Document:

Exhibit 4.1

    
      

    

    

      SCICLONE
        PHARMACEUTICALS, INC.

      

      AND

      

      MELLON
        INVESTOR SERVICES LLC

      

      as
        Rights
        Agent

       

      

      RIGHTS
        AGREEMENT

      

      Dated
        as
        of December 19, 2006

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      RIGHTS
        AGREEMENT

       

      This
        Rights Agreement (the “Rights Agreement”) is dated as of December 19, 2006,
        between SciClone Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
        and Mellon Investor Services LLC, a New Jersey limited liability company
        as
        rights agent (the “Rights Agent”).

       

      W I T N E S S E T H:

       

      WHEREAS,
        the Board of Directors of the Company effective on December 18, 2006
        (i) authorized the issuance and declared a dividend of one right (“Right”)
        for each share of the common stock, par value $0.001 per share, of the Company
        outstanding as of the Close of Business (as such term is hereinafter defined)
        on
        January 2, 2007 (the “Record Date”), each Right representing the right to
        purchase one one-thousandth of a share of Series D Preferred Stock of the
        Company having the rights, powers and preferences set forth in the form of
        Certificate of Designation attached hereto as Exhibit A upon the terms and
        subject to the conditions hereinafter set forth, and (ii) further
        authorized and directed the issuance of one Right with respect to each share
        of
        Common Stock of the Company that shall become outstanding between the Record
        Date, and the Distribution Date (as such term is hereinafter
        defined);

       

      NOW,
        THEREFORE, in consideration of the premises and the mutual agreements herein
        set
        forth, the parties agree as follows:

       

      1.    Certain
        Definitions.
        For
        purposes of this Rights Agreement the following terms shall 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 outstanding Common Stock of the Company, without the prior
        approval of the Board of Directors; provided, however, that 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 15% of
        the
        Company’s outstanding 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 outstanding shares of Common
        Stock
        beneficially owned by such Person, provided,
        further,
        that if
        a Person shall become the Beneficial Owner of 15% or more of the Company’s
        outstanding Common Stock then outstanding solely by reason of a reduction
        of the
        number of shares of outstanding Common Stock, and shall thereafter become
        the
        Beneficial Owner of any additional shares of Common Stock of the Company,
        then
        such Person shall be deemed to be an Acquiring Person unless upon the
        consummation of the acquisition of such additional shares of Common Stock
        such
        person does not own 15% or
        more
        of the shares of Common Stock then outstanding. An Acquiring Person shall
        not
        include an Exempt Person (as such term is hereinafter defined) or a
        Grandfathered Person (as such term is hereinafter defined); provided further
        that a Grandfathered Person shall become an Acquiring Person if, without
        the
        prior approval of the Board of Directors, the Grandfathered Person becomes
        the
        Beneficial Owner of an additional number of shares, in addition to shares
        of
        Common Stock beneficially owned by the Grandfathered Person, together with
        all
        Affiliates and Associates of such Grandfathered Person, on the date of the
        Company's first public announcement of this Agreement, but a Grandfathered
        Person shall not become an Acquiring Person solely by reason of a reduction
        of
        the number of shares of outstanding Common Stock. Notwithstanding the foregoing,
        if (i) either (X) the Board of Directors determines in good faith that
        a Person who would otherwise be an Acquiring Person, as defined pursuant
        to the
        foregoing provisions of this paragraph (a), has become such inadvertently
        (including, without limitation, because (A) such Person was unaware that it
        beneficially owned a percentage of Common Stock that would otherwise cause
        such
        Person to be an Acquiring Person or (B) such Person was aware of the extent
        of its beneficial ownership but had no actual knowledge of the consequences
        of
        such beneficial ownership under this Rights Agreement) and without any intention
        of changing or influencing control of the Company, or (Y) within two
        Business Days of being requested by the Company to advise the Company regarding
        same, such Person certifies in writing that such Person acquired beneficial
        ownership of 15% or
        more
        of the Company’s outstanding Common Stock inadvertently or without knowledge of
        the terms of the Rights, and (ii) such Person divests as promptly as
        practicable a sufficient number of shares of Common Stock so that such Person
        would no longer be an “Acquiring Person,” as defined pursuant to the foregoing
        provisions of this paragraph (a), then such Person shall not be deemed to
        be or to have become an “Acquiring Person” for any purposes of this Rights
        Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (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 date of this Rights Agreement.

       

      (c)    A
        Person
        shall be deemed the “Beneficial Owner” of any securities

       

      (i)   
        which
        such Person or any of such Person’s Affiliates or Associates beneficially owns,
        directly or indirectly;

       

      (ii)  
        which
        such Person or any of such Person’s Affiliates or Associates, directly or
        indirectly, has (A) the right to acquire (whether such right is exercisable
        immediately or only after the passage of time) pursuant to any agreement,
        arrangement or understanding (other than customary agreements with and between
        underwriters and selling group members with respect to a bona fide public
        offering of securities), whether or not in writing, or upon the exercise
        of
        conversion rights, exchange rights, rights (other than the Rights), warrants
        or
        options, or otherwise; provided, however, that a Person shall not be deemed
        the
        Beneficial Owner of, or to “beneficially own,” securities tendered pursuant to a
        tender or exchange offer made by such Person or any of such Person’s Affiliates
        or Associates until such tendered securities are accepted for purchase or
        exchange; or (B) the right to vote or dispose of or has “beneficial
        ownership” of (as determined pursuant to Rule 13d-3 of the General Rules
        and Regulations under the Exchange Act, or any comparable or successor rule),
        including pursuant to any agreement, arrangement or understanding (whether
        or
        not in writing); provided, however, that a Person shall not be deemed the
        Beneficial Owner of, or to “beneficially own”, any securities if the agreement,
        arrangement or understanding to vote such security (1) arises solely from a
        revocable proxy or consent 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

       

      
        
          
          

        

        
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      (iii) 
         which
        are
        beneficially owned, directly or indirectly, by any other Person with which
        such
        Person or any of such Person’s Affiliates or Associates has any agreement,
        arrangement or understanding (whether or not in writing) for the purpose
        of
        acquiring, holding, voting except as described in the proviso to clause (B)
        of subparagraph (ii) of this Section 1(c) or disposing of any
        securities of the Company; provided,
        however,
        that no
        Person who is an officer, director or employee of an Exempt Person shall
        be
        deemed, solely by reason of such Person’s status or authority as such, to be the
        Beneficial Owner of, to have “beneficial ownership” of or to “beneficially own”
any securities that are “beneficially owned” (as defined in this
        Section 1(c)), including, without limitation, in a fiduciary capacity, by
        an Exempt Person or by any other such officer, director or employee of an
        Exempt
        Person.

       

      For
        all
        purposes of this Rights Agreement, any calculation of the number of shares
        of
        Common Stock outstanding at any particular time, including any calculation
        for
        purposes of determining the particular percentage of such outstanding shares
        of
        Common Stock 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 date
        hereof.

       

      (d)    “Board
        of
        Directors” shall mean the Company’s Board of Directors.

       

      (e)    “Business
        Day” shall mean any day other than a Saturday, Sunday, or a day on which the
        NASDAQ or banking institutions in the State of New York are authorized or
        obligated by law or executive order to close.

       

      (f)    “Close
        of
        Business” on any given date shall mean 5:00 P.M., New York time,
        on
        such date; provided, however, that if such date is not a Business Day it
        shall
        mean 5:00 P.M., New York time, on the next succeeding Business
        Day.

       

      (g)    “Common
        Stock” when used with reference to the Company shall mean the common stock, par
        value $0.001 per share, of the Company. “Common Stock” when used with reference
        to any Person other than the Company which shall be organized in corporate
        form
        shall mean the capital stock or other equity security with the greatest per
        share voting power of such Person or, if such Person is a Subsidiary of or
        is
        controlled by another Person, the Person which ultimately controls such
        first-mentioned Person. “Common Stock” when used with reference to any Person
        other than the Company which shall not be organized in corporate form shall
        mean
        units of beneficial interest which shall represent the right to participate
        in
        profits, losses, deductions and credits of such Person and which shall be
        entitled to exercise the greatest voting power per unit of such
        Person.

       

      (h)    “Common
        Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
        hereof.

       

      (i)    “Company”
        shall have the meaning set forth in the preamble hereto.

      
        
          
          

        

        
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      (j)    “Current
        Market Price” shall have the meaning set forth in Section 11(d)
        hereof.

       

      (k)    “Current
        Value” shall have the meaning set forth in Section 11(a)(iii)
        hereof.

       

      (l)    “Distribution
        Date” shall have the meaning set forth in Section 3(a) hereof.

       

      (m)   “Exchange
        Act” shall mean the Securities Exchange Act of 1934, as amended.

       

      (n)    “Exempt
        Person” shall mean the Company or any Subsidiary of the Company, including,
        without limitation, in its fiduciary capacity, any employee benefit plan
        or
        employee or director stock plan of the Company or of any Subsidiary of the
        Company, or any Person, organized, appointed, established or holding Common
        Stock for or pursuant to the terms of any such plan or any Person funding
        other
        employee benefits for employees of the Company or any Subsidiary of the
        Company.

       

      (o)    “Expiration
        Date” shall have the meaning set forth in Section 7(a) hereof.

       

      (p)    “Final
        Expiration Date” shall have the meaning set forth in Section 7(a)
        hereof.

       

      (q)    “Flip-In
        Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
        or 11(a)(ii)(C) hereof.

       

      (r)    
“Flip-In
        Exercise Payment” shall have the meaning set forth in Section 11(a)(ii)
        hereof.

       

      (s)    “Flip-In
        Trigger Date” shall have the meaning set forth in Section 11(a)(iii)
        hereof.

       

      (t)    
“Flip-Over
        Event” shall mean any event described in clause (x), (y) or (z) of
        Section 13(a) hereof.

       

      (u)    “Flip-Over
        Exercise Payment” shall have the meaning set forth in Section 13(a)
        hereof.

       

      (v)    “Grandfathered
        Person” shall mean Sigma Tau Finanziaria S.p.A., together with its
        Affiliates and
        Associates, provided that such Person shall cease to be a Grandfathered Person
        at such time as such Person ceases to beneficially own in excess of 15% of
        the Company’s Common Stock.

       

      (w)    “NASDAQ”
        shall have the meaning set forth in Section 9(b) hereof.

       

      
        
          
          

        

        
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      (x)    “Person”
        shall mean any individual, firm, corporation, partnership, trust, limited
        liability company or other entity, and shall include any successor (by merger
        or
        otherwise) thereof or thereto.

       

      (y)    “Preferred
        Stock” shall mean the Series D Preferred Stock, $0.001 par value per share,
        of the Company having the rights, powers and preferences set forth in
Exhibit A
        hereto,
        and, to the extent that there is not a sufficient number of shares of
        Series D Preferred Stock authorized to permit the full exercise of the
        Rights, any other series of Preferred Stock, $0.001 par value per share,
        of the
        Company designated for such purpose containing terms substantially similar
        to
        the terms of the Series D Preferred Stock.

       

      (z)    “Preferred
        Stock Equivalent” shall have the meaning set forth in Section 11(b)
        hereof.

       

      (aa)   “Principal
        Party” shall have the meaning set forth in Section 13(b)
        hereof.

       

      (bb)   “Purchase
        Price” shall have the meaning set forth in Section 4(a)
        hereof.

       

      (cc)   “Record
        Date” shall have the meaning set forth in the Recitals within this Rights
        Agreement.

       

      (dd)   “Redemption
        Date” shall have the meaning set forth in Section 7(a) hereof.

       

      (ee)   “Redemption
        Price” shall have the meaning set forth in Section 23(a)
        hereof.

       

      (ff)    “Right
        Certificate” shall have the meaning set forth in Section 3(a)
        hereof.

       

      (gg)   “Securities
        Act” shall mean the Securities Act of 1933, as amended.

       

      (hh)   “Spread”
        shall have the meaning set forth in Section 11(a)(iii) hereof.

       

      (ii)     “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 or
        such
        earlier date as a majority of the directors shall become aware of the existence
        of an Acquiring Person.

       

      (jj)
            “Substitution
        Period” shall have the meaning set forth in Section 11(a)(iii)
        hereof.

       

      (kk)   “Subsidiary”
        of a Person shall mean any corporation or other entity of which securities
        or
        other ownership interests having ordinary voting power sufficient to elect
        a
        majority of the board of directors or other persons performing similar functions
        are beneficially owned, directly or indirectly, by such Person and any
        corporation or other entity that is otherwise controlled by such
        Person.

       

      
        
          
          

        

        
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      (ll)    “Summary
        of Rights” shall have the meaning set forth in Section 3(b)
        hereof.

       

      (mm)       
        “Trading
        Day” shall mean a day on which the principal national securities exchange on
        which the shares of Common Stock are listed or admitted to trading is open
        for
        the transaction of business or, if the shares of Common Stock are not listed
        or
        admitted to trading on any national securities exchange , a Business
        Day.

       

      (nn)   “Triggering
        Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
        or 11(a)(ii)(C) or Section 13 hereof.

       

      (oo)   “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.

       

      Any
        determination required by the definitions contained in this Section 1 shall
        be made by the Board of Directors in its good faith judgment, which
        determination shall be binding on the Rights Agent and the holders of the
        Rights.

       

      2.    Appointment
        of Rights Agent.
        The
        Company hereby appoints the Rights Agent to act as rights agent for the Company
        in accordance with the terms and conditions hereof, and the Rights Agent
        hereby
        accepts such appointment. The Company may from time to time appoint a co-rights
        agent as it may deem necessary or desirable. The Rights Agent shall have
        no duty
        to supervise, and in no event shall be liable for, the acts or omissions
        of any
        such co-rights agent.

