







 
    6.  Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. 



    (a) Subject
to the provisions of Sections 7(e), 7(f) and 15 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock (or, after the occurrence of a Triggering
Event, shares of Common Stock or other securities and property, as the case may be) as the Rights Certificate or Rights Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent. Subject to receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them (as the Company may reasonably request) of the identity of the Beneficial Owner (or former Beneficial Owner) of the Rights Certificate or the Affiliates or
Associates thereof, the Rights Agent shall (subject to Section 7(e) hereof) thereupon countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights Certificates. The Rights Agent shall have no duty or obligation under this  Section 6 unless and until it is satisfied that
all applicable taxes and charges have been paid in full. 


    (b) Subject
to the provisions of Sections 7(e), 7(f) and 15 hereof, upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate and such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request, and, in case of loss, theft or destruction, of indemnity or security satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company shall execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate
so lost, stolen, destroyed or mutilated. 




    7.  Exercise of Rights; Purchase Price; Expiration Date of Rights.



	(a)
	Subject
to the provisions of Sections 7(e) and 7(f) hereof, the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon presentation of the Rights Certificate, with the
appropriate form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent set forth in Section 26  hereof, together with payment of
the Purchase Price for each one one-thousandth of a share of Preferred Stock (or such other securities or property as the case may
be) as to which the Rights are exercised, at or prior to the earliest of (i) the Close of Business on July 26, 2011 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 24 hereof, (iii) the
consummation of a transaction contemplated by Section 13(d) hereof or (iv) the time at which the Rights are exchanged as provided in  Section 24(c) hereof (such earliest time being herein referred to as the "Expiration Date").
Notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock may exercise all of the rights of a registered
holder of a Rights Certificate with respect to the Rights associated with such shares of Common Stock in accordance with and subject to the provisions of this Agreement, including the 



7





 


provisions
of Section 7(e) hereof, as of the date such Person becomes a record holder of shares of Common Stock. 



	(b)
	The
Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right shall, as of the Effective Date, be Five Hundred Dollars
($500.00), shall be subject to adjustment from time to time after the Effective Date as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) of this  Section 7 below.



	(c)
	Upon
receipt of a Rights Certificate representing exercisable Rights, with the appropriate form of election to purchase duly executed, accompanied by payment of the Purchase Price
for the fractional interests in shares of Preferred Stock (or other securities or property) to be purchased and an amount equal to any applicable tax or charge in cash, or by certified check or bank
draft payable to the order of the Company, the Rights Agent shall, subject to Section 21(k) hereof, thereupon promptly (i)(A) requisition from
any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent) certificates for the number of one one-thousandths of a share of
Preferred Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company, in its sole discretion, shall have
elected to deposit the fractional interests in shares of Preferred Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock as are to be purchased (in which case certificates for the one one-thousandths of a share of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company shall direct the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in accordance with  Section 15, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order
of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder and, (iv) when appropriate, after receipt promptly deliver such cash to
or upon the order of the registered holder of such Rights Certificate. In the event that the Company is obligated to issue other securities of the Company, and/or distribute other property pursuant to  Section 11(a)
, the Company shall make all arrangements necessary so that such other securities and/or property are available for distribution by
the Rights Agent, if and when appropriate. In addition, in the
case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating thereon that the rights represented by such Rights Certificate no longer include the rights provided by  Section 11(a)(ii) hereof; provided, however, that if less than all the Rights represented by such
Rights Certificate were so exercised, the Rights Agent shall indicate on the Rights Certificate the number of Rights represented thereby which continue to include the rights provided by  Section 11(a)(ii). 




    (d) In
case the registered holder of any Rights Certificate shall exercise (except pursuant to Section 11(a)(ii))
less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to such registered holder's duly authorized assigns, subject to the provisions of Section 6 and  Section 15 hereof. 


    (e) Notwithstanding
anything in this Agreement to the contrary, if there occurs any Triggering Event, then any Rights that are or were on or after the Distribution Date
Beneficially Owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person shall become null and void, without any further action, and any holder of such Rights shall thereafter
have no rights 



8





 


whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. Without limiting the foregoing sentence, Rights held by the following Persons shall be null and void
without any further action: (i) any direct or indirect transferee of any Rights that are or were on or after the Distribution Date Beneficially Owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person; (ii) any direct or indirect transferee of any Rights that were on or before the Distribution Date Beneficially Owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person if the transferee received such Rights, directly or indirectly, (A) from an Acquiring Person or any Associate or Affiliate of an Acquiring Person (x) as
a result of a distribution by such Acquiring Person or any Associate or Affiliate of an Acquiring Person to holders of its equity securities or similar interests (including, without limitation,
partnership interests) or (y) pursuant to any continuing agreement, arrangement or understanding with respect to the Rights or (B) in a transfer (or series of transfers) which the Board
determines is part of a plan, agreement, arrangement or understanding which has the purpose or effect of avoiding the provisions of this  Section 7(e); and (iii) subsequent transferees of
Persons referred to in the foregoing clauses (i) and (ii) as well as this
clause (iii). The Company shall notify the Rights Agent when this Section 7(e) applies and shall use all reasonable efforts to ensure that
the provisions of this Section 7(e) are complied with, but neither the Company nor the Rights Agent shall have any liability to any holder of
Rights or any Rights Certificate or to any other Person as a result of the Company's failure to make any determination with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. 


    (f)  Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless the Certificate contained in the
appropriate form of Election to Purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise shall have been properly completed and duly executed by the registered
holder thereof and the Company shall have been provided with such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request. 




    8.  Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 


    9.  Reservation and Availability of Preferred Stock. 



    (a) The
Company covenants and agrees that it shall cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock, or any
authorized and issued shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and other securities) held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and other securities) that will be sufficient (in accordance with the provisions of this Agreement,
including Section 11(a)(iii) hereof) to permit the exercise in full of all outstanding Rights. 


    (b) So
long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and other securities) issuable upon the
exercise of the Rights may 



9





 


be listed on any national securities exchange or quoted on any national quotation system, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable,
all shares (or other securities) reserved for such issuance to be listed on such exchange or quoted on such system upon official notice of issuance upon such exercise. 