       

      3.    Issuance
        of Right Certificates.

       

      (a)    Until
        the
        earlier of (i) the Stock Acquisition Date (or, if the Stock Acquisition
        Date occurs before the Record Date, the Close of Business on the Record Date)
        or
        (ii) the tenth Business Day (or such later date as may be determined by
        action of the Board of Directors prior to such time as any Person becomes
        an
        Acquiring Person) after the date of the commencement by any Person (other
        than
        an Exempt Person) of, or of the first public announcement of the intent of
        any
        Person (other than an Exempt Person) to commence (which intention to commence
        remains in effect for five business days after such announcement), a tender
        or
        exchange offer upon the successful consummation of which such Person, together
        with its Affiliates and Associates, would be the Beneficial Owner of
        15% or
        more
        of the outstanding Common Stock (irrespective of whether any shares are actually
        purchased pursuant to any such offer) (including any such date which is after
        the date of this Rights Agreement and prior to the issuance of the Rights;
        the
        earlier of such dates being herein referred to as the “Distribution Date”),
        (x) the Rights will be evidenced (subject to the provisions of
        Section 3(c) hereof) by the certificates for the Common Stock registered in
        the names of the holders of the Common Stock and not by separate Right
        Certificates, and (y) each Right will be transferable only in connection
        with the transfer of a share (subject to adjustment as hereinafter provided)
        of
        Common Stock. As soon as practicable after the Distribution Date, the Company
        will prepare and execute, the Rights Agent will countersign, and the Company
        will send or cause to be sent (and the Rights Agent will, if requested and
        provided with all necessary information, 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, as shown by the records of the Company,
        to
        the address of such holder shown on such records, a Right certificate in
        substantially the form of Exhibit B
        hereto
        (a “Right Certificate”) evidencing one Right for each share of Common Stock so
        held. In the event that an adjustment in the number of Rights per share of
        Common Stock has been made pursuant to Sections 11 or 13 hereof, at the time
        of
        distribution of the Rights Certificates, the Company shall make the necessary
        and appropriate rounding adjustments (in accordance with Section 14(a) hereof),
        so that Rights Certificates representing only whole numbers of Rights are
        distributed and cash is paid in lieu of any fractional Rights. As of and
        after
        the Distribution Date the Rights will be evidenced solely by such Right
        Certificates. The Company shall promptly notify the Rights Agent in writing
        upon
        the occurrence of the Distribution Date and, if such notification is given
        orally, the Company shall confirm the same in writing on or prior to the
        Business Day next following. Until such notice is received by the Rights
        Agent,
        the Rights Agent may presume conclusively for all purposes that the Distribution
        Date has not occurred.

       

      
        
          
          

        

        
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      (b)    On
        the
        Record Date, or as soon as practicable thereafter, the Company will send
        a copy
        of a Summary of Rights to Purchase Preferred Stock, substantially in the
        form
        attached hereto as Exhibit C
        (a
“Summary of Rights”), by first-class, postage prepaid mail, to each record
        holder of Common Stock as of the Close of Business on the Record Date, at
        the
        address of such holder shown on the records of the Company.

       

      (c)    Rights
        shall be issued in respect of all shares of Common Stock that are issued
        (either
        as an original issuance or from the Company’s treasury) after the Record Date
        prior to the earlier of the Distribution Date or the Expiration Date. With
        respect to certificates representing such shares of Common Stock, the Rights
        will be evidenced by such certificates for Common Stock registered in the
        names
        of the holders thereof together with the Summary of Rights. Until the
        Distribution Date (or, if earlier, the Expiration Date), the surrender for
        transfer of any certificate for Common Stock outstanding on the Record Date
        (with or without a copy of the Summary of Rights attached thereto), shall
        also
        constitute the surrender for transfer of the Rights associated with the Common
        Stock represented thereby.

       

      (d)    Certificates
        issued for Common Stock (including, without limitation, certificates issued
        upon
        transfer or exchange of Common Stock) after the Record Date but prior to
        the
        earlier of the Distribution Date or the Expiration Date shall have impressed
        on,
        printed on, written on or otherwise affixed to them a legend in substantially
        the following form:

       

      This
        certificate also evidences and entitles the holder hereof to certain Rights
        as
        set forth in the Rights Agreement between SciClone Pharmaceuticals, Inc.
        and
        Mellon Investor Services LLC, as Rights Agent, dated as of December 19, 2006,
        as
        the same may be amended or supplemented from time to time (the “Rights
        Agreement”), the terms of which are hereby incorporated herein by reference and
        a copy of which is on file at the principal executive office of SciClone
        Pharmaceuticals, Inc. Under certain circumstances, as set forth in the Rights
        Agreement, such Rights (as such term is defined in the Rights Agreement)
        will be
        evidenced by separate certificates and will no longer be evidenced by this
        certificate. SciClone Pharmaceuticals, Inc. will mail to the holder of this
        certificate a copy of the Rights Agreement without charge after receipt by
        it of
        a written request therefor. Under
        certain circumstances as provided in the Rights Agreement, Rights issued
        to,
        beneficially owned by or transferred to any Person who is or becomes an
        Acquiring Person (as such terms are defined in the Rights Agreement) or an
        Associate or Affiliate (as such terms are defined in the Rights Agreement)
        thereof and certain transferees thereof will be null and void and will no
        longer
        be transferable.

       

      
        
          
          

        

        
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      With
        respect to such certificates containing the foregoing legend, the Rights
        associated with the Common Stock represented by such certificates shall,
        until
        the Distribution Date, be evidenced by such certificates alone, and registered
        holders of Common Stock shall also be the registered holders of the associated
        Rights, and the surrender for transfer of any such certificate shall also
        constitute the surrender for transfer of the Rights associated with the Common
        Stock represented thereby. In the event that the Company purchases or acquires
        any shares of Common Stock after the Record Date but prior to the earlier
        of the
        Distribution Date, the Redemption Date or the Expiration Date, any Rights
        associated with such shares of Common Stock shall be deemed cancelled and
        retired so that the Company shall not be entitled to exercise any Rights
        associated with the shares of Common Stock no longer outstanding.

       

      Notwithstanding
        this subsection (d), the omission of a legend shall not affect the
        enforceability of any part of this Rights Agreement or the rights of any
        holder
        of the Rights.

       

      4.    Form
        of Right Certificates.

       

      (a)    The
        Right
        Certificates (and the forms of election to purchase shares and of assignment
        to
        be printed on the reverse thereof), when, as and if issued, shall be
        substantially in the form set forth in Exhibit B
        hereto
        and may have such marks of identification or designation and such legends,
        summaries or endorsements printed thereon as the Company may deem appropriate
        (but which do not affect the rights, duties or responsibilities of the Rights
        Agent) and as are not inconsistent with the provisions of this Rights Agreement,
        or as may be required to comply with any law or with any rule or regulation
        made
        pursuant thereto or with any rule or regulation of any stock exchange on
        which
        the Rights may from time to time be listed, or to conform to usage. Subject
        to
        the provisions of Sections 11, 13 and 22 hereof, the Right Certificates
        evidencing the Rights issued on the Record Date whenever such certificates
        are
        issued, shall be dated as of the Record Date and the Right Certificates
        evidencing Rights to holders of record of Common Stock issued after the Record
        Date shall be dated as of the Record Date but shall also be dated to reflect
        the
        date of issuance of such Right Certificate. On their face, Right Certificates
        shall entitle the holders thereof to purchase, for each Right, one
        one-thousandth of a share of Preferred Stock, or other securities or property
        as
        provided herein, as the same may from time to time be adjusted as provided
        herein, at the price per one one-thousandth of a share of Preferred Stock
        of
        $25.00, as the same may from time to time be adjusted as provided herein
        (the
“Purchase Price”).

       

      (b)    Notwithstanding
        any other provision of this Rights Agreement, any Right Certificate that
        represents Rights that are or were at any time on or after the earlier of
        the
        Stock Acquisition Date or the Distribution Date beneficially owned by an
        Acquiring Person or any Affiliate or Associate thereof (or any transferee
        of
        such Rights) shall have impressed on, printed on, written on or otherwise
        affixed to it (if the Company has knowledge that such Person is an Acquiring
        Person or an Associate or Affiliate thereof or transferee of such Persons
        or a
        nominee of any of the foregoing) a legend in substantially the following
        form:

       

      
        
          
          

        

        
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      The
        Beneficial Owner of the Rights represented by this Right Certificate is an
        Acquiring Person or an Affiliate or Associate (as such terms are defined
        in the
        Rights Agreement) of an Acquiring Person or a subsequent holder of such Right
        Certificates beneficially owned by such Persons. Accordingly, this Right
        Certificate and the Rights represented hereby are null and void and will
        no
        longer be transferable as provided in the Rights Agreement.

       

      The
        provisions of Section 11(a)(ii) and Section 24 of this Rights
        Agreement shall be operative whether or not the foregoing legend is contained
        on
        any such Right Certificates.

       

      5.    Countersignature
        and Registration.

       

      (a)    The
        Right
        Certificates shall be executed on behalf of the Company by its Chief Executive
        Officer, its President or any Vice President, either manually or by facsimile
        signature, and 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 Right Certificates
        shall
        be manually countersigned by the Rights Agent 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 Right Certificates shall cease to be such officer
        of the
        Company before countersignature by the Rights Agent and issuance and delivery
        by
        the Company, such Right 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 Right Certificates had not ceased
        to
        be such officer of the Company; and any Right Certificate may be signed on
        behalf of the Company by any person who, at the actual date of the execution
        of
        such Right Certificate, shall be a proper officer of the Company to sign
        such
        Right Certificate, although at the date of the execution of this Rights
        Agreement any such person was not such an officer.

       

      (b)    Following
        the Distribution Date and receipt by the Rights Agent of notice to that effect
        and all other relevant information referred to in Section 3(a), the Rights
        Agent
        will keep or cause to be kept, at its office designated for such purpose,
        books
        for registration and transfer of the Right Certificates issued hereunder.
        Such
        books shall show the names and addresses of the respective holders of the
        Right
        Certificates, the number of Rights evidenced on its face by each of the Right
        Certificates, the date of each of the Right Certificates and the certificate
        numbers for each of the Right Certificates.

       

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

       

      
        
          
          

        

        
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      (a)    Subject
        to the provisions of Sections 7(e), 11(a)(ii) and 14 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, and following receipt in writing
        by
        the Rights Agent of notice to that effect, any Right Certificate or Certificates
        (other than Right Certificates representing Rights that have become null
        and
        void pursuant to Section 11(a)(ii) hereof or that have been exchanged
        pursuant to Section 24 hereof) may be (i) transferred or
        (ii) split up, combined or exchanged for another Right Certificate or Right
        Certificates, entitling the registered holder to purchase a like number of
        shares of Preferred Stock or other securities as the Right Certificate or
        Right
        Certificates surrendered then entitled such holder to purchase. Any registered
        holder desiring to transfer any Right Certificate shall surrender the Right
        Certificate at the office of the Rights Agent designated for such purposes
        with
        the form of assignment on the reverse side thereof duly endorsed (or enclose
        with such Right Certificate a written instrument of transfer in form
        satisfactory to the Company and the Rights Agent), duly executed by the
        registered holder thereof or his attorney duly authorized in writing, and
        with
        such signature guaranteed by a member of a securities approved medallion
        program. Any registered holder desiring to split up, combine or exchange
        any
        Right Certificate or Right Certificates shall make such request in writing
        delivered to the Rights Agent, and shall surrender the Right Certificate
        or
        Right Certificates to be split up, combined or exchanged at the office of
        the
        Rights Agent designated for such purpose. The Right Certificates are
        transferable only on the registry books of the Rights Agent. Neither the
        Rights
        Agent nor the Company shall be obligated to take any action whatsoever with
        respect to the transfer of any such surrendered Right Certificate or Right
        Certificates until the registered holder thereof shall have (i) completed
        and
        signed the certificate contained in the form of assignment set forth on the
        reverse side of each such Right Certificate, (ii) provided such additional
        evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
        thereof and of the Rights evidenced thereby and the Affiliates and Associates
        of
        such Beneficial Owner (or former Beneficial Owner) as the Company or the
        Rights
        Agent shall reasonably request, and (iii) paid a sum sufficient to cover
        any tax
        or charge that may be imposed in connection with any transfer, split up,
        combination or exchange of Right Certificates as required by Section 9(d)
        hereof. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e),
        11 and 14 hereof, manually countersign and deliver to the Person entitled
        thereto a Right Certificate or Right Certificates, as the case may be, as
        so
        requested, registered in such name or names as may be designated by the
        surrendering registered holder. The Company may require payment from the
        holder
        of a Right Certificate of a sum sufficient to cover any tax or charge that
        may
        be imposed in connection with any transfer, split up, combination or exchange
        of
        Right Certificates. The Rights Agent shall have no duty or obligation to
        take
        any action under this Section or any other section of this Rights Agreement
        which requires the payment by a Rights holder of applicable taxes or charges
        unless and until the Rights Agent is satisfied that all such taxes and/or
        charges have been paid.

       

      (b)    Subject
        to the provisions of Section 11(a)(ii) 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 Right Certificate, and, in case of
        loss,
        theft or destruction, of indemnity or security satisfactory to them, and,
        if
        requested by the Company, 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 Right Certificate if mutilated, the Company
        will
        make, execute and deliver a new Right Certificate of like tenor to the Rights
        Agent for countersignature and delivery to the registered owner in lieu of
        the
        Right Certificate so lost, stolen, destroyed or mutilated.

       

      
        
          
          

        

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

       

      (a)    Subject
        to Section 11(a)(ii) hereof, the Rights shall become exercisable, and may
        be exercised to purchase Preferred Stock, except as otherwise provided herein,
        in whole or in part at any time after the Distribution Date upon surrender
        of
        the Right Certificate, with the form of election to purchase on the reverse
        side
        thereof duly executed (with such signature duly guaranteed), to the Rights
        Agent
        at the office of the Rights Agent designated for such purpose, together with
        payment of the Purchase Price with respect to each Right exercised, subject
        to
        adjustment as hereinafter provided, at or prior to the Close of Business
        on the
        earlier of (i) December 19, 2016 (the “Final Expiration Date”), (ii) the
        time at which the Rights are redeemed as provided in Section 23 hereof
        (such date being herein referred to as the “Redemption Date”) or (iii) the
        time at which all such Rights are exchanged as provided in Section 24
        hereof (the earliest of (i), (ii) and (iii) being herein referred to as the
        “Expiration Date”). Except for those provisions herein which expressly survive
        the termination of this Rights Agreement, this Rights Agreement shall terminate
        at such time as the Rights are no longer exercisable hereunder.

       

      (b)    The
        Purchase Price and the number of shares of Preferred Stock or other securities
        or consideration to be acquired upon exercise of a Right shall be subject
        to
        adjustment from time to time as provided in Sections 11 and 13 hereof. The
        Purchase Price shall be payable in lawful money of the United States of America,
        in accordance with Section 7(c) hereof.

       

      (c)    Except
        as
        provided in Section 11(a)(ii) hereof, upon receipt of a Right Certificate
        with the form of election to purchase duly executed, accompanied by payment
        of
        the Purchase Price (as such amount may be reduced pursuant to
        Section 11(a)(iii) hereof) or so much thereof as is necessary for the
        shares to be purchased and an amount equal to any applicable tax or charge,
        by
        cash, certified check or official bank check payable to the order of the
        Company
        or the Rights Agent, the Rights Agent shall, subject to Section 20(k)
        hereof, thereupon promptly (i) requisition from any transfer agent of the
        Preferred Stock certificates for the number of shares of Preferred Stock
        so
        elected to be purchased and the Company will comply and hereby authorizes
        and
        directs such transfer agent to comply with all such requests,
        (ii) requisition from the Company the amount of cash to be paid in lieu of
        issuance of fractional shares in accordance with Section 14(b) hereof, and
        (iii) promptly after receipt of such Preferred Stock certificates cause the
        same to be delivered to or upon the order of the registered holder of such
        Right
        Certificate, registered in such name or names as may be designated by such
        holder, and, when appropriate, after receipt of the cash requisitioned from
        the
        Company promptly deliver such cash to or upon the order of the registered
        holder
        of such Right Certificate. In the event of a purchase of securities, other
        than
        Preferred Stock, pursuant to Section 11(a) or Section 13 hereof, the
        Company shall promptly provide written notice to the Rights Agent and the
        Rights
        Agent, relying on such notice, shall promptly take the appropriate actions
        corresponding to the foregoing clauses (i) through (iii). In the event that
        the Company is obligated to issue other securities of the Company, pay cash
        and/or distribute other property pursuant to Section 11(a) hereof, the
        Company will make all arrangements necessary so that such other securities,
        cash
        and/or other property are available for distribution by the Rights Agent,
        if and
        when appropriate.

       

      (d)    Except
        as
        otherwise provided herein, in case the registered holder of any Right
        Certificate shall exercise less than all the Rights evidenced thereby, a
        new
        Right Certificate evidencing Rights equivalent to the Rights remaining
        unexercised shall be issued by the Rights Agent to the registered holder
        of such
        Right Certificate or to his duly authorized assigns, subject to the provisions
        of Sections 6 and 14 hereof.

       

      
        
          
          

        

        
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      (e)    Notwithstanding
        anything in this Rights 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 such registered holder shall have (i) properly
        completed and signed the certificate contained in the form of election to
        purchase set forth on the reverse side of the Right Certificate surrendered
        for
        such exercise and (ii) provided 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 Right Certificates.
        All
        Right Certificates surrendered for the purpose of exercise. transfer, split
        up,
        combination or exchange shall, if surrendered to the Company or to any of
        its
        agents, be delivered to the Rights Agent for cancellation or in cancelled
        form,
        or, if surrendered to the Rights Agent, shall be cancelled by it, and no
        Right
        Certificates shall be issued in lieu thereof except as expressly permitted
        by
        any of the provisions of this Rights Agreement. The Company shall deliver
        to the
        Rights Agent for cancellation and retirement, and the Rights Agent shall
        so
        cancel and retire, any Right Certificate purchased or acquired by the Company
        otherwise than upon the exercise thereof. The Rights Agent shall deliver
        all
        cancelled Right Certificates to the Company, or shall, at the written request
        of
        the Company, destroy such cancelled Right Certificates, and in such case
        shall
        deliver a certificate of destruction thereof to the Company.

       

      9.    Reservation
        and Availability of Shares of Preferred Stock.

       

      (a)    The
        Company covenants and agrees that at all times it will cause to be reserved
        and
        kept available, out of and to the extent of its authorized and unissued shares
        of Preferred Stock not reserved for another purpose (and, following the
        occurrence of a Triggering Event, other securities) or held in its treasury,
        the
        number of shares of Preferred Stock (and, following the occurrence of a
        Triggering Event, other securities) that, as provided in this Rights Agreement,
        including Section 11(a)(iii) hereof, will be sufficient to permit the
        exercise in full of all outstanding Rights; provided,
        however,
        that
        the Company shall be required to reserve and keep available shares of Preferred
        Stock or other securities sufficient to permit the exercise in full of all
        outstanding Rights pursuant to the adjustments set forth in
        Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof only
        if, and to the extent that, the Rights become exercisable pursuant to such
        adjustments.

       

      (b)    The
        Company shall (i) use its best efforts to cause, from and after such time
        as the Rights become exercisable, the Rights and all shares of Preferred
        Stock
        (and following the occurrence of a Triggering Event, other securities) issued
        or
        reserved for issuance upon exercise thereof to be reported by the National
        Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”)
        or such other system then in use, and if the Preferred Stock shall become
        listed
        on any national securities exchange, to cause, from and after such time as
        the
        Rights become exercisable, the Rights and all shares of Preferred Stock (and,
        following the occurrence of a Triggering Event, other securities) issued
        or
        reserved for issuance upon exercise thereof to be listed on such exchange
        upon
        official notice of issuance upon such exercise and (ii) if then necessary,
        to permit the offer and issuance of such shares of Preferred Stock (and,
        following the occurrence of a Triggering Event, other securities), register
        and
        qualify such share of Preferred Stock (and, following the occurrence of a
        Triggering Event, other securities) under the Securities Act and any applicable
        state securities or “blue sky” laws (to the extent exemptions therefrom are not
        available), cause such registration statement and qualifications to become
        effective as soon as possible after such filing and keep such registration
        and
        qualifications effective until the Expiration Date of the Rights. The Company
        may temporarily suspend, for a period of time not to exceed ninety (90) days,
        the exercisability of the Rights in order to prepare and file a registration
        statement under the Securities Act and permit it to become effective. Upon
        any
        such suspension, the Company shall issue a public announcement stating that
        the
        exercisability of the Rights has been temporarily suspended, as well as a
        public
        announcement at such time as the suspension is no longer in effect. The Company
        shall notify the Rights Agent whenever it makes a public announcement pursuant
        to this Section 9(b) and give the Rights Agent a copy of such announcement.
        Notwithstanding any provision of this Rights Agreement to the contrary, the
        Rights shall not be exercisable in any jurisdiction unless the requisite
        qualification in such jurisdiction shall have been obtained and until a
        registration statement under the Securities Act (if required) shall have
        been
        declared effective.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (c)    The
        Company covenants and agrees that it will take all such action as may be
        necessary to ensure that all shares of Preferred Stock (and following the
        occurrence of a Triggering Event, other securities) delivered upon exercise
        of
        Rights shall, at the time of delivery of the certificates for such shares
        (subject to payment of the Purchase Price in respect thereof), be duly and
        validly authorized and issued and fully paid and nonassessable shares in
        accordance with applicable law.

       

      (d)    The
        Company further covenants and agrees that it will pay when due and payable
        any
        and all taxes and charges which may be payable in respect of the issuance
        or
        delivery of the Right Certificates or of any shares of Preferred Stock (or
        other
        securities, as the case may be) upon the exercise of Rights. The Company
        shall
        not, however, be required to pay any tax or charge which may be payable in
        respect of any transfer or delivery of Right Certificates to a Person other
        than, or the issuance or delivery of certificates for Preferred Stock (or
        other
        securities, as the case may be) upon exercise of Rights in a name other than
        that of, the registered holder of the Right Certificate, and the Company
        shall
        not be required to issue or deliver a Right Certificate or certificate for
        Preferred Stock (or other securities, as the case may be) to a Person other
        than
        such registered holder until any such tax and charge shall have been paid
        (any
        such tax or charge being payable by the holder of such Right 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 shares of Preferred Stock (or other
        securities, as the case may be) is issued upon the exercise of Rights shall
        for
        all purposes be deemed to have become the holder of record of the shares
        of
        Preferred Stock (or other securities, as the case may be) represented thereby
        on, and such certificate shall be dated, the date upon which the Right
        Certificate evidencing such Rights was duly surrendered and payment of the
        Purchase Price (and any applicable taxes or charges) was made. Prior to the
        exercise of the Rights evidenced thereby, the holder of a Right Certificate,
        as
        such, shall not be entitled to any rights of a stockholder of the Company
        with
        respect to the 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, if any, and shall not
        be
        entitled to receive any notice of any proceedings of the Company, except
        as
        provided herein.

       

      
        
          
          

        

        
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      11.    Adjustments
        to Number and Kind of Shares, Number of Rights or Purchase Price.
        The
        number and kind of shares subject to purchase upon the exercise of each Right,
        the number of Rights outstanding and the Purchase Price are subject to
        adjustment from time to time as follows:

       

      (a)    (i)    In
        the
        event the Company shall at any time after the date of this Rights Agreement
        (A) declare or pay any dividend on Preferred Stock payable in shares of
        Preferred Stock, (B) subdivide or split the outstanding shares of Preferred
        Stock into a greater number of shares, (C) combine or consolidate the
        outstanding shares of Preferred Stock into a smaller number of shares or
        effect
        a reverse split of the outstanding shares of Preferred Stock, 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), 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 Preferred Stock or capital stock, as the case may be, issuable
        on such
        date, shall be proportionately adjusted so that the holder of any Right
        exercised after such time shall be entitled to receive, upon payment of the
        Purchase Price then in effect, the aggregate number and kind of shares of
        capital stock or other securities, which, if such Right had been exercised
        immediately prior to such date, the holder thereof 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).

       

      (ii)    Subject
        to Section 24, in the event any Acquiring Person or any Associate or
        Affiliate of any Acquiring Person, at any time after the date of this Rights
        Agreement, directly or indirectly, (1) shall consolidate with or merge with
        and into the Company or any of its Subsidiaries or otherwise combine with
        the
        Company or any of its Subsidiaries and the Company or such Subsidiary shall
        be
        the continuing or surviving corporation of such consolidation, merger or
        combination and the Common Stock of the Company shall remain outstanding
        and no
        shares thereof shall be changed into or exchanged for stock or other securities
        of the Company or of any other Person or cash or any other property, or
        (2) shall, in one or more transactions, other than in connection with the
        exercise of a Right or Rights and other than in connection with the exercise
        or
        conversion of securities exercisable for or convertible into securities of
        the
        Company or of any Subsidiary of the Company, transfer any assets or property
        to
        the Company or any of its Subsidiaries in exchange (in whole or in part)
        for any
        shares of any class of capital stock of the Company or any of its Subsidiaries
        or any securities exercisable for or convertible into shares of any class
        of
        capital stock of the Company or any of its Subsidiaries, or otherwise obtain
        from the Company or any of its Subsidiaries, with or without consideration,
        any
        additional shares of any class of capital stock of the Company or any of
        its
        Subsidiaries or any securities exercisable for or convertible into shares
        of any
        class of capital stock of the Company or any of its Subsidiaries (other than
        as
        part of a pro rata offer or distribution by the Company or such Subsidiary
        to
        all holders of such shares), or (3) shall sell, purchase, lease, exchange,
        mortgage, pledge, transfer or otherwise acquire (other than as a pro rata
        dividend) or dispose of, to, from or with, as the case may be (in one
        transaction or a series of transactions), the Company or any of its
        Subsidiaries, any assets (including securities) on terms and conditions less
        favorable to the Company or such Subsidiary than the Company or such Subsidiary
        would be able to obtain in arm’s-length negotiation with an unaffiliated third
        party, or (4) shall receive any compensation from the Company or any of its
        Subsidiaries for services other than compensation for employment as a regular
        or
        part-time employee, or fees for serving as a director, at rates in accordance
        with the Company’s (or its Subsidiary’s) past practices, or (5) shall
        receive the benefit, directly or indirectly (except proportionately as a
        stockholder), of any loans, advances, guarantees, pledges or other financial
        assistance or any tax credits or tax advantage provided by the Company or
        any of
        its Subsidiaries, or (6) shall engage in any transaction with the Company
        (or any of its Subsidiaries) involving the sale, license, transfer or grant
        of
        any right in, or disclosure of, any patents, copyrights, trade secrets,
        trademarks, know-how or any other intellectual or industrial property rights
        recognized under any country’s intellectual property laws which the Company
        (including its Subsidiaries) owns or has the right to use on terms and
        conditions not approved by the Board of Directors; or

       

      
        
          
          

        

        
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      (B)    any
        Person, alone or together with its Affiliates and Associates, shall become
        an
        Acquiring Person; or

       

      (C)    during
        such time as there is an Acquiring Person, there shall be any reclassification
        of securities (including any reverse stock split), or any recapitalization
        of
        the Company, or any merger or consolidation of the Company with any of its
        Subsidiaries or any other transaction or series of transactions involving
        the
        Company or any of its Subsidiaries (whether or not with or into or otherwise
        involving an Acquiring Person or any Affiliate or Associate of such Acquiring
        Person) which has the effect, directly or indirectly, of increasing by more
        than
        1% the proportionate share of the outstanding shares of any class of equity
        securities of the Company or any of its Subsidiaries, or securities exercisable
        for or convertible into equity securities of the Company or any of its
        Subsidiaries, which is directly or indirectly beneficially owned by any
        Acquiring Person or any Affiliate or Associate of any Acquiring Person (any
        of
        (A), (B) or (C) being referred to herein as a “Flip-In Event”);