    (c) If
then required by applicable law, the Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the
occurrence of a Triggering Event as to which the consideration to be delivered by the Company upon exercise of the Rights has been determined pursuant to this Agreement, or as soon as is required by
law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended (the "Act"), with respect
to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, (B) the Expiration Date or (C) the date the
Company receives an opinion of counsel to the effect that the maintenance of such registration statement in effect is no longer necessary. If then required by applicable law, the Company will also
take such action as may be appropriate under the securities or "blue sky" laws of the various states. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of this Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement or to comply with such blue sky laws. Upon any such suspension, the Company shall promptly notify the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained. 


    (d) The
Company covenants and agrees that it shall take all such action as may be necessary to ensure that all one one-thousandths of a share of Preferred
Stock and/or other securities delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable shares or securities. 


    (e) The
Company further covenants and agrees that it shall pay when due and payable any and all taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for one one-thousandths of a share of Preferred Stock and/or other securities upon the exercise of Rights. The Company shall not,
however, be required to (i) pay any tax or charge which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or
(ii) issue or deliver any certificates for shares of Preferred Stock and/or other securities in a name other than that of the registered holder upon the exercise of any Rights until such tax or
charge shall have been paid (any such tax or charge being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that
no such tax or charge is due. 




    10. Preferred Stock Record Date. Each Person in whose name any certificate for one one-thousandths of a
share of Preferred Stock (or other securities) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the fractional shares of Preferred Stock
(or other securities) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly presented and payment of the Purchase
Price (and any applicable taxes or charges) was made; provided, however, that if the date of 


10





 


such presentation and payment is a date upon which the Preferred Stock (or other securities) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or other securities) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein. 


    11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. The Purchase Price, the number of
shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. 



    (a) (i)
In the event the Company shall at any time after the Effective Date (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock and other
securities which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this  Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this  Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to  Section 11(a)(ii) hereof. 



	(ii)
	Subject
to Section 24(c) hereof, in the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person other than pursuant to a Permitted Offer (such an event being a "Section 11 Event"),
then, promptly following the first occurrence of such a Section 11 Event, proper provision shall be made so that each holder of a Right, except
as provided in Section 7(e) hereof, shall, for a period of sixty (60) days after the later of the occurrence of any such Section 11
Event and the effective date of an appropriate registration statement pursuant to Section 9  hereof, have a right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of fractional interests in shares of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the Section 11 Event at issue and (y) dividing that product by fifty percent (50%) of the current market price per one share of Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of the Section 11 Event at issue (such number of shares being
referred to as the "number of Adjustment Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of  Section 13 hereof shall apply and no adjustment shall be made pursuant to this  Section 11(a)(ii); and provided, further, that such sixty (60) day
period shall not be
deemed 




11





 



to
run during any period in which the exercise of the Rights or the fulfillment by the Company or the Rights Agent of its or their obligations under this Agreement shall be enjoined or otherwise
prohibited in full or in part by any court or other governmental agency or body. 



	(iii)
	In
lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the
Company may, if a majority of the Board then in office determines that such action is necessary or appropriate and not contrary to the interests of holders of Rights, elect to (and, in the event that
the Board has not exercised the exchange right contained in Section 24(c) hereof and there are not sufficient treasury shares and authorized but
unissued shares of Common Stock to permit the exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the Company shall) take
all such action as may be necessary to authorize, issue or pay, upon the exercise of the Rights, cash (including by way of a reduction of the Purchase Price), property, shares of Common Stock, other
securities (whether equity or debt securities of the Company, any Subsidiary of the Company, or otherwise) or any combination thereof having an aggregate value equal to the value of the shares of
Common Stock which otherwise would have been issuable pursuant to Section 11(a)(ii) hereof, which aggregate value shall be determined by a
nationally recognized investment banking firm selected by a majority of the Board. For purposes of the preceding sentence, the value of the Common Stock shall be determined pursuant to  Section 11(d) hereof and the value of any fractional interests in preferred stock or preference stock which a majority of the Board determines to
be a "common stock equivalent" shall be deemed to have the same value as the Common Stock. Any such election by the Board must be made and publicly
announced within sixty (60) days following the date on which the Section 11 Event at issue shall have occurred with prompt notice thereof to the Rights Agent. Following the occurrence of
such Section 11 Event, a majority of the Board then in office may suspend the exercisability of the Rights for a period of up to sixty (60) days following the date on which such
Section 11 Event shall have occurred to the extent that such Directors have not determined whether to exercise their rights of election under this  Section 11(a)(iii). If the Board shall
determine in good faith that it is likely that sufficient additional shares of Common Stock or common
stock equivalents could be authorized for issuance upon exercise in full of the Rights, the sixty (60) day period set forth above may be extended to the extent necessary, but not more than
ninety (90) days following the occurrence of the Section 11 Event at issue, in order that the Company may seek stockholder approval for the authorization of such additional shares. In
the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended with prompt notice thereof to the Rights
Agent. 





    (b) If
the Company shall fix a record date for the issuance of rights, options or warrants to all holders of any interests in Preferred Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase any interests in Preferred Stock (or securities having the same or more
favorable rights, privileges and preferences as the Preferred Stock ("equivalent preferred stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as defined in Section 11(d)) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or 



12





 


equivalent preferred stock to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as determined reasonably and with good faith to the holders of Rights by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes. Shares of Preferred Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 


    (c) If
the Company shall fix a record date for the making of a distribution to all holders of interests in Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights, options or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current market price (as defined in  Section 11(d) hereof) per
share of Preferred Stock on such record date, less the fair market value (as determined reasonably and with good faith
to the holders of Rights by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes) of
the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights, options or warrants distributable in respect of one share of Preferred Stock and the
denominator of which shall be the then current market price (as defined in Section 11(d) hereof) per share of the Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would be in effect if such record date had not been fixed. 


    (d) (i)
For the purpose of any computation hereunder, other than as provided in Section 11(a)(iii), the
"current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the Common Stock is determined in whole or in part during a period following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock or (B) any subdivision, combination or
reclassification of such
Common Stock, and prior to the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, 



13





 


as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange but are listed or quoted on The Nasdaq Stock Market, the last reported
sale price, or, in case no such sale takes place on such day, the average of the closing bid and asked prices as reported by Nasdaq, or, if the shares of Common Stock are not listed or quoted on The
Nasdaq Stock Market, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the OTC
Bulletin Board or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock selected by the Board. If on any such date no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined reasonably and with good faith by the Board shall be used and shall be binding on the Rights Agent and conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal national securities exchange or The Nasdaq Stock Market, as the case may be, on which the shares
of Common Stock are principally listed or admitted to trading or quoted is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading or quoted on any
national securities exchange or The Nasdaq Stock Market, a Business Day. If the Common Stock is not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share determined reasonably and with good faith to the holders of Rights by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes. 



	(ii)
	For
the purpose of any computation hereunder, the "current market price" per share (or one
one-thousandth of a share) of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in Section 11(d)(i)  (other than the last sentence thereof). If the
current market price per share (or one one-thousandth of a share) of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in Section 11(d)(i), the
"current market price" per share of Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and recapitalization with respect to the Common Stock occurring after the Effective Date) multiplied by the current market price per share of
the Common Stock and the "current market price" per one one-thousandth of a share of Preferred Stock shall be equal to the current market
price per share of the Common Stock (as appropriately adjusted). If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, "current market
price" per share shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. 





    (e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this  Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date. 



14







  



    (f)  If
as a result of any provision of this Section 11, the holder of any Right shall become entitled to receive
any shares of capital stock of the Company other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares (and the related Purchase Price) contained in this  Section 11, and the provisions of
Sections 7, 9, 10, 13 and  15 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares. 


    (g) All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein. 


    (h) Unless
the Company shall have exercised its election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and (c)
hereof, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. 


    (i)  The
Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number
of one one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one millionth) obtained by dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement and promptly notify the Rights Agent of its
election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to  Section 15 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in
the public announcement. 


    (j)  Irrespective
of any adjustment or change in the Purchase Price or the number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one 



15





 


one-thousandths of a share and the number of one one-thousandths of a share which were expressed in the initial Rights Certificates issued hereunder. 


    (k) Before
taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the number of one
one-thousandths of a share of Preferred Stock or shares of Common Stock or other securities issuable upon exercise of the Rights (aggregating, for this purpose, an appropriate amount of
the Purchase Price for fractional shares to compare such aggregated amount to the par value for a whole share), the Company shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and nonassessable one one-thousandths of a share of Preferred Stock or shares of Common Stock or other
securities at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is to receive a combination of Common Stock and common stock equivalents, or Preferred Stock and preferred
stock equivalents, a portion of the consideration paid upon such exercise, equal to at least the then par value, if any, of a share of Common Stock or Preferred Stock of the Company, as the case may
be, shall be allocated as the payment for each share of Common Stock or Preferred Stock of the Company, as the case may be, so received. 


    (l)  In
any case in which this Section 11 shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company may elect to defer (and shall promptly notify the Rights Agent of any such election) until the occurrence of such event the issuing to
the holder of any Right exercised after such record date the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;  provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring such adjustment. 


    (m) Anything
to the contrary in this Section 11 notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its
sole discretion shall determine to be advisable in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any shares of Preferred Stock at less than the
current market price, issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to hereinabove in this Section 11, hereafter made by the Company to holders of Preferred Stock
shall not be taxable to such stockholders. 


    (n) Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Effective Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of the outstanding Common Stock, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of such event. 



16





 


    (o) The exercise of Rights under Section 11(a)(ii) hereof shall only result in the loss of rights under  Section 11(a)(ii) hereof to the extent so exercised and shall not otherwise affect the rights represented by the Rights under this Agreement,
including the rights represented by Section 13 hereof. 




    12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in  Sections 11 or 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief, reasonably detailed statement of the facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Rights Certificate in accordance with  Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall
have no duty with respect to and shall not be deemed to have knowledge of any adjustment unless and until it shall have received such certificate. Notwithstanding the foregoing provisions of this  Section 12, the failure of the Company to make such certification or give such notice shall not affect the validity, or the force or effect, of
the requirement for such adjustment. 


    13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 



    (a) In
the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other
Person, (y) any Person shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger (other than, in the
case of any transaction described in (x) or (y), a merger or consolidation which would result in all of the Voting Power represented by the securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into securities of the surviving entity) all of the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation and the holders of such securities not having changed as a result of such merger or consolidation), or
(z) the Company shall sell, mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one or more transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person (any of the events described in the foregoing
clauses (x), (y) or (z) being herein referred to as a "Section 13 Event"), then, and in each such case, proper provision shall be
made so that (i) each holder of a Right (other than as provided in Section 7(e) hereof) shall have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of shares of freely tradable Common Stock of the Principal Party (as hereinafter defined), free
and clear of liens, rights of call or first refusal, encumbrances or other adverse claims, as shall be equal to the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is then exercisable (without taking into account any adjustment previously made pursuant to  Section 11(a)(ii) hereof)
and (y) dividing that product by fifty percent (50%) of the current market price per share of the Common Stock
of such Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof
shall apply to such Principal Party; and (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with such consummation as may be necessary to ensure that the provisions hereof shall thereafter
be applicable, as nearly as 



17





 


reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights. 


    (b) "Principal Party" shall mean: 



	(i)
	in
the case of any transaction described in clauses (x) or (y) of the first sentence of this  Section 13, the Person that is the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other party to the merger or consolidation (including, if applicable, the Company, if it is the surviving corporation); and



	(ii)
	in
the case of any transaction described in clause (z) of the first sentence in this  Section 13, the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction
or transactions; 





provided, however, that in any such case, (A) if the Common Stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary or Affiliate of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other Person; (B) in case such Person is a Subsidiary, directly or
indirectly, or Affiliate of more than one Person, the Common Stock of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value; and (C) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in clauses (A) and (B) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such joint venture were a Subsidiary of each such joint venturer and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests. 



    (c) The
Company shall not consummate any Section 13 Event unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and each Principal Party and each other Person who may become a Principal Party as a result of such Section 13 Event shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this  Section 13 and further providing that, as soon as
practicable after the date of such Section 13 Event, the Principal Party at its own
expense shall: 



	(i)
	prepare
and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, will use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date;



	(ii)
	use
its best efforts to (x) qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate and (y) cause the Rights and the securities purchasable upon exercise of the Rights to be listed on any national securities
exchange or national quotation system upon which its Common Stock is listed, traded or quoted; and 




18





 


	(iii)
	deliver
to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that comply in all material
respects with the requirements for registration on Form 10 under the Exchange Act. 