       

      then
        upon
        the first occurrence of such Flip-In Event (i) the Purchase Price shall be
        adjusted to be the Purchase Price in effect immediately prior to the Flip-In
        Event multiplied by the number of one
        one-thousandth of a share of Preferred Stock for which a Right was exercisable
        immediately prior to such Flip-In Event, whether or not such Right was then
        exercisable, and (ii) each holder of a Right, except as otherwise provided
        in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
        thereafter have the right to receive, upon exercise thereof at a price equal
        to
        the Purchase Price (as so adjusted), in accordance with the terms of this
        Rights
        Agreement and in lieu of shares of Preferred Stock, such number of shares
        of
        Common Stock as shall equal the result obtained by dividing the Purchase
        Price
        (as so adjusted) by 50% of the Current Market Price per share of the Common
        Stock (determined pursuant to Section 11(d) hereof) on the date of such
        Flip-In Event; provided,
        however,
        that
        the Purchase Price (as so adjusted) and the number of shares of Common Stock
        so
        receivable upon the exercise of a Right shall, following the Flip-In Event,
        be
        subject to further adjustment as appropriate in accordance with
        Section 11(f) hereof. Notwithstanding anything in this Rights Agreement to
        the contrary, however, from and after the Flip-In Event, any Rights that
        are
        beneficially owned by (x) any Acquiring Person (or any Affiliate or
        Associate of any Acquiring Person), (y) a transferee of any Acquiring
        Person (or any such Affiliate or Associate) who becomes a transferee after
        the
        Flip-In Event or (z) a transferee of any Acquiring Person (or any such
        Affiliate or Associate) who became a transferee prior to or concurrently
        with
        the Flip-In Event pursuant to either (I) a transfer from the Acquiring
        Person to holders of its equity securities or to any Person with whom it
        has any
        continuing agreement, arrangement or understanding, whether written or
        otherwise, regarding the transferred Rights or (II) a transfer which the
        Board of Directors has determined is part of a plan, agreement, arrangement
        or
        understanding, whether written or otherwise, which has the purpose or effect
        of
        avoiding the provisions of this paragraph, and subsequent transferees of
        such
        Persons, shall be null and void without any further action and any holder
        of
        such Rights shall thereafter have no rights whatsoever with respect to such
        Rights under any provision of this Rights Agreement. The Company shall use
        all
        reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
        are complied with, but shall have no liability to any holder of Right
        Certificates or other Person as a result of its failure to make any
        determinations with respect to an Acquiring Person or its Affiliates, Associates
        or transferees hereunder. From and after the Flip-In Event, no Right Certificate
        shall be issued pursuant to Section 3 or Section 6 hereof that
        represents Rights that are or have become null and void pursuant to the
        provisions of this paragraph, and any Right Certificate delivered to the
        Rights
        Agent that represents Rights that are or have become null and void pursuant
        to
        the provisions of this paragraph shall be cancelled. The Company shall give
        the
        Rights Agent written notice of the identity of any such Acquiring Person,
        Associate or Affiliate, or the nominee of any of the foregoing, and the Rights
        Agent may rely on such notice in carrying out its duties under this Rights
        Agreement and shall be deemed not to have any knowledge of the identity of
        any
        such Acquiring Person, Associate or Affiliate, or the nominee of any of the
        foregoing unless and until it shall have received such notice.

       

      
        
          
          

        

        
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      (iii)   The
        Company may at its option substitute for a share of Common Stock issuable
        upon
        the exercise of Rights in accordance with the foregoing subparagraph (ii)
        such number or fractions of shares of Preferred Stock having an aggregate
        current market value equal to the Current Market Price of a share of Common
        Stock. In the event that there shall not be sufficient shares of Common Stock
        issued but not outstanding or authorized but unissued to permit the exercise
        in
        full of the Rights in accordance with the foregoing subparagraph (ii), the
        Board of Directors shall, to the extent permitted by applicable law and any
        material agreements then in effect to which the Company is a party
        (A) determine the excess (such excess, the “Spread”) of (1) the value
        of the shares of Common Stock issuable upon the exercise of a Right in
        accordance with the foregoing subparagraph (ii) (the “Current Value”) over
        (2) the Purchase Price (as adjusted in accordance with the foregoing
        subparagraph (ii)), and (B) with respect to each Right (other than
        Rights which have become null and void pursuant to the foregoing
        subparagraph (ii)), make adequate provision to substitute for the shares of
        Common Stock issuable in accordance with the foregoing paragraph (ii) upon
        exercise of the Right and payment of the Purchase Price (as adjusted in
        accordance therewith), (1) cash, (2) a reduction in such Purchase
        Price, (3) shares of Preferred Stock or other equity securities of the
        Company (including, without limitation, shares or fractions of shares of
        preferred stock which, by virtue of having dividend, voting and liquidation
        rights substantially comparable to those of the shares of Common Stock, are
        deemed in good faith by the Board of Directors to have substantially the
        same
        value as the shares of Common Stock (such shares of Preferred Stock and shares
        or fractions of shares of preferred stock being hereinafter referred to as
        “Common Stock Equivalents”), (4) debt securities of the Company,
        (5) other assets, or (6) any combination of the foregoing, having a
        value which, when added to the value of the shares of Common Stock actually
        issued upon exercise of such Right, shall have an aggregate value equal to
        the
        Current Value (less the amount of any reduction in such Purchase Price),
        where
        such aggregate value has been determined by the Board of Directors upon the
        advice of a nationally recognized investment banking firm selected in good
        faith
        by the Board of Directors; provided,
        however,
        that if
        the Company shall not make adequate provision to deliver value pursuant to
        clause (B) above within 30 days following the date of the Flip-In Event
        (the “Flip-in Trigger Date”), then the Company shall be obligated to deliver, to
        the extent permitted by applicable law and any material agreements then in
        effect to which the Company is a party, upon the surrender for exercise of
        a
        Right and without requiring payment of such Purchase Price, shares of Common
        Stock (to the extent available), and then, if necessary, such number or
        fractions of shares of Preferred Stock (to the extent available) and then,
        if
        necessary, cash, which shares and/or cash have an aggregate value equal to
        the
        Spread. If the Board of Directors shall determine in good faith that it is
        likely that sufficient additional shares of Common Stock and/or Common Stock
        Equivalents could be authorized for issuance upon exercise in full of the
        Rights, the 30-day period set forth above may be extended to the extent
        necessary, but not more than 90 days after the Flip-In Trigger Date, in order
        that the Company may seek stockholder approval for the authorization of such
        additional shares of Common Stock or Common Stock Equivalents (such 30-day
        period, as it may be extended being hereinafter referred to as the “Substitution
        Period”). To the extent that the Company determines that some action need be
        taken pursuant to the second and/or third sentence of this
        Section 11(a)(iii), the Company (x) shall provide, subject to the last
        sentence of Section 11(a)(ii) hereof, that such action shall apply
        uniformly to all outstanding Rights, and (y) may suspend the exercisability
        of the Rights until the expiration of the Substitution Period in order to
        seek
        any authorization of additional shares and/or to decide the appropriate form
        of
        distribution to be made pursuant to the first sentence of
        Section 11(a)(iii) and to determine the value thereof. 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, as well as a
        public
        announcement at such time as the suspension is no longer in effect. For purposes
        of this Section 11(a)(iii), the value of the Common Stock shall be the
        Current Market Price per share of the Common Stock on the Flip-In Trigger
        Date
        and the per share or per unit value of any Common Stock Equivalent shall
        be
        deemed to equal the Current Market Price per share of the Common Stock on
        such
        date. The Board of Directors may, but shall not be required to, establish
        procedures to allocate the right to receive Common Stock upon the exercise
        of
        the Rights among holders of Rights pursuant to this
        Section 11(a)(iii).

       

      
        
          
          

        

        
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      (b)    In
        case
        the Company shall fix a record date for the issuance of rights (other than
        the
        Rights), options or warrants to all holders of Preferred Stock entitling
        them to
        subscribe for or purchase Preferred Stock (for a period expiring within 45
        calendar days after such record date), shares having the same rights, privileges
        and preferences as the Preferred Stock (a “Preferred Stock Equivalent”) or
        securities convertible into Preferred Stock or Preferred Stock Equivalent
        at a
        price per share of Preferred Stock or Preferred Stock Equivalent (or having
        a
        conversion price per share, if a security is convertible into Preferred Stock
        or
        Preferred Stock Equivalent) less than the Current Market Price 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 Preferred Stock
        Equivalent (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 Preferred Stock Equivalent 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 by delivery
        of consideration part or all of which is in a form other than cash, the value
        of
        such non-cash consideration shall be as determined in good faith by the Board
        of
        Directors, whose determination shall be described in a statement filed with
        the
        Rights Agent. 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 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.

       

      
        
          
          

        

        
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      (c)    In
        case
        the Company shall fix a record date for a distribution to all holders of
        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, assets (other than a dividend payable in
        Preferred Stock, but including any dividend payable in stock other than
        Preferred Stock) or subscription rights 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 Current Market Price per share of Preferred Stock on such record
        date, less the fair market value (as determined in good faith by the Board
        of
        Directors, whose determination shall be described in a statement filed with
        the
        Rights Agent) of the portion of the cash, assets or evidences of indebtedness
        to
        be distributed or of such subscription rights or warrants applicable to a
        share
        of Preferred Stock and the denominator of which shall be such Current Market
        Price per share of 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 be adjusted to be the Purchase Price
        which
        would have been in effect if such record date had not been fixed.

       

      (d)    (i)    For
        the
        purpose of any computation hereunder, other than computations made pursuant
        to
        Section 11(a)(iii) hereof, 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 the Common Stock for the 30 consecutive Trading Days immediately
        prior to, but not including, such date, and for purpose of computations made
        pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share
        of the Common Stock on any date shall be deemed to be the average of the
        daily
        closing prices per share of the Common Stock for the 10 consecutive Trading
        Days
        immediately following, but not including, such date; provided,
        however, that in the event that the Current Market Price per share of the
        Common
        Stock is determined during a period following the announcement by the issuer
        of
        the Common Stock of (i) any dividend or distribution on the Common Stock
        (other than a regular quarterly cash dividend and other than the Rights),
        (ii) any subdivision, combination or reclassification of the Common Stock,
        and prior to the expiration of the requisite 30 Trading Day or 10 Trading
        Day
        period, as set forth above, after the ex-dividend date for such dividend
        or
        distribution, or the record date for such subdivision, combination or
        reclassification occurs, 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 NASDAQ or, if the shares of Common Stock are not listed or
        admitted to trading on the NASDAQ, 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, the last quoted sale 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 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 of Directors. 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
        in
        good faith by the Board of Directors shall be used and shall be binding on
        the
        Rights Agent. 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 as
        determined in good faith by the Board of Directors, whose determination shall
        be
        described in a statement filed with the Rights Agent and shall be conclusive
        for
        all purposes.

       

      
        
          
          

        

        
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      (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 clause (i) of this
        Section 11(d) (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 clause (i) of
        this Section 11(d), 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
        recapitalizations with respect to the Common Stock occurring after the date
        of
        this Rights Agreement) 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”
shall mean the fair value per share as determined in good faith by the Board
        of
        Directors, 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 ten-thousandth of a share of Common
        Stock
        or other share or one-hundred-thousandth 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 years from the date of the transaction which mandates
        such adjustment, or (ii) the Expiration Date.

       

      
        
          
          

        

        
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      (f)    If
        as a
        result of an adjustment made pursuant to Section 11(a)(ii) or
        Section 13(a) hereof, the holder of any Right thereafter exercised shall
        become entitled to receive any shares of capital stock other than Preferred
        Stock, thereafter the number of such other shares so receivable upon exercise
        of
        any Right and the Purchase Price thereof 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 of Preferred Stock contained in
        Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and
        the provisions of Sections 7, 9, 10, 13 and 14 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 shares 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),
        upon each adjustment of the Purchase Price as a result of the calculations
        made
        in Sections 11(b) and (c), 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-thousandth of a share
        of
        Preferred Stock (calculated to the nearest one-hundred-thousandth) obtained
        by
        (i) multiplying (x) the number of one one-thousandth 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
        or any adjustment to the number of shares of Preferred Stock for which a
        Right
        may be exercised made pursuant to Sections 11(a)(i), 11(b) or 11(c), to
        adjust the number of Rights in lieu of any adjustment in the number of shares
        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 shares 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 hundred-thousandth) 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 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. The Company shall
        notify the Rights Agent whenever it makes a public announcement pursuant
        to this
        Section 11(i) and shall promptly give the Rights Agent a written notice of
        such
        announcement. This record date may be the date on which the Purchase Price
        is
        adjusted or any day thereafter, but, if the Right Certificates have been
        issued,
        shall be at least 10 days later than the date of the public announcement.
        If Right 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 Right Certificates
        on such record date Right Certificates evidencing, subject to Section 14
        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
        Right Certificates held by such holders prior to the date of adjustment,
        and
        upon surrender thereof, if required by the Company, new Right Certificates
        evidencing all the Rights to which such holders shall be entitled after such
        adjustment. Right Certificates so to be distributed shall be issued, executed
        and delivered by the Company, and countersigned and delivered by the Rights
        Agent, 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 Right Certificates on the record date specified
        in the
        public announcement.

       

      
        
          
          

        

        
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      (j)    Irrespective
        of any adjustment or change in the Purchase Price or the number of shares
        of
        Preferred Stock issuable upon the exercise of the Rights, the Right Certificates
        theretofore and thereafter issued may continue to express the Purchase Price
        per
        share and the number of shares which were expressed in the initial Right
        Certificate 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 shares of Common Stock, Preferred
        Stock
        or other capital stock issuable upon exercise of the Rights, the Company
        shall
        take any corporate action, including using its best efforts to obtain any
        required stockholder approvals, which may, in the opinion of its counsel,
        be
        necessary in order that the Company may validly and legally issue fully paid
        and
        nonassessable shares of Common Stock, Preferred Stock or other capital stock
        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, a portion
        of
        the consideration paid upon such exercise, equal to at least the then par
        value
        of a share of Common Stock of the Company, shall be allocated as the payment
        for
        each share of Common Stock of the Company 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 (with prompt written notice thereof to the Rights
        Agent) until the occurrence of such event the issuance 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 of Preferred Stock and other capital stock or securities upon the
        occurrence of the event requiring such adjustment.

       

      (m)    Anything
        in this Section 11 to the contrary notwithstanding, the Company shall be
        entitled to make such reductions in the Purchase Price, in addition to those
        adjustments expressly permitted or required by this Section 11, as and to
        the extent that in their good faith judgment the Board of Directors shall
        determine to be advisable in order that any (i) consolidation or
        subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
        Preferred Stock at less than the Current Market Price, (iii) issuance for
        cash of shares of Preferred Stock or securities which by their terms are
        convertible into or exchangeable for shares of Preferred Stock, (iv) stock
        dividends or (v) issuance of rights, options or warrants referred to in
        this Section 11, hereafter made by the Company to holders of its Preferred
        Stock shall not be taxable to such stockholders.

       

      
        
          
          

        

        
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      (n)    The
        Company covenants and agrees that it shall not, at any time after the
        Distribution Date, (i) consolidate with any other Person, (ii) merge
        with or into any other Person, or (iii) sell or transfer (or permit any
        Subsidiary to sell or transfer), in one transaction or a series of related
        transactions, assets or earning power aggregating more than 50% of the assets
        or
        earning power of the Company and its Subsidiaries (taken as a whole) to,
        any
        other Person or Persons, if (x) at the time of or immediately after such
        consolidation, merger or sale there are any charter or by-law provisions
        or any
        rights, warrants or other instruments or securities outstanding or agreements
        in
        effect which substantially diminish or otherwise eliminate the benefits intended
        to be afforded by the Rights or (y) prior to, simultaneously with or
        immediately after such consolidation, merger or sale, the stockholders of
        the
        Person who constitutes, or would constitute, the “Principal Party” for purposes
        of Section 13(a) hereof shall have received a distribution of Rights
        previously owned by such Person or any of its Affiliates and Associates.
        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.

       

      (o)    The
        Company covenants and agrees that, after the Distribution Date, it will not,
        except as permitted by Section 23, Section 24 or Section 27
        hereof, take (or permit any Subsidiary to take) any action if at the time
        such
        action is taken it is reasonably foreseeable that such action will diminish
        substantially or eliminate the benefits intended to be afforded by the
        Rights.

       

      (p)    Anything
        in this Rights Agreement to the contrary notwithstanding, in the event that
        the
        Company shall at any time after the Record Date and prior to the Distribution
        Date (i) declare or pay any dividend on the outstanding shares of Common
        Stock payable in shares of Common Stock, (ii) subdivide the outstanding
        shares of Common Stock, or (iii) combine the outstanding shares of Common
        Stock into a smaller number of shares, the number of Rights associated with
        each
        share of Common Stock then outstanding, or issued or delivered thereafter,
        shall
        be proportionately adjusted so that the number of Rights thereafter associated
        with each share of Common Stock following any such event equals 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
        or
        which shall be the number of shares of Common Stock outstanding immediately
        prior to the occurrence of such event and the denominator of which shall
        be the
        number of shares of Common Stock outstanding immediately following the
        occurrence of such event.

       

      12.    Certification
        of Adjustments or Number of Shares.
        Whenever an adjustment is made or any event affecting the Rights or their
        exercisability (including, without limitation, an event which causes the
        Rights
        to become null and void) occurs as provided in Sections 11 and 13 hereof, ,
        the Company shall (a) promptly prepare a certificate signed by its Chief
        Executive Officer, its President or any Vice President and by the Treasurer
        or
        any Assistant Treasurer or the Secretary or any Assistant Secretary of the
        Company setting forth such adjustment or describing such event, and a brief,
        reasonably detailed statement of the facts, computations and methodology
        accounting for such adjustment or event, (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 Right Certificate (or, if prior to the Distribution Date, to
        each
        holder of a certificate representing shares of Common Stock) in accordance
        with
        Section 26 hereof. Notwithstanding the foregoing sentence, the failure of
        the Company to give such notice shall not affect the validity of or the force
        or
        effect of or the requirement for such adjustment. The Rights Agent shall
        be
        fully protected in relying on any certificate prepared by the Company pursuant
        to Sections 11 and 13 and on any adjustment or statement therein contained
        and shall have no duty or liability with respect to, and shall not be deemed
        to
        have knowledge of, any such adjustment or event unless and until it shall
        have
        received such certificate. Any adjustment to be made pursuant to
        Sections 11 and 13 of this Rights Agreement shall be effective as of the
        date of the event giving rise to such adjustment.

       

      
        
          
          

        

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

       

      (a)    In
        the
        event that following the first occurrence of a Flip-In Event, directly or
        indirectly, (x) the Company shall consolidate with, or merge with and into,
        any other Person or Persons and the Company, as the case may be, shall not
        be
        the surviving or continuing Person of such consolidation or merger, or
        (y) any Person or Persons shall consolidate with, or merge with and into,
        the Company, and the Company shall be the continuing or surviving Person
        of such
        consolidation or merger and, in connection with such consolidation or merger,
        all or part of the outstanding shares of Common Stock shall be changed into
        or
        exchanged for stock or other securities of any other Person or of the Company
        or
        cash or any other property other than, in the case of the transactions described
        in subparagraphs (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
        transactions), or (z) the Company or one or more of its Subsidiaries shall
        sell, mortgage or otherwise transfer to any other Person or any Affiliate
        or
        Associate of such Person, in one transaction, or a series of related
        transactions, assets or earning power aggregating more than 50% of the assets
        or
        earning power of the Company and its Subsidiaries (taken as a whole), then,
        on
        the first occurrence of any such event (a “Flip-Over Event”), proper provision
        shall be made so that (i) each holder of a Right (other than Rights which
        have become null and void pursuant to Section 11(a)(ii) hereof) shall
        thereafter have the right to receive, upon the exercise thereof at the Purchase
        Price (as theretofore adjusted in accordance with Section 11(a)(ii)
        hereof), in accordance with the terms of this Rights Agreement and in lieu
        of
        shares of Preferred Stock or Common Stock of the Company, such number of
        validly
        authorized and issued, fully paid, non-assessable and freely tradeable shares
        of
        Common Stock of the Principal Party (as such term is hereinafter defined),
        not
        subject to any liens, encumbrances, rights of first refusal or other adverse
        claims, as shall equal the result obtained by dividing the Purchase Price
        (as
        theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 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; provided,
        however,
        that
        the Purchase Price (as theretofore adjusted in accordance with
        Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
        Principal Party so receivable upon exercise of a Right shall be subject to
        further adjustment as appropriate in accordance with Section 11(f) hereof
        to reflect any events occurring in respect of the Common Stock of such Principal
        Party after the occurrence of such consolidation, merger, sale or transfer;
        (ii) such Principal Party shall thereafter be liable for, and shall assume,
        by virtue of such Flip-Over Event, all the obligations and duties of the
        Company
        pursuant to this Rights Agreement; (iii) the term “Company” for all
        purposes of this Rights Agreement shall thereafter be deemed to refer to
        such
        Principal Party, it being specifically intended that the provisions of
        Section 11 hereof shall only apply to such Principal Party following the
        first occurrence of a Flip-Over Event; 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 the consummation of any such transaction as may be necessary
        to assure that the provisions hereof shall thereafter be applicable, as nearly
        as reasonably may be, in relation to its shares of Common Stock thereafter
        deliverable upon the exercise of the Rights; provided, however, that, upon
        the
        subsequent occurrence of any merger, consolidation, sale of all or substantially
        all assets, recapitalization, reclassification of shares, reorganization
        or
        other extraordinary transaction in respect of such Principal Party, each
        holder
        of a Right shall thereupon be entitled to receive, upon exercise of a Right,
        such cash, shares, rights, warrants and other property which such holder
        would
        have been entitled to receive had he, at the time of such transaction, owned
        the
        shares of Common Stock of the Principal Party purchasable upon the exercise
        of a
        Right, and such Principal Party shall take such steps (including, but not
        limited to, reservation of shares of stock) as may necessary to permit the
        subsequent exercise of the Rights in accordance with the terms hereof for
        such
        cash, shares, rights, warrants and other property.

       

      
        
          
          

        

        
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      (b)    “Principal
        Party” shall mean

       

      (i)    in
        the
        case of any transaction described in (x) or (y) of the first sentence of
        Section 13(a) hereof: (A) the Person that is the issuer of the
        securities into which shares of Common Stock of the Company are converted
        in
        such merger or consolidation, or, if there is more than one such issuer,
        the
        issuer the Common Stock of which has the greatest aggregate market value
        or
        (B) if no securities are so issued, (x) the Person that is the other
        party to the merger or consolidation and that survives said merger or
        consolidation, or, if there is more than one such Person, the Person the
        Common
        Stock of which has the greatest market value or (y) if the Person that is
        the other party to the merger or consolidation does not survive the merger
        or
        consolidation, the Person that does survive the merger or consolidation
        (including the Company if it survives); and

       

      (ii)    in
        the
        case of any transaction described in (z) of the first sentence in
        Section 13(a) hereof, the Person that is the party receiving the greatest
        portion of the assets or earning power transferred pursuant to such transaction
        or transactions, or, if each Person that is a party to such transaction or
        transactions receives the same portion of the assets or earning power so
        transferred or if the Person receiving the greatest portion of the assets
        or
        earning power cannot be determined, whichever of such Persons that is the
        issuer
        of Common Stock having the greatest aggregate market value of shares
        outstanding;

       

      
        
          
          

        

        
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      provided,
        however,
        that in
        any such case described in the foregoing paragraphs (b)(i) or (b)(ii),
        (1) if the Common Stock of such Person is not at such time and has not been
        continuously over the preceding 12-month period registered under Section 12
        of the Exchange Act, and such Person is a direct or indirect Subsidiary of
        another Person the Common Stock of which is and has been so registered, the
        term
“Principal Party” shall refer to such other Person, or (2) if such Person
        is a Subsidiary, directly or indirectly, of more than one Person, the Common
        Stocks of all of which are and have been so registered, the term “Principal
        Party” shall refer to whichever of such Persons is the issuer of the Common
        Stock having the greatest market value of shares outstanding, or (3) if
        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 (1) and (2) above shall apply to each of the
        owners having an interest in the joint venture as if the Person owned by
        the
        joint venture was a Subsidiary of both or all of such joint venturers, and
        the
        Principal Party in each such case shall bear the obligations set forth in
        this
        Section 13 in the same ratio as its interest in such Person bears to the
        total of such interests.

       

      (c)    The
        Company shall not consummate any consolidation, merger, sale, disposition
        or
        transfer referred to in Section 13(a) 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
        the Principal Party involved therein shall have executed and delivered to
        the
        Rights Agent an agreement confirming that the requirements of
        Sections 13(a) and (b) hereof shall promptly be performed in accordance
        with their terms and that such consolidation, merger, sale, disposition or
        transfer of assets shall not result in a default by the Principal Party under
        this Rights Agreement as the same shall have been assumed by the Principal
        Party
        pursuant to Sections 13(a) and (b) hereof and further providing that, as
        soon as practicable after executing such agreement pursuant to this
        Section 13, the Principal Party at its own expense shall:

       

      (i)    prepare
        and file a registration statement under the Securities Act, if necessary,
        with
        respect to the Rights and the securities purchasable upon exercise of the
        Rights
        on an appropriate form, use its best efforts to cause such registration
        statement to become effective as soon as practicable after such filing and
        use
        its best efforts to cause such registration statement to remain effective
        (with
        a prospectus at all times meeting the requirements of the Securities Act)
        until
        the date of expiration of the Rights, and similarly comply with applicable
        state
        securities laws;

       

      (ii)    use
        its
        best efforts, if the Common Stock of the Principal Party shall become listed
        on
        a national securities exchange, to list (or continue the listing of) the
        Rights
        and the securities purchasable upon exercise of the Rights on such securities
        exchange and, if the Common Stock of the Principal Party shall not be listed
        on
        a national securities exchange, to cause the Rights and the securities purchased
        upon exercise of the Rights to be reported by the NASDAQ or
        such
        other system then in use;

       

      (iii)   deliver
        to holders of the Rights historical financial statements for the Principal
        Party
        which comply in all respects with the requirements for registration on
        Form 10 (or any successor form) under the Exchange Act; and

       

      
        
          
          

        

        
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      (iv)    obtain
        waivers of any rights of first refusal or preemptive rights in respect of
        the
        shares of Common Stock of the Principal Party subject to purchase upon exercise
        of outstanding Rights.

       

      In
        the
        event that any of the transactions described in Section 13(a) hereof shall
        occur at any time after the occurrence of a transaction described in
        Section 11(a)(ii) hereof, the Rights which have not theretofore been
        exercised shall thereafter be exercisable in the manner described in
        Section 13(a).

       

      (d)    Furthermore,
        in case the Principal Party which is to be a party to a transaction referred
        to
        in this Section 13 has a provision in any of its authorized securities or
        in its Certificate of Incorporation or Bylaws or other instrument governing
        its
        corporate affairs, which provision would have the effect of (i) causing
        such Principal Party to issue, in connection with, or as a consequence of,
        the
        consummation of a transaction referred to in this Section 13, shares of
        Common Stock of such Principal Party at less than the then Current Market
        Price
        per share (determined pursuant to Section 11(d) hereof) or securities
        exercisable for, or convertible into, Common Stock of such Principal Party
        at
        less than such then current market price (other than to holders of Rights
        pursuant to this Section 13) or (ii) providing for any special
        payment, tax or similar provisions in connection with the issuance of the
        Common
        Stock of such Principal Party pursuant to the provisions of Section 13;
        then, in such event, the Company hereby agrees with each holder of Rights
        that
        it shall not consummate any such transaction unless prior thereto the Company
        and such Principal Party shall have executed and delivered to the Rights
        Agent a
        supplemental agreement providing that the provision in question of such
        Principal Party shall have been cancelled, waived or amended, or that the
        authorized securities shall be redeemed, so that the applicable provision
        will
        have no effect in connection with, or as a consequence of, the consummation
        of
        the proposed transaction.