The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. The rights under
this Section 13 shall be in addition to the rights to exercise Rights and adjustments under  Section 11(a)(ii) hereof and shall survive any
exercise thereunder. 



    (d) Notwithstanding
anything in this Agreement to the contrary, this Section 13 shall not be applicable to a
transaction described in clauses (x) or (y) of Section 13(a) hereof if (i) such transaction is (x) consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons) and (y) related to such Permitted Offer,
(ii) the price per share of Common Stock offered in such transaction is not less than the price per share of Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being offered to the remaining holders of Common Stock pursuant to such transaction is the same as the form of consideration
paid pursuant to such Permitted Offer. Upon consummation of any such transaction contemplated by this subsection (d), all Rights hereunder shall expire. 




    14. Additional Covenants. 



    (a) The
Company covenants and agrees that after the Stock Acquisition Date it shall not (i) consolidate with, (ii) merge with or into or (iii) sell
or transfer to any other Person, in one or more transactions, assets or earning power aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries taken
as a whole, if at the time of or after such consolidation, merger or sale there are any charter or by-law provisions or any rights, warrants or other instruments outstanding or any other
action taken which would diminish or otherwise eliminate the benefits intended to be afforded by the Rights. The Company shall not consummate any such consolidation, merger or sale unless prior
thereto the Company and such other Person shall have executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this subsection. 


    (b) The
Company covenants and agrees that, after the Stock Acquisition Date, it will not, except as permitted by  Section 24 hereof, take any action the purpose or effect of which is to diminish or
otherwise eliminate the benefits intended to be afforded by
the Rights. 




    15. Fractional Rights and Fractional Shares. 



    (a) The
Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in  Section 11(n) hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 15(a), the current market value
of a whole Right shall be (except as otherwise provided in the last sentence of this Section 15(a)) the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last sale price, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by The Nasdaq Stock Market or such other system then in
use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined reasonably and with good 



19





 


faith to the holders of Rights by the Board shall be used and shall be binding on the Rights Agent and conclusive for all purposes. 


    (b) The
Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the fractional interests
in shares of Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a share of Preferred Stock. For purposes of this Section 15(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise. 


    (c) Following
the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of Common Stock. For purposes of this  Section 15(c), the current
market value shall be determined in the manner set forth in  Section 11(d) hereof for the Trading Day immediately prior to the date of such exercise. 


    (d) Except
as otherwise expressly provided herein, the holder of a Right by the acceptance of the Right expressly waives such holder's right to receive any fractional
Rights or any fractional shares (other than, in the case of Preferred Stock, fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of a
Right. 




    16. Rights of Action. All rights of action in respect of this Agreement, except those rights of action expressly vested
in the Rights Agent under this Agreement, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in such holder's own behalf and for such holder's own benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder
of any Person subject to this Agreement. Holders of Rights shall be entitled to recover the reasonable costs and expenses, including attorneys' fees, incurred by them in any action to enforce the
provisions of this Agreement. 


20





 


    17. Agreement of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that: 



    (a) prior
to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock; 


    (b) after
the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent and only if surrendered at the office of the
Rights Agent set forth in Section 26 hereof, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and
certificates attached; 


    (c) the
Company and the Rights Agent shall deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary;
and 


    (d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other
Person as a result of the inability of the Company or the Rights Agent to perform any of its or their obligations under this Agreement by reason of any preliminary or permanent injunction or other
order, decree, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use its best efforts to have any such order, decree, judgment or ruling lifted or otherwise overturned as soon as possible. 




    18. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock, Common Stock or any other securities of the Company which may at any time be issuable upon exercise
of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions thereof. 


    19. Concerning the Rights Agent. 



    (a) The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the preparation, delivery, administration, amendment and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost, or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (as finally determined by a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending
against any claim 



21





 


of liability arising therefrom, directly or indirectly. The indemnity provided herein shall survive the termination of this Agreement, the termination and expiration of the Rights and the resignation
or removal of the Rights Agreement. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. 


    (b) The
Rights Agent shall be authorized to rely on, shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement or the exercise or performance of its duties hereunder in reliance upon any Rights Certificate or certificate for Common Stock or
for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged by the proper Person or Persons. 




    20. Merger or Consolidation or Change of Name of Rights Agent. 



    (a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust or stockholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 22 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 


    (b) In
case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement. 



22







 
    21. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations, and only the duties and obligations,
expressly imposed by this Agreement (and not implied duties or obligations) upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound: 



    (a) The
Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the advice or opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion. 


    (b) Whenever
in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of current market price) be proved or established by the Company prior to taking, suffering or omitting any action hereunder,
such fact or matter (unless other evidence in respect thereof shall be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights Agent and the Rights Agent shall incur no liability on or in respect of any action taken, suffered or omitted in good faith
by it under the provisions of this Agreement in reliance upon such certificate. 


    (c) The
Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct as finally determined by a court of competent
jurisdiction. Anything in this Agreement to the contrary notwithstanding, in no case will the Rights Agent be liable for special, indirect, punitive, incidental or consequential loss or damages of any
kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the possibility of such damages. Notwithstanding anything to the contrary herein, the
liability of the Rights Agent hereunder will be limited to the amount of fees paid by the Company to the Rights Agent hereunder. 


    (d) The
Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates (except
as to the fact that it has countersigned the Rights Certificates) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. 



    (e) The
Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible or liable for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be responsible or liable for any adjustment required under the provisions of  Section 11 or 13 hereof or responsible or liable for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt of a
certificate pursuant to Section 12 describing any such adjustment); nor shall it be responsible or liable for any determination by the Board of
the current market value of the Rights or Preferred Stock or Common Stock pursuant to the provisions of Section 15 hereof; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Stock or other securities to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Preferred Stock or other securities will, when so issued, be validly authorized and issued, fully paid and nonassessable. 



23





 


    (f)  The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performance by the Rights Agent of the provisions of this Agreement. 


    (g) The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered
pursuant to any provision hereof from the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to such officers for advice or instructions in connection with its duties, and such advice or instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in good faith in accordance with the
advice or written instructions of any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, suffered or
omitted and the Rights Agent shall not be liable for any action taken, suffered or omitted in accordance with a proposal included in any such application on or after the date specified therein (which
date shall not be less than three (3) Business Days after the date any such officer actually receives such application, unless any such officer shall have consented in writing to an earlier
date) unless, prior to taking or omitting any such action, the Rights Agent has received written instructions in response to such application specifying the action to be taken or omitted. 


    (h) The
Rights Agent and any stockholder, Affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person. 


    (i)  The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or
to the holders of the Rights or any other Person resulting from any such act, omission, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment
thereof. 


    (j)  No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if the Rights Agent believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it. 


    (k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause l or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the Company. 




    22. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed to the Company and to each transfer agent of the Common Stock and Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed 


24





 


to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit such holder's Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a Person organized and doing business under the laws of the United States or of the State of New York or the State of California (or of any other state of the
United States so long as such Person is authorized to do business in the State of New York or the State of California), in good standing, which is authorized under such laws to exercise corporate
trust or stockholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000.00 or (b) an Affiliate of a Person described in clause (a) of this sentence. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall mail notice thereof in writing to the predecessor Rights Agent and each transfer agent of the Common Stock and Preferred Stock,
and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this  Section 22, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be. 


    23. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock options or otherwise under any employee plan or arrangement, which plan or arrangement is existing as of the Distribution
Date, or upon the exercise, conversion or exchange of any other securities issued by the Company on or prior to the Distribution Date, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificates shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificates would be issued, and (ii) no such Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 


    24. Redemption, Termination and Exchang. 



    (a) (i) The
Board may, at its option, at any time prior to the earlier of (x) the Stock Acquisition Date or (y) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring 



25





 


after the Effective Date (such redemption price being hereinafter referred to as the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in any form of consideration deemed appropriate by the Board. 



	(ii)
	In
addition, and notwithstanding the provisions of Section 24(a)(i) hereof, the Board may
redeem all but not less than all of the then outstanding Rights at the Redemption Price on or after the Stock Acquisition Date but prior to any Section 13 Event either (x) in connection
with any Section 13 Event in which all holders of Common Stock are treated alike and not involving (other than as a holder of Common Stock being treated like all other such holders) an
Acquiring Person or an Affiliate or Associate thereof or any other Person in which such Acquiring Person or Affiliate or Associate thereof has any interest, or any other Person acting directly or
indirectly on behalf of or in association with any such Acquiring Person or Affiliate or Associate thereof, or (y) following the occurrence of a Section 11 Event, and the expiration of
any period during which the holder of Rights may exercise the rights under Section 11(a)(ii) hereof as a result thereof, if and for as long as
any Acquiring Person having triggered the Section 11 Event at issue is not thereafter the Beneficial Owner of fifteen percent (15%) or more of the outstanding shares of Common Stock, and at the
time of redemption there are no other Persons who are Acquiring Persons. 





    (b) (i)
In the case of a redemption permitted under Section 24(a)(i) hereof, immediately upon the action of the
Board ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. In the case of a redemption permitted only under  Section 24(a)(ii) hereof, evidence of
which shall have been filed with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten (10) Business Days following the giving of notice of such redemption to the holders of such Rights if no
Section 11 Event shall have occurred, and, if a Section 11 Event shall have occurred, upon the later of ten (10) Business Days following the giving of such notice or the
expiration of any period during which the rights under Section 11(a)(ii) hereof may be exercised as a result thereof. Within ten (10) days
after the action of the Board ordering any such redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made. 



	(ii)
	In
the case of a redemption permitted under Section 24(a)(i) or  (ii), the Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the
manner of redemption of the Rights and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent of the Common Stock, and upon such action, all outstanding Rights Certificates shall be null and void
without any further action by the Company. 




    (c) (i)
Subject to the limitations of applicable laws, the Board may, at its option and at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 7(e)  hereof) for (A) shares of Common Stock
at an exchange ratio of one 



26





 


share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Effective Date (the "Exchange
Shares"), or (B) Substitute Consideration (as that term is defined below). The Board may determine, in its sole discretion, whether to deliver Exchange Shares or
Substitute Consideration. Notwithstanding the foregoing, the Board shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of fifty percent (50%) or more of the Common Stock then outstanding. 



	(ii)
	In
the event the Board shall determine to deliver Substitute Consideration in exchange for Rights, the Company shall (1) determine the value
of the Exchange Shares (the "Exchange Value"), and (2) with respect to each Right to be exchanged, make adequate provision to substitute for
Exchange Shares the following (the "Substitute Consideration"): (v) cash, (w) Common Stock or common stock equivalents (as that term is
defined in Section 11(a)(iii) hereof) or Preferred Stock or equivalent preferred stock (as that term is defined in  Section 11(b) hereof),
(x) debt securities of the Company, (y) other assets, or (z) any combination of the foregoing, having
an aggregate value equal to the Exchange Value, where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment banking firm selected by the
Board. For purposes of this Section 24(c), the value of a share of Common Stock shall be the current market price (as determined pursuant to  Section 11(d)
hereof) per share of Common Stock on the day that is the later of (x) the first occurrence of a Section 11 Event or
(y) the date on which the Company's right of redemption pursuant to Section 24(a)(i) hereof expires; and the value of any common stock
equivalent shall be deemed to have the same value as the Common Stock on such date.



	(iii)
	Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to this  Section 24(c), and without any further action and without any notice, the right to exercise such Rights shall
terminate and the only right
thereafter of a holder of such Rights shall be to receive Exchange Shares or Substitute Consideration for each Right exchanged by such holder. The Company shall promptly give public notice and notice
to the Rights Agent of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange
of Common Stock (or Substitute Consideration) for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.



	(iv)
	In
the event that there shall not be sufficient shares of Common Stock or Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section 24(c), the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock or Preferred Stock for issuance upon exchange of the Rights.



	(v)
	The
Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders of 




27





 



the
Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this Section 24(c)(v), the current market value of a whole share of Common Stock shall be determined
in the manner set forth in Section 11(d) hereof for the Trading Day immediately prior to the date of exchange pursuant to this  Section 24(c).







    25. Notice of Certain Events. 



    (a) In
case the Company shall propose (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than fifty percent (50%) of the
assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate, in accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by
the holders of the shares of Preferred Stock, whichever shall be the earlier. 


    (b) In
case any Triggering Event shall occur, then, in any such case, the Company or the Principal Party, as the case may be, shall as soon as practicable thereafter
give to each holder of a Rights Certificate and the Rights Agent, in accordance with Section 26 hereof, a notice of the occurrence of such
Triggering Event, which shall specify the event and the consequences of the Triggering Event to holders of Rights under Section 11(a)(ii) or  13(a) hereof, as the case may be. 