       

      14.    Fractional
        Rights and Fractional Shares.

       

      (a)    The
        Company shall not be required to issue fractions of Rights or to distribute
        Right Certificates which evidence fractional Rights. In lieu of such fractional
        Rights, there shall be paid to the holders of record of the Right Certificates
        with regard to which such fractional Rights would otherwise be issuable,
        an
        amount in cash equal to the same fraction of the then current market value
        of a
        whole Right. For the purposes of this Section 14(a), the then current
        market value of a Right shall be determined in the same manner as the Current
        Market Price of a share of Common Stock shall be determined pursuant to
        Section 11(d) hereof.

       

      (b)    The
        Company shall not be required to issue fractions of shares of Preferred Stock
        or
        Preferred Stock Equivalent (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
        Equivalent (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
        or Preferred Stock Equivalent 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 shares
        of
        Preferred Stock or Preferred Stock Equivalent 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 or Preferred
        Stock
        Equivalent, the Company may pay to the registered holders of Right 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 or Preferred Stock Equivalent. For purposes of this
        Section 14(b), the current market value of one one-thousandth of a share of
        Preferred Stock or Preferred Stock Equivalent shall be the Current Market
        Price
        of a share of Common Stock (as determined pursuant to Section 11(d)(ii)
        hereof) for the Trading Day immediately prior to the date of such
        exercise.

       

      
        
          
          

        

        
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      (c)    Following
        the occurrence of a Flip-In Event, the Company shall not be required to issue
        fractions of shares or units of Common Stock or Common Stock Equivalents
        or
        other securities upon exercise of the Rights or to distribute certificates
        which
        evidence fractional shares of such Common Stock or Common Stock Equivalents
        or
        other securities. In lieu of fractional shares or units of such Common Stock
        or
        Common Stock Equivalents or other securities, the Company may pay to the
        registered holders of Right 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 or unit of such Common Stock or Common Stock Equivalent
        or other securities. For purposes of this Section 14(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 and, if
        such
        Common Stock Equivalent is not traded, each such Common Stock Equivalent
        shall
        have the value of one one-thousandth of a share of Preferred Stock.

       

      (d)    The
        holder of a Right by the acceptance of a Right expressly waives his right
        to
        receive any fractional Right or any fractional shares upon exercise of a
        Right.

       

      (e)    Whenever
        a payment for fractional Rights or fractional shares or other securities
        of the
        Company is to be made by the Rights Agent, the Company shall (i) promptly
        prepare and deliver to the Rights Agent a certificate setting forth in
        reasonable detail the facts related to such payment and the prices and/or
        formulas utilized in calculating such payments, and (ii) provide sufficient
        monies to the Rights Agent in the form of fully collected funds to make such
        payments. The Rights Agent shall be fully protected in relying upon such
        a
        certificate and shall have no duty with respect to, and shall not be deemed
        to
        have knowledge or any payment for the fractional Rights or fractional shares
        or
        other securities of the Company under any Section of this Rights Agreement
        relating to the payment of fractional Rights or fractional shares or other
        securities of the Company unless and until the Rights Agent shall have received
        such a certificate and sufficient monies.

       

      15.    Rights
        of Action.
        As of
        the Record Date, all rights of action in respect of this Right Agreement,
        other
        than any rights of action vested in the Rights Agent pursuant to
        Sections 18 and 20 hereunder, are vested in the respective holders of
        record of the Right Certificates (and, prior to the Distribution Date, the
        holders of record of the Common Stock); and any holder of record of any Right
        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 Right Certificate
        (or, prior to the Distribution Date, of the Common Stock), may, in his own
        behalf and for his own benefit, enforce, and may institute and maintain any
        suit, action or proceeding against the Company or any other Person to enforce,
        or otherwise act in respect of, his right to exercise the Rights evidenced
        by
        such Right Certificate in the manner provided in such Right Certificate and
        in
        this Rights 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 by the Company
        of
        this Rights Agreement and, accordingly, that they will be entitled to specific
        performance of the obligations under, and injunctive relief against actual
        or
        threatened violations by the Company of, the obligations of any Person subject
        to this Rights Agreement. Holders of Rights shall be entitled to recover
        from
        the Company the reasonable costs and expenses, including attorneys’ fees,
        incurred by them in any action to enforce the provisions of this Rights
        Agreement.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      16.    Agreement
        of Right 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 not be evidenced by a Right Certificate
        and will be transferable only in connection with the transfer of Common
        Stock;

       

      (b)    after
        the
        Distribution Date, the Right Certificates will be transferable only on the
        registry books of the Rights Agent if surrendered at the office of the Rights
        Agent designated for such purpose, duly endorsed or accompanied by a proper
        instrument of transfer with all required certificates completed;

       

      (c)    the
        Company and the Rights Agent may deem and treat the Person in whose name
        the
        Right 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
        Right Certificate or the associated Common Stock certificate made by anyone
        other than the Company or the Rights Agent or the transfer agent of the Common
        Stock) 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 Rights 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 its inability to perform any of its obligations under this
        Rights
        Agreement by reason of any preliminary or permanent injunction or other order,
        judgment, decree or ruling (whether interlocutory or final) issued by a court
        or
        by a governmental, regulatory, self-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 injunction,
        order, judgment, decree or ruling lifted or otherwise overturned as soon
        as
        possible.

       

      17.    Right
        Certificate Holder Not Deemed a Stockholder.
        No
        holder of a Right, as such, shall be entitled to vote, receive dividends
        in
        respect of or be deemed for any purpose to be the holder of Common Stock
        or any
        other securities of the Company which may at any time be issuable upon the
        exercise of the Rights, nor shall anything contained herein or in any Right
        Certificate be construed to confer upon the holder of any Right Certificate,
        as
        such, any of the rights of a stockholder of the Company or any right to vote
        in
        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 in respect of any such stock or securities, or otherwise, until the
        Right
        or Rights evidenced by such Right Certificate shall have been exercised in
        accordance with the provisions hereof.

       

      
        
          
          

        

        
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      18.    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 other disbursements
        incurred in the preparation, negotiation, delivery, administration, amendment
        and execution of this Rights 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 (including, without
        limitation, the reasonable fees and expenses of legal counsel) incurred without
        gross negligence, bad faith or willful misconduct on the part of the Rights
        Agent (which gross negligence, bad faith or willful misconduct must be
        determined by a final, non-appealable order, judgment, decree or ruling of
        a
        court of competent jurisdiction), for any action taken, suffered or omitted
        by
        the Rights Agent in connection with the acceptance, administration, exercise
        and
        performance of its duties under this Rights Agreement. The costs and expenses
        incurred in enforcing this right of indemnification shall be paid by the
        Company, including, without limitation, the costs and expenses of defending
        against any claim of liability arising therefrom, directly or indirectly.
        The
        provisions of this Section 18 and Section 20 below shall survive the termination
        of this Rights Agreement and the exercise or expiration of the Rights and
        the
        resignation, replacement or removal of the Rights Agent.

       

      (b)    The
        Rights Agent shall be authorized and 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 Rights Agreement and the exercise
        and
        performance of its duties hereunder in reliance upon any Right Certificate,
        certificate for Common Stock or 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,
        guaranteed, verified or acknowledged, by the proper Person or Persons, or
        otherwise upon the advice of counsel as set forth in Section 20 hereof. The
        Rights Agent shall not be deemed to have knowledge of any event of which
        it is
        entitled to receive notice thereof hereunder, and the Rights Agent shall
        be
        fully protected and shall incur no liability for failing to take any action
        in
        connection therewith unless and until it has received such notice in
        writing.

       

      19.    Merger
        or Consolidation or Changed 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 shareholder services business of the
        Rights Agent or any successor Rights Agent, shall be the successor to the
        Rights
        Agent under this Rights 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 21 hereof. In case at the time such successor Rights
        Agent shall succeed to the agency created by this Rights Agreement, any of
        the
        Right 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 Right Certificates so countersigned; and, in case
        at that
        time any of the Right Certificates shall not have been countersigned, any
        successor Rights Agent may countersign such Right Certificates either in
        the
        name of the predecessor Rights Agent or in the name of the successor Rights
        Agent; and in all such cases such Right Certificates shall have the full
        force
        provided in the Right Certificates and in this Rights Agreement.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

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

       

      20.    Rights
        and Duties of Rights Agent.
        The
        Rights Agent undertakes to perform only the duties and obligations expressly
        imposed by this Rights Agreement (and no implied duties) upon the following
        terms and conditions, by all of which the Company and the holders of Right
        Certificates, by their acceptance thereof, shall be bound:

       

      (a)    The
        Rights Agent may consult with legal counsel (who may be legal counsel for
        the
        Company or an employee of the Rights Agent), 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 accordance with such advice or
        opinion.

       

      (b)    Whenever
        in the performance of its duties under this Rights 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 to take any action hereunder, such fact or matter (unless
        other evidence in respect thereof be herein specifically prescribed) may
        be
        deemed to be conclusively proved and established by certificate signed by
        the
        President or any Vice President and by the Treasurer or any Assistant Treasurer
        or the Secretary or any Assistant Secretary of the Company and delivered
        to the
        Rights Agent; and such certificate 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 under the
        provisions of this Rights 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 (which gross negligence, bad faith or willful
        misconduct must be determined by a final, non-appealable order, judgment,
        decree
        or ruling of a court of competent jurisdiction). Anything in this Rights
        Agreement to the contrary notwithstanding, in no event shall the Rights Agent
        be
        liable for special, indirect, incidental, punitive or consequential loss
        or
        damage of any kind whatsoever (including but not limited to lost profits),
        even
        if the Rights Agent has been advised of the likelihood of such loss or damage
        and regardless of the form of action. Any liability of the Rights Agent under
        this Rights Agreement will be limited to the amount of annual fees paid by
        the
        Company to the Rights Agent.

       

      
        
          
          

        

        
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      (d)    The
        Rights Agent shall not be liable for or by reason of any of the statements
        of
        fact or recitals contained in this Rights Agreement or in the Right Certificates
        (except its countersignature thereof) 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 have any liability for or be under any responsibility
        in
        respect of the validity of this Rights 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 Right Certificate (except its countersignature
        thereof); nor shall it be responsible for any breach by the Company of any
        covenant or condition contained in this Rights Agreement or in any Right
        Certificate; nor shall it be responsible for any change in the exercisability
        of
        the Rights (including the Rights becoming null and void pursuant to Section
        11(a)(ii) hereof) or any change or adjustment in the terms of the Rights
        (including the manner, method or amount thereof provided for in Sections
        3, 11,
        13, 23 or 24 or the ascertaining of the existence of facts that would require
        any such change or adjustment (except with respect to the exercise of Rights
        evidenced by Right Certificates after receipt of a Certificate furnished
        pursuant to Section 12 describing any such adjustment upon which the Rights
        Agent may rely); 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 Common Stock to be issued pursuant to this Rights Agreement or any Right
        Certificate or as to whether any shares of Common Stock will, when issued,
        be
        validly authorized and issued, fully paid and nonassessable.

       

      (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 performing by the Rights Agent of the provisions
        of this Rights Agreement.

       

      (g)    The
        Rights Agent is hereby authorized and directed to accept instructions with
        respect to the performance of its duties hereunder from the Chairman of the
        Board, the Chief Executive Officer, the President or any Vice President or
        the
        Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer
        of the Company, and to apply to such officers for advice or instructions
        in
        connection with its duties, and such instruction shall be full authorization
        and
        protection to the Rights Agent and the Rights Agent shall not be liable for
        or
        in respect of any action taken, suffered or omitted by it in accordance with
        instructions of any such officer or for any delay in acting while waiting
        for
        those instructions. The Rights Agent shall be fully authorized and protected
        in
        relying upon the most recent instructions received by 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, suffered or omitted by the Rights Agent under this Rights Agreement
        and the date on and/or after which such action shall be taken or suffered
        or
        such omission shall be effective. The Rights Agent shall not be liable for
        any
        action taken or suffered by, or omission of, the Rights Agent in accordance
        with
        a proposal included in any such application on or after the date specified
        in
        such application (which date shall not be less than five Business Days after
        the
        date any officer of the Company actually receives such application, unless
        any
        such officer shall have consented in writing to an earlier date) unless,
        prior
        to taking any such action (or the effective date in the case of an omission),
        the Rights Agent shall have received written instructions in response to
        such
        application specifying the action to be taken or omitted.

       

      
        
          
          

        

        
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      (h)    The
        Rights Agent and any shareholder, 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 the Rights Agent were not the
        Rights
        Agent under this Rights Agreement. Nothing herein shall preclude the Rights
        Agent (or any such shareholder, affiliate, director, officer or employee)
        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 (through its directors,
        officers and employees) or by or through its attorneys or agents, and the
        Rights
        Agent shall not be answerable or accountable for any act, default, neglect
        or
        misconduct of any such attorneys or agents or for any loss to the Company
        or to
        any holders of Rights or to any other Person resulting from any such act,
        default, neglect or misconduct, absent gross negligence, bad faith or willful
        misconduct in the selection and continued employment thereof (which gross
        negligence, bad faith or willful misconduct must be determined by a final,
        non-appealable order, judgment, decree or ruling of a court of competent
        jurisdiction).

       

      (j)    No
        provision of this Rights 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 it 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 Right Certificate surrendered to the Rights Agent for exercise
        or
        transfer, the certificate contained in the form of assignment or the form
        of
        election to purchase set forth on the reverse thereof, as the case may be,
        has
        either not been completed or indicates an affirmative response to clause
        1
        and/or 2 thereof, the Rights Agent shall not take any further action with
        respect to such requested exercise of transfer without first consulting with
        the
        Company.

       

      21.    Change
        of Rights Agent.
        The
        Rights Agent or any successor Rights Agent may resign and be discharged from
        its
        duties under this Rights Agreement upon 30 days’ notice in writing, or such
        earlier period as shall be agreed to in writing, mailed to the Company and
        to
        each transfer agent of the Common Stock by registered or certified mail,
        and to
        the holders of the Right Certificates by first-class mail. The Company may
        remove the Rights Agent or any successor Rights Agent (with or without cause)
        upon 30 days’ notice in writing, or such earlier period as shall be agreed
        to in writing, mailed to the Rights Agent or successor Rights Agent, as the
        case
        may be, and to each transfer agent of the Common Stock by registered or
        certified mail, and to the holders of the Right 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
        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 Right Certificate (who shall, with such
        notice, submit his Right Certificate for inspection by the Company), then
        the
        incumbent Rights Agent or the holder of record of any Right 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 any State thereof, in good standing, which is authorized
        under such laws to exercise corporate trust or stock transfer 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 or (b) an Affiliate controlled by 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 file notice thereof in writing with the predecessor Rights
        Agent
        and each transfer agent of the Common Stock, and mail a notice thereof in
        writing to the registered holders of the Right Certificates. Failure to give
        any
        notice provided for in this Section 21, however, or any defect therein,
        shall not affect the legality or validity of the resignation, replacement
        or
        removal of the Rights Agent or the appointment of the successor Rights Agent,
        as
        the case may be.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      22.    Issuance
        of New Right Certificates.
        Notwithstanding any of the provisions of this Rights Agreement or of the
        Rights
        to the contrary, the Company may, at its option, issue new Right Certificates
        evidencing Rights in such form as may be approved by its Board of Directors
        to
        reflect any adjustment or change in the Purchase Price per share and the
        number
        or kind or class of shares of stock or other securities or property purchasable
        under the Right Certificates made in accordance with the provisions of this
        Rights 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 shall, with respect to shares of Common
        Stock so issued or sold pursuant to the exercise of stock options or under
        any
        employee plan or arrangement, or upon the exercise, conversion or exchange
        of
        securities hereinafter issued by the Company, in each case existing prior
        to the
        Distribution Date, issue Right Certificates representing the appropriate
        number
        of Rights in connection with such issuance or sale; provided,
        however,
        that
        (i) no such Right Certificate 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 Right Certificate would be issued, and (ii) no such
        Right Certificate shall be issued, if, and to the extent that, appropriate
        adjustment shall otherwise have been made in lieu of the issuance
        thereof.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      23.    Redemption.

       

      (a)    The
        Board
        of Directors may, at its option, at any time prior to the earlier of
        (x) the first occurrence of a Flip-In Event or (y) the Close of
        Business on the Expiration Date, redeem all but not less than all the then
        outstanding Rights at a redemption price of $0.001 per Right, as such amount
        may
        be appropriately adjusted to reflect any stock split, stock dividend or similar
        transaction occurring after the date hereof (such redemption price being
        hereinafter referred to as the “Redemption Price”).

       

      (b)    Immediately
        upon the action of the Board of Directors ordering the redemption of the
        Rights
        (or at such later time as the Board of Directors may establish for the
        effectiveness of such redemption), 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.
        The Company shall promptly give public notice of any such redemption (with
        prompt written notice thereof to the Rights Agent); provided,
        however,
        that
        the failure to give, or any defect in, any such notice shall not affect the
        legality or validity of such redemption. Within 10 days after such action
        of the
        Board of Directors ordering the redemption of the Rights (or such later time
        as
        the Board of Directors may establish for the effectiveness of such redemption),
        the Company shall mail a notice of redemption to all the holders of the then
        outstanding Rights 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 which is mailed
        in
        the manner herein provided shall be deemed given, whether or not the holder
        receives the notice. Each such notice of redemption shall state the method
        by
        which the payment of the Redemption Price will be made. The failure to give
        notice required by this Section 23(b) or any defect therein shall not
        affect the legality or validity of the action taken by the Company.

       

      (c)    In
        the
        case of a redemption permitted under Section 23(a) hereof, 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 Right Certificates shall be null and void without any further
        action
        by the Company.

       

      24.    Exchange
        of Rights for Common Stock.

       

      (a)    The
        Board
        of Directors may, at its option, at any time after the occurrence of a Flip-In
        Event, exchange all or part of the then outstanding and exercisable Rights
        (which (i) shall not include Rights that have become null and void pursuant
        to the provisions of Section 11(a)(ii) and (ii) shall include, without
        limitation, any Rights issued after the Distribution Date in accordance with
        Section 22 hereof) for shares of Common Stock at an exchange ratio of one
        share of Common Stock per Right, appropriately adjusted to reflect any stock
        split, stock dividend or similar transaction occurring after the date hereof
        (the “Exchange Ratio”). Notwithstanding the foregoing the Board of Directors
        shall not be empowered to effect such exchange at any time after any Person
        (other than an Exempt Person), together with all Affiliates and Associates
        of
        such Person, becomes the Beneficial Owner of shares of Common Stock aggregating
        50% or more of the shares of Common Stock then outstanding. From and after
        the
        occurrence of an event specified in Section 13(a) hereof, any Rights that
        theretofore have not been exchanged pursuant to this Section 24(a) shall
        thereafter be exercisable only in accordance with Section 13 and may not be
        exchanged pursuant to this Section 24(a).

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      (b)    Immediately
        upon the action of the Board of Directors ordering the exchange of any Rights
        pursuant to subsection (a) of this Section 24 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
        that number of shares of Common Stock equal to the number of such Rights
        held by
        such holder multiplied by the Exchange Ratio. The Company shall promptly
        give
        public notice of any such exchange (with prompt written notice of such exchange
        to the Rights Agent); provided,
        however,
        that
        the failure to give, or any defect in, such notice shall not affect the legality
        or 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 which
        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 the shares of Common Stock 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 null and void pursuant to
        the
        provisions of Section 11(a)(ii) hereof) held by each holder of
        Rights.

       

      (c)    In
        any
        exchange pursuant to this Section 24, the Company, at its option, may
        substitute, and, in the event that there shall not be sufficient shares of
        Common Stock issued but not outstanding or authorized but unissued to permit
        any
        exchange of Rights as contemplated in accordance with this Section 24, the
        Company shall substitute to the extent of such insufficiency, for each share
        of
        Common Stock that would otherwise be issuable upon exchange of a Right, a
        number
        of shares of Preferred Stock or Preferred Stock Equivalent or fractions thereof
        having an aggregate current per share market price (determined pursuant to
        Section 11(d) hereof) equal to the current per share market price of one
        share of Common Stock (determined pursuant to Section 11(d) hereof) as of
        the date of the Flip-In Event.

       

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

       

      (e)    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 the Right 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 paragraph (d), the current market
        value of a whole share of Common Stock shall be the Current Market Price
        of a
        share of Common Stock (as defined in Section 11(d) hereof for the purposes
        of computations made other than pursuant to Section 11(a)(iii)) for the
        Trading Day immediately prior to the date of exchange pursuant to this
        Section 24.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      25.    Notice
        of Proposed Actions.

       

      (a)    In
        case
        the Company, after the Distribution Date, shall propose (i) to effect any
        of the transactions referred to in Section 11(a)(i) or to pay any dividend
        to the holders of record of its Preferred Stock payable in stock of any class
        or
        to make any other distribution to the holders of record of its Preferred
        Stock
        (other than a regular periodic cash dividend), or (ii) to offer to the
        holders of record of its Preferred Stock or options, warrants, or other rights
        to subscribe for or to purchase shares of Preferred Stock (including any
        security convertible into or exchangeable for Preferred Stock) or shares
        of
        stock of any other class or any other securities, options, warrants, convertible
        or exchangeable securities or other rights, or (iii) to effect any
        reclassification of its Preferred Stock or any recapitalization or
        reorganization of the Company, or (iv) to effect any consolidation or
        merger with or into, 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 50% of the assets or earning power of the
        Company and its Subsidiaries (taken as a whole) to, any other Person or Persons,
        or (v) to effect the liquidation, dissolution or winding up of the Company,
        then, in each such case, the Company shall give to the Rights Agent and to
        each
        holder of record of a Right Certificate, in accordance with Section 26
        hereof, notice of such proposed action, which shall specify the record date
        for
        the purposes of such transaction referred to in Section 11(a)(i), or such
        dividend or distribution, or the date on which such reclassification,
        recapitalization, reorganization, consolidation, merger, sale or transfer
        of
        assets, disposition, liquidation, dissolution or winding up is to take place
        and
        the record date for determining participation therein by the holders of record
        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 10 days prior to the record date for determining holders of record of
        the Preferred Stock for purposes of such action, and in the case of any such
        other action, at least 10 days prior to the date of the taking of such
        proposed action or the date of participation therein by the holders of record
        of
        Preferred Stock, whichever shall be the earlier.

       

      (b)    In
        case
        any of the transactions referred to in Section 11(a)(ii) or Section 13
        of this Rights Agreement are proposed, then, in any such case, the Company
        shall
        as soon as practicable thereafter give to the Rights Agent and to each holder
        of
        Rights, in accordance with Section 26 hereof, notice of the proposal of
        such transaction at least 10 days prior to consummating such transaction,
        which notice shall specify the proposed event and the consequences of the
        event
        to holders of Rights under Section 11(a)(ii) or Section 13 hereof, as
        the case may be, and, upon consummating such transaction, shall similarly
        give
        notice thereof to each holder of Rights.

       

      (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 Rights Agreement to be given or made by the
        Rights
        Agent or by the holder of record of any Right Certificate or Right to or
        on
        behalf of the Company shall be sufficiently given or made if in writing and
        sent
        by first-class mail, postage prepaid, addressed (until another address is
        filed
        in writing with the Rights Agent) as follows:

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      
        	 	
                SciClone
                  Pharmaceuticals, Inc.

                901
                  Mariner’s Island Boulevard, Suite 205

                San
                  Mateo, California 94404

                Attention:
                  Chief Financial Officer

              

      

       

      Subject
        to the provisions of Section 21 hereof, any notice or demand authorized by
        this
        Rights Agreement to be given or made by the Company or by the holder of record
        of any Right Certificate or Right to or on the Rights Agent shall be
        sufficiently given or made if sent by first-class mail, postage prepaid,
        addressed (until another address is filed in writing with the Company) as
        follows:

       

      
        	 	
                Mellon
                  Investor Services LLC

                480
                  Washington Boulevard

                Jersey
                  City, NJ 07310

                Attention:
                  Client Relationship Executive

                 

                Mellon
                  Investor Services LLC

                480
                  Washington Boulevard

                Jersey
                  City, NJ 07310

                Attention:
                  General Counsel

              

      

       

      Notices
        or demands authorized by this Rights Agreement to be given or made by the
        Company or the Rights Agent to the holder of record of any Right Certificate
        or
        Right shall be sufficiently given or made if sent by first-class mail, postage
        prepaid, addressed to such holder at the address of such holder as it appears
        upon the registry books of the Rights Agent or, prior to the Distribution
        Date,
        on the registry books of the Transfer Agent.

       

      27.    Supplements
        and Amendments.
        Except
        as otherwise provided herein, for so long as the Rights are then redeemable,
        the
        Company may in its sole and absolute discretion supplement or amend any
        provision of this Rights Agreement in any respect without the approval of
        any
        holders of the Rights. At any time when the Rights are no longer redeemable,
        except as provided in the penultimate sentence of this Section 27, the
        Company may supplement or amend this Rights Agreement without the approval
        of
        any holders of Right Certificates in order to (i) cure any ambiguity,
        (ii) correct or supplement any provision contained herein which may be
        defective or inconsistent with any other provisions herein, (iii) shorten
        or lengthen any time period hereunder, or (iv) change or supplement the
        provisions hereunder in any manner which the Company may deem necessary or
        desirable, any such supplement or amendment to be evidenced by a writing
        signed
        by the Company and the Rights Agent; provided
        that no
        such supplement or amendment shall adversely affect the interests of the
        holders
        of Rights as such (other than an Acquiring Person or an Affiliate or Associate
        of an Acquiring Person), and no such amendment may cause the Rights again
        to
        become redeemable or cause the Rights Agreement again to become amendable
        other
        than in accordance with this sentence. Upon the delivery of a certificate
        from
        an appropriate officer of the Company that states that the proposed supplement
        or amendment complies with this Section 27, the Rights Agent shall execute
        such
        supplement or amendment. Notwithstanding anything contained in this Rights
        Agreement to the contrary, (a) no supplement or amendment shall be made which
        changes the Redemption Price and (b) neither the Company nor the Rights Agent
        shall be obligated to enter into any supplement or amendment that affects
        the
        Rights Agent’s rights, duties, obligations or immunities under this Rights
        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.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      28.    Successors.
        All of
        the covenants and provisions of this Rights 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.

       

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

       

      30.    Determinations
        and Actions by the Board of Directors.
        The
        Board of Directors shall have the exclusive power and authority to administer
        this Rights Agreement and to exercise the rights and powers specifically
        granted
        to the Board of Directors or to the Company, or as may be necessary or advisable
        in the administration of this Rights Agreement, including, without limitation,
        the right and power to (i) interpret the provisions of this Rights Agreement
        and
        (ii) make all determinations deemed necessary or advisable for the
        administration of this Rights Agreement (including, without limitation, a
        determination to redeem or not redeem the Rights or to amend or not amend
        this
        Rights Agreement). All such actions, calculations, interpretations and
        determinations (including, for purpose of clause (y) below, all omissions
        with
        respect to the foregoing) which are done or made by the Board of Directors
        in
        good faith, including but not limited to those made under Sections 1 and
        11
        hereunder, (x) shall be final, conclusive and binding on the Company, the
        Rights
        Agent, the holders of the Rights, as such, and all other Persons, and (y)
        not
        subject the Board to any liability to the holders of the Rights. Notwithstanding
        anything contained herein to the contrary, the Rights Agent is entitled always
        to assume that the Company’s Board of Directors acted in good faith and shall be
        fully protected and incur no liability in reliance thereon.