    (c) The
failure to give notice required by this Section 25 or any defect therein shall not affect the legality or
validity of the action taken by the Company or the vote upon any such action. 




    26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of
any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, or sent by nationwide overnight delivery, addressed (until another address
is filed in writing with the Rights Agent) as follows: 




IDEC
Pharmaceuticals Corporation

3030 Callan Road

San Diego, CA 92121

Attention: Corporate Secretary 





Subject
to the provisions of Section 22, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be 


28





 


sufficiently given or made if sent by first-class mail, postage prepaid, or sent by nationwide overnight delivery, addressed (until another address is filed in writing with the Company) as follows: 




Mellon
Investor Services LLC

400 South Hope Street, 4th Floor

Los Angeles, CA 90071

Attention: Rosa Bautista 





Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, or sent by nationwide overnight delivery, addressed to such holder at the address of such holder as shown on the registry books of the Company. 


    27. Supplements and Amendments. The Company and the Rights Agent may from time to time supplement or amend this
Agreement without approval of any holders of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) prior to the Distribution Date, to change or supplement any provision hereunder in any manner which the Company may deem
necessary or desirable or (iv) on or following the Distribution Date, to change or supplement any provision hereunder in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights Certificates. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment unless the Rights
Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common Stock. 


    28. Determination and Actions by the Board. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the Effective Date. Except as otherwise provided herein, the Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates
and all other parties and (y) not subject the Board to any liability to the holders of the Rights Certificates. The Rights Agent may hereby assume without any need to investigate that the Board
has acted in good faith. 


29







 
    29. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 


    30. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date,
the Common Stock). 


    31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. 


    32. Governing Law. This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and to be
performed entirely within such state. 


    33. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 



    34. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof. 


    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. 



	 	 	IDEC PHARMACEUTICALS CORPORATION
	 	 	 	 	 
	

 	
 	

By:	
 	

/s/ KENNETH J. WOOLCOTT   

	

 	
 	

Title:	
 	

Vice President, General Counsel

	

 	
 	

 	
 	

 
	 	 	MELLON INVESTOR SERVICES LLC,

as Rights Agent
	

 	
 	

 	
 	

 
	 	 	 	 	 
	 	 	By:	 	/s/ ROSA BAUTISTA   

	

 	
 	

Title:	
 	

Relationship Manager





30






  



 
 

EXHIBIT A
  
    [Form of Rights Certificate]    
  



	Certificate No. R-	
	 	
	 	Rights	 	 





	

NOT EXERCISABLE AFTER JULY 26, 2011, OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AN AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*







	*
	The
portion of the legend in brackets shall be inserted only if applicable. 


 
 

Rights Certificate
  
    IDEC PHARMACEUTICALS CORPORATION    
  


    This certifies that                             , or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement dated as of July 26, 2001 (the
"Rights Agreement") between IDEC PHARMACEUTICALS CORPORATION, a Delaware corporation (the
"Company"), and MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company (f/k/a ChaseMellon
Shareholder Services, LLC, the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m. (San Francisco time) on July 26, 2011, unless earlier redeemed or exchanged by the Company as set forth in the Rights Agreement, at the office of
the Rights Agent designated for such purpose, one one-thousandth of a fully paid, nonassessable share of Series X Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of Five Hundred Dollars ($500.00) per one one-thousandth of a share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate with the appropriate Form of Election to Purchase and Certificate duly
executed. 


    The
number of Rights evidenced by this Rights Certificate (and the number of one one-thousandths of a share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of the Effective Date (as such term is defined in the Rights Agreement), based on the Preferred Stock as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths of a share of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events. 


    Upon
the occurrence of a Triggering Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are Beneficially Owned (as such term is
defined in the Rights Agreement) by (i) an Acquiring Person (as such term is defined in the Rights Agreement) or an Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement) or, (iii) under certain circumstances specified in the Rights Agreement, a transferee of an Acquiring Person, or an 


A–1





 


Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any rights with respect to such Rights from and after the occurrence of any such
Triggering Event. 


    This
Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the principal office of the Company and are also available upon written request to
the Company. 


    This
Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-thousandths of a share of Preferred Stock as
the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised (other than pursuant to  Section 11(a)(ii)
 of the Rights Agreement) in part, the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights Certificate shall be exercised in whole or in part pursuant to  Section 11(a)(ii) of the Rights Agreement, the holder
shall be entitled to receive this Rights Certificate duly marked to indicate that
such exercise has occurred as set forth in the Rights Agreement. 


    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may, in certain instances, be (i) redeemed by the Company at its option at a
redemption price of $0.001 per Right or (ii) exchanged in whole or in part for shares of the Company's Common Stock or substitute consideration. Subject to the provisions of the Rights
Agreement, the Company, at its option, may elect to mail payment of the redemption price to the registered holder of the Rights at the time of redemption, in which event this certificate may become
void without any further action by the Company. 


    The
Company may elect not to issue fractional shares of Preferred Stock or other securities upon the exercise of any Right or Rights evidenced hereby (other than fractions, in the
instance of Preferred Stock, which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary
receipts), in which event a cash payment will be made, in lieu thereof, as provided in the Rights Agreement. 


    No
holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of one one-thousandths of a share of
Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. 


    This
Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. 


    WITNESS
the facsimile signature of the proper officers of the Company and its corporate seal. 



	Dated:	 	 	 	, 20	 	 	.
	 	 	
	 	 	 	
	 





A–2





 


	Attest:	 	 	 	IDEC PHARMACEUTICALS CORPORATION
	

 	
 	

 	
 	

By:	
 	

 
	
	 	 	 	

	

Title:	
 	

 	
 	

Title:	
 	

 
	 	 	
	 	 	 	

	Countersigned:	 	 	 	 
	
MELLON INVESTOR SERVICES LLC,

as Rights Agent	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 




A–3





 
 
 

[Form of Reverse Side of Rights Certificate]
  
    FORM OF ASSIGNMENT
  
    (To be executed by the registered holder if such
  holder desires to transfer the Rights Certificate.)




    FOR
VALUE RECEIVED,                hereby sells, assigns and transfers unto
                                         
       
 



	

 (please print name, address and social security or other identifying number of transferee)
	







this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint               
Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution. 



	Dated:	 	 	 	, 20	 	 	.
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 
	

Signature Guaranteed:	
 	

 






    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


A–4






   CERTIFICATE  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement);
and 


    (2) after
due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did
[  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. 



	Dated:	 	 	 	, 20	 	 	.
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 





NOTICE  


    The signature to the foregoing Assignment must correspond to the name as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and will affix a legend to that effect on any Rights Certificate issued in exchange for this Rights Certificate. 


A–5






  



 
 

FORM OF ELECTION TO PURCHASE
  
    (To be executed if holder desires to
  exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)    



    To:
IDEC PHARMACEUTICALS CORPORATION 


    The
undersigned hereby irrevocably elects to exercise                Rights represented by this Rights Certificate to purchase the shares of Common
Stock (or such other securities of the Company) issuable upon the exercise of the Rights and requests that certificates for such shares be issued in the name of: 



	
 (Please insert social security or other identifying number)
	

 (Please print name and address)
	







    The Rights Certificate (indicating the balance, if any, of such Rights which may still be exercised pursuant to  Section 11(a)(ii) of the Rights
Agreement) shall be returned to the undersigned unless the undersigned requests that the Rights
Certificate be registered in the name of and delivered to: 


    Please
insert social security or other identifying number (complete only if Rights Certificate is to be registered in a name other than the undersigned) 



	
 (Please print name and address)
	







	

Dated:	
 	

 	
 	

, 20	
 	

 	

 .
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 






Signature Guaranteed: 


    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


A–6






  



 
 

CERTIFICATE    
  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); 


    (2) this
Rights Certificate [  ] is [  ] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and 


    (3) after
due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did
[  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. 



	Dated:	 	 	 	, 20	 	 	.
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 





 
 

NOTICE    
  


    The signature to the foregoing Election to Purchase must correspond to the name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement). 


A–7






  



 
 
 

FORM OF ELECTION TO PURCHASE
  
    (To be executed if holder desires to exercise
  the Rights Certificate other than pursuant to
Section 11(a)(ii)
 of the Rights Agreement.)    




    To:
IDEC PHARMACEUTICALS CORPORATION 


    The
undersigned hereby irrevocably elects to exercise                Rights represented by this Rights Certificate to purchase the one
one-thousandths of a share of Preferred Stock (or such other securities of the Company or any other Person) issuable upon the exercise of the Rights and requests that certificates for such
shares be issued in the name of: 



	
 (Please insert social security or other identifying number)
	

 (Please print name and address)
	







    If applicable, the Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to  Section 11(a)(ii) of the Rights
Agreement shall be returned to the undersigned unless such Person requests that the Rights Certificate be
registered in the name of and delivered to: 



	

 Please insert social security or other identifying number

(complete only if Rights Certificate is to be registered in a name other than the undersigned)
	

 (Please print name and address)
	







	

Dated:	
 	

 	
 	

, 20	
 	

 	

 .
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 






Signature Guaranteed: 


    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


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   CERTIFICATE  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); 



    (2) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement);
and 


    (3) after
due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did
[  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. 



	

Dated:	
 	

 	
 	

, 20	
 	

 	

 .
	 	 	
	 	 	 	
	 






	

	
 	

 
	Signature	 	 





NOTICE  


    The signature to the foregoing Election to Purchase must correspond to the name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement). 


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EXHIBIT B
  
    SUMMARY OF RIGHTS
  
    (As amended to date)    



    On
July 22, 1997, the Board of Directors of IDEC Pharmaceuticals Corporation (the "Company") declared a dividend distribution of
one "Right" for each outstanding share of common stock (the "Common Stock") of the Company to
stockholders of record at the close of business on August 11, 1997 (the "Record Date"). Since the Record Date, the Company has issued one Right
with each newly issued share of Common Stock. On July 26, 2001, the Board of Directors amended the terms of the Rights. The description and terms of the Rights are set forth in that certain
Amended and Restated Rights Agreement (the "Rights Agreement") between the Company and Mellon Investor Services LLC (f/k/a ChaseMellon Shareholder
Services LLC, the "Rights Agent"), originally dated as of July 22, 1997, but amended and restated as of July 26, 2001. This Summary of
Rights provides a summary of the Rights as amended to date (i.e., as reflected in the Rights Agreement). 


    Each
Right, when exercisable, will entitle the registered holder to purchase from the Company one one-thousandth of a share of preferred stock, designated as
Series X Junior Participating Preferred Stock (the "Preferred Stock"), at a price of Five Hundred Dollars ($500.00) per one
one-thousandth of a share (the "Purchase Price"), subject to adjustment. The Rights are initially attached to all Common Stock certificates
representing shares outstanding, and no separate Rights certificates have been distributed. The Rights will separate from the Common Stock and a "Distribution
Date" will occur upon the earliest of the following: (i) a public announcement that a person, entity or group of affiliated or associated persons and/or entities (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of fifteen percent (15%) or more of the outstanding shares of
Common Stock (other than (A) as a result of repurchases of stock by the Company or certain inadvertent actions by institutional or certain other stockholders, (B) the Company, any
subsidiary of the Company or any employee benefit plan of the Company or any subsidiary and (C) certain other instances set forth in the Rights Agreement); or (ii) ten
(10) business days (unless such date is extended by the Board of Directors) following the commencement of a tender offer or exchange offer which would result in any person, entity or group of
affiliated or associated persons and/or entities becoming an Acquiring Person (unless such tender offer or exchange offer is a Permitted Offer (defined below)). 


    Until
the Distribution Date (or earlier redemption or expiration of the Rights, if applicable), (i) the Rights will be evidenced by certificates for Common Stock and will be
transferred only with such Common Stock certificates, (ii) Common Stock certificates issued upon transfers or new issuances of the Common Stock will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any certificates for outstanding Common Stock will also constitute the transfer of the Rights associated with such Common Stock.
As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date, and the separate Rights Certificates alone will evidence the Rights. 


    The
Rights are not exercisable unless and until a Distribution Date occurs. The Rights will expire on the earliest of (i) July 26, 2011, (ii) consummation of a
merger transaction with a person, entity or group who (x) acquired Common Stock pursuant to a Permitted Offer and (y) is offering in the merger the same price per share and form of
consideration paid in the Permitted Offer or (iii) redemption or exchange of the Rights by the Company as described below. 


    The
number of Rights associated with each share of Common Stock shall be proportionately adjusted in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock. The Purchase Price payable, and the number of one one-thousandths of a share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time (i) in the event of a stock dividend on, or a subdivision, combination or 


B–1





 


reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights, options or warrants to subscribe for Preferred Stock, certain convertible
securities or securities having the same or more favorable rights, privileges and preferences as the Preferred Stock at less than the current market price of the Preferred Stock or (iii) upon
the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends out of earnings or retained earnings) or of subscription rights,
options or warrants (other than those referred to above). With certain exceptions, no adjustments in the Purchase Price will be required until cumulative adjustments require an adjustment of at least
one percent (1%) in such Purchase Price. 


    In
the event that, after the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person has become such, the Company is involved in a merger or
other business combination transaction (whether or not the Company is the surviving corporation) or fifty percent (50%) or more of the Company's assets or earning power are sold (in one transaction or
a series of transactions), proper provision shall be made so that each holder of a Right (other than an Acquiring Person) shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, that number of shares of common stock of either the Company, in the event that it is the surviving corporation of a merger or consolidation, or the acquiring company (or,
in the event there is more than one acquiring company, the acquiring company receiving the greatest portion of the assets or earning power transferred) which at the time of such transaction would have
a market value of two (2) times the Purchase Price (such right being called the "Merger Right"). In the event that a person, entity or group
becomes an Acquiring Person (unless pursuant to a tender offer or exchange offer for all outstanding shares of Common Stock at a price and on terms determined prior to the date of the first acceptance
of payment for any of such shares by at least a majority of the members of the Board of Directors who are not officers of the Company and are not Acquiring Persons (or affiliated or associated persons
and/or entities thereof) to be fair to and in the best interests of the Company and its stockholders (a "Permitted Offer")), then proper provision shall
be made so that each holder of a Right will, for a sixty (60) day period (subject to extension under certain circumstances) thereafter, have the right to receive upon exercise that number of
shares of Common Stock (or, at the election of the
Company, which election may be obligatory if sufficient authorized shares of Common Stock are not available, a combination of Common Stock, property, other securities
(e.g., Preferred Stock) and/or cash (including by way of a reduction in the Purchase Price)) having a market value of two (2) times the Purchase
Price (such right being called the "Subscription Right"). The holder of a Right will continue to have the Merger Right whether or not such holder
exercises the Subscription Right. Notwithstanding the foregoing, upon the occurrence of any of the events giving rise to the exercisability of the Merger Right or the Subscription Right, any Rights
that are or were at any time after the Distribution Date owned by an Acquiring Person (or affiliated or associated persons and/or entities thereof) shall immediately become null and void. 



    At
any time prior to the earlier to occur of (i) a person, entity or group becoming an Acquiring Person or (ii) the expiration of the Rights, the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the "Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may, following a person, entity or group becoming an Acquiring Person, redeem the then outstanding Rights in whole, but not in part, at the Redemption
Price (i) if such redemption is incidental to a merger or other business combination transaction or series of transactions involving the Company but not involving an Acquiring Person (or
certain related persons and/or entities) or (ii) following an event giving rise to, and the expiration of the exercise period for, the Subscription Right if and for as long as the Acquiring
Person triggering the Subscription Right beneficially owns securities representing less than fifteen percent (15%) of the outstanding shares of Common Stock and at the time of redemption there are no
other Acquiring Persons. The redemption of Rights described in the preceding sentence shall be effective only as of such time when the Subscription Right is not exercisable. Upon the effective date of
the redemption of 


B–2





 


the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. 



    Subject
to applicable law, the Board of Directors, at its option, may at any time after a person, group or entity becomes an Acquiring Person (but not after the acquisition by such
Acquiring Person of fifty percent (50%) or more of the outstanding shares of Common Stock), exchange all or part of the then outstanding and exercisable Rights (except for Rights which have become
void) for shares of Common Stock at a rate of one share of Common Stock per Right (subject to adjustment) or, alternatively, for substitute consideration consisting of cash, securities of the Company
or other assets (or any combination thereof). 


    The
Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior to any other series of preferred stock the Company may issue (unless otherwise provided in
the terms of such stock). Each share of Preferred Stock will have a preferential quarterly dividend in an amount equal to 1,000 times the dividend declared on each share of Common Stock. In the event
of liquidation, the holders of shares of Preferred Stock will receive a preferred liquidation payment equal, per share, to the greater of $1,000.00 or 1,000 times the payment made per share of Common
Stock. Each share of Preferred Stock will have 1,000 votes, voting together with the shares of Common Stock. In the event of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged,
each share of Preferred Stock will be entitled to receive 1,000 times the amount and type of consideration received per share of Common Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and consolidations, are protected by customary antidilution provisions. Fractional shares of Preferred Stock will be issuable;  however, the Company
may elect to (i) distribute depositary receipts in lieu of such fractional shares and (ii) make an adjustment in
cash, in lieu of fractional shares other than fractions that are multiples of one one-thousandth of a share, based on the market price of the Preferred Stock. 


    Until
a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.
While the distribution of the Rights should not be taxable to stockholders or to the Company, holders of Rights may, depending upon the circumstances, recognize taxable income in the event
(i) that the Rights become exercisable for (x) Common Stock or Preferred Stock (or other consideration) or (y) common stock of an acquiring company in the instance of the Merger
Right as set forth above or (ii) of any redemption or exchange of the Rights as set forth above. 


    The
Company and the Rights Agent retain broad authority to amend the Rights Agreement; however, following any Distribution Date any
amendment may not adversely affect the interests of holders of Rights. 


    A
copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to an Amendment to Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
RIGHTS AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE. 


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TABLE OF CONTENTS


AMENDED AND RESTATED RIGHTS AGREEMENT


EXHIBIT A [Form of Rights Certificate]

Rights Certificate IDEC PHARMACEUTICALS CORPORATION

[Form of Reverse Side of Rights Certificate] FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the Rights Certificate.)



FORM OF ELECTION TO PURCHASE (To be executed if holder desires to exercise the Rights Certificate pursuant to Section 11(a)(ii) of the Rights Agreement.)


CERTIFICATE

NOTICE


FORM OF ELECTION TO PURCHASE


EXHIBIT B SUMMARY OF RIGHTS (As amended to date)