       

      31.    Three
        Year Independent Director Evaluation.
        A
        committee of the Company’s Board of Directors shall review this Rights Agreement
        in order to consider whether the maintenance of this Rights Agreement continues
        to be in the best interests of the Company and its stockholders. Such committee
        shall conduct such review periodically when, as and in such manner as the
        committee deems appropriate, after giving due regard to all relevant
        circumstances; provided, however, that the committee shall take such action
        at
        least every three years following the date hereof. Following each such review,
        such committee will report its conclusions to the full Board of Directors,
        including any recommendation in light thereof as to whether this Rights
        Agreement should be modified or the Rights should be redeemed. Such committee
        shall be comprised only of directors of the Company who shall have been
        determined by the Company’s Board of Directors to be independent under NASDAQ
        listing standards, or, if the Common Shares are listed on a national exchange,
        such national exchange’s listing standards. Such committee is authorized to
        retain such legal counsel, financial advisors and other advisors as the
        committee deems appropriate in order to assist the committee in carrying
        out its
        foregoing responsibilities under this Rights Agreement. Such committee shall
        initially be the Nominating and Corporate Governance Committee of the Company’s
        Board of Directors, provided that the Board of Directors may, at its discretion,
        delegate this review to another committee of independent directors pursuant
        to
        this provision.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

      32.    Governing
        Law.
        This
        Rights Agreement and each Right 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 solely by residents of such state and
        performed entirely within such state; provided, however, that all provisions
        regarding the rights, duties and obligations of the Rights Agent shall be
        governed by and construed in accordance with the laws of the State of New
        York
        applicable to contracts made and to be performed entirely within such
        State.

       

      33.    Counterparts.
        This
        Rights 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 Rights Agreement are
        inserted for convenience only and shall not control or affect the meaning
        or
        construction of any of the provisions hereof.

       

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

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
        be duly
        executed, and their seals affixed and attested, all as of the date and year
        first above written.

       

      
        	
                [SEAL]

              	 	 	 
	 	 	 
	
                ATTEST:

              	 	
                SciClone
                  Pharmaceuticals, Inc.

              
	 	 	 	 	 
	
                By:

              	 	 	
                By:

              	 
	 	
                Name:

              	 	 	
                Name:

              
	 	
                Title:

              	 	 	
                Title:

              
	 	 	 	 
	
                [SEAL]

              	 	 	 
	 	 	 
	
                ATTEST:

              	 	
                Mellon
                  Investor Services LLC

              
	 	 	 	 	 
	
                By:

              	 	 	
                By:

              	 
	 	
                Name:

              	 	 	
                Name:

              
	 	
                Title:

              	 	 	
                Title:

              

      

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      TABLE
        OF
        CONTENTS

       

      Page

       

      
        
          	
                  1.

                	
                  Certain
                    Definitions

                	
                  1

                
	 	 	 
	
                  2.

                	
                  Appointment
                    of Rights Agent

                	
                  6

                
	 	 	 
	
                  3.

                	
                  Issuance
                    of Right Certificates

                	
                  6

                
	 	 	 
	
                  4.

                	
                  Form
                    of Right Certificates

                	
                  8

                
	 	 	 
	
                  5.

                	
                  Countersignature
                    and Registration

                	
                  8

                
	 	 	 
	
                  6.

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

                	
                  9

                
	 	 	 
	
                  7.

                	
                  Exercise
                    of Rights; Purchase Price; Expiration Date of Rights

                	
                  10

                
	 	 	 
	
                  8.

                	
                  Cancellation
                    and Destruction of Right Certificates

                	
                  11

                
	 	 	 
	
                  9.

                	
                  Reservation
                    and Availability of Shares of Preferred Stock

                	
                  11

                
	 	 	 
	
                  10.

                	
                  Preferred
                    Stock Record Date

                	
                  13

                
	 	 	 
	
                  11.

                	
                  Adjustments
                    to Number and Kind of Shares, Number of Rights or Purchase
                    Price

                	
                  13

                
	 	 	 
	
                  12.

                	
                  Certification
                    of Adjustments or Number of Shares

                	
                  22

                
	 	 	 
	
                  13.

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

                	
                  22

                
	 	 	 
	
                  14.

                	
                  Fractional
                    Rights and Fractional Shares

                	
                  25

                
	 	 	 
	
                  15.

                	
                  Rights
                    of Action

                	
                  26

                
	 	 	 
	
                  16.

                	
                  Agreement
                    of Right Holders

                	
                  27

                
	 	 	 
	
                  17.

                	
                  Right
                    Certificate Holder Not Deemed a Stockholder

                	
                  27

                
	 	 	 
	
                  18.

                	
                  Concerning
                    the Rights Agent

                	
                  27

                
	 	 	 
	
                  19.

                	
                  Merger
                    or Consolidation or Changed Name of Rights Agent

                	
                  28

                
	 	 	 
	
                  20.

                	
                  Duties
                    of Rights Agent

                	
                  29

                
	 	 	 
	
                  21.

                	
                  Change
                    of Rights Agent

                	
                  30

                
	 	 	 
	
                  22.

                	
                  Issuance
                    of New Right Certificates

                	
                  31

                
	 	 	 
	
                  23.

                	
                  Redemption

                	
                  32

                

        

         

        
          
            
            

          

          
            -i-

            
              

            

          

          
            
            

          

        

        TABLE
          OF
          CONTENTS

         

        (continued)

         

        Page

         

        
          	
                  24.

                	
                  Exchange
                    of Rights for Common Stock

                	
                  32

                
	 	 	 
	
                  25.

                	
                  Notice
                    of Proposed Actions

                	
                  34

                
	 	 	 
	
                  26.

                	
                  Notices

                	
                  35

                
	 	 	 
	
                  27.

                	
                  Supplements
                    and Amendments

                	
                  35

                
	 	 	 
	
                  28.

                	
                  Successors

                	
                  36

                
	 	 	 
	
                  29.

                	
                  Benefits
                    of this Rights Agreement

                	
                  36

                
	 	 	 
	
                  30.

                	
                  Determinations
                    and Actions by the Board of Directors

                	
                  36

                
	 	 	 
	
                  31.

                	
                  Three
                    Year Independent Director Evaluation

                	
                  36

                
	 	 	 
	
                  32.

                	
                  Governing
                    Law

                	
                  37

                
	 	 	 
	
                  33.

                	
                  Counterparts

                	
                  37

                
	 	 	 
	
                  34.

                	
                  Descriptive
                    Headings

                	
                  37

                
	 	 	 
	
                  35.

                	
                  Severability

                	
                  37

                

        

         

      

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

       

      
        EXHIBIT
          A

        

        

        SciClone
          Pharmaceuticals, Inc.

        

        CERTIFICATE
          OF DESIGNATION,

        PREFERENCES
          AND RIGHTS

        OF
          THE
          TERMS OF THE

        SERIES
          D
          PREFERRED STOCK

         

        Pursuant
          to Section 151 of the General Corporation Law of the State of
          Delaware

         

        We,
          the
          President and Chief Executive Officer and the Secretary, respectively,
          of
          SciClone Pharmaceuticals, Inc., organized and existing under the General
          Corporation Law of the State of Delaware, in accordance with the provisions
          of
          Section 103 thereof, DO HEREBY CERTIFY:

         

        That
          pursuant to the authority conferred upon the Board of Directors by the
          Certificate of Incorporation of the said Corporation, the said Board of
          Directors on December 18, 2006, adopted the following resolution creating
          a
          series of 150,000 shares of Preferred Stock designated as Series D Preferred
          Stock:

         

        RESOLVED,
          that pursuant to the authority vested in the Board of Directors of this
          Corporation in accordance with the provisions of its Certificate of
          Incorporation, a series of Preferred Stock of the Corporation be and it
          hereby
          is created, and that the designation and amount thereof and the powers,
          preferences and relative, participating, optional and other special rights
          of
          the shares of such series, and the qualifications, limitations or restrictions
          thereof are as follows:

         

        Section
          1.    Designation
          and Amount.
          The
          shares of such series shall be designated as “Series D Preferred Stock” (the
“Series D Preferred Stock”), $0.001 par value per share, and the number of
          shares constituting such series shall be 150,000.

         

        Section
          2.    Dividends
          and Distributions.

         

        (A)       
          The
          dividend rate on the shares of Series D Preferred Stock shall be for each
          quarterly dividend (hereinafter referred to as a “quarterly dividend period”),
          which quarterly dividend periods shall commence on January 1, April 1,
          July 1 and October 1 each year (each such date being referred to
          herein as a “Quarterly Dividend Payment Date”) (or in the case of original
          issuance, from the date of original issuance) and shall end on and include
          the
          day next preceding the first date of the next quarterly dividend period,
          at a
          rate per quarterly dividend period (rounded to the nearest cent) equal
          to the
          greater of (a) $625.00 or (b) subject to the provisions for adjustment
          hereinafter set forth, 1,000 times the aggregate per share amount of all
          cash dividends, and 1,000 times the aggregate per share amount (payable in
          cash, based upon the fair market value at the time the non-cash dividend
          or
          other distribution is declared as determined in good faith by the Board
          of
          Directors) of all non-cash dividends or other distributions other than
          a
          dividend payable in shares of Common Stock or a subdivision of the outstanding
          shares of Common Stock (by reclassification or otherwise), declared (but
          not
          withdrawn) on the Common Stock, par value $0.001 per
          share, of the Corporation (the “Common Stock”) during the immediately preceding
          quarterly dividend period, or, with respect to the first quarterly dividend
          period, since the first issuance of any share or fraction of a share of
          Series D
          Preferred Stock. In the event this Company shall at any time after January
          2,
          2007 (the “Rights Declaration Date”) (i) declare any dividend on Common
          Stock payable in shares of Common Stock, (ii) subdivide the outstanding
          Common Stock, or (iii) combine the outstanding Common Stock into a smaller
          number of shares, then in each such case the amount to which holders of
          shares
          of Series D Preferred Stock were entitled immediately prior to such event
          under
          clause (b) of the preceding sentence shall be adjusted by multiplying such
          amount by a fraction the numerator of which is the number of shares of
          Common
          Stock outstanding immediately after such event and the denominator of which
          is
          the number of shares of Common Stock that were outstanding immediately
          prior to
          such event.

         

        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

        (B)        
          Dividends
          shall begin to accrue and be cumulative on outstanding shares of Series
          D
          Preferred Stock from the Quarterly Dividend Payment Date next preceding
          the date
          of issue of such shares of Series D Preferred Stock, unless the date of
          issue of
          such shares is prior to the record date for the first Quarterly Dividend
          Payment
          Date, in which case dividends on such shares shall begin to accrue from
          the date
          of issue of such shares, or unless the date of issue is a Quarterly Dividend
          Payment Date or is a date after the record date for the determination of
          holders
          of shares of Series D Preferred Stock entitled to receive a quarterly dividend
          and before such Quarterly Dividend Payment Date, in either of which events
          such
          dividends shall begin to accrue and be cumulative from such Quarterly Dividend
          Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
          paid on the shares of Series D Preferred Stock in an amount less than the
          total
          amount of such dividends at the time accrued and payable on such shares
          shall be
          allocated pro rata on a share-by-share basis among all such shares at the
          time
          outstanding. The Board of Directors may fix a record date for the determination
          of holders of shares of Series D Preferred Stock entitled to receive payment
          of
          a dividend or distribution declared thereon, which record date shall be
          no more
          than 45 days prior to the date fixed for the payment thereof.

         

        Section
          3.    Voting
          Rights.
          The
          holders of shares of Series D Preferred Stock shall have the following
          voting
          rights:

         

        (A)       
          Subject
          to the provision for adjustment hereinafter set forth, each share of Series
          D
          Preferred Stock shall entitle the holder thereof to 1,000 votes on all
          matters submitted to a vote of the stockholders of the Corporation. In
          the event
          the Corporation shall at any time after the Rights Declaration Date
          (i) declare any dividend on Common Stock payable in shares of Common Stock,
          (ii) subdivide the outstanding Common Stock, or (iii) combine the
          outstanding Common Stock into a smaller number of shares, then in each
          such case
          the number of votes per share to which holders of shares of Series D Preferred
          Stock were entitled immediately prior to such event shall be adjusted by
          multiplying such number by a fraction the numerator of which is the number
          of
          shares of Common Stock outstanding immediately after such event and the
          denominator of which is the number of shares of Common Stock that were
          outstanding immediately prior to such event.

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        (B)        
          Except
          as
          otherwise provided herein, in the Certificate of Incorporation or Bylaws,
          the
          holders of shares of Series D Preferred Stock and the holders of shares
          of
          Common Stock shall vote together as one class on all matters submitted
          to a vote
          of stockholders of the Corporation.

         

        (C)        
          Except
          as
          set forth herein, in the Certificate of Incorporation and in the Bylaws,
          holders
          of Series D Preferred Stock shall have no special voting rights and their
          consent shall not be required (except to the extent they are entitled to
          vote
          with holders of Common Stock as set forth herein) for taking any corporate
          action.

         

        Section
          4.    Reacquired
          Shares.
          Any
          shares of Series D Preferred Stock purchased or otherwise acquired by the
          Corporation in any manner whatsoever shall be retired and canceled promptly
          after the acquisition thereof. All such shares shall upon their cancellation
          become authorized but unissued shares of Preferred Stock and may be reissued
          as
          part of a new series of Preferred Stock to be created by resolution or
          resolutions of the Board of Directors, subject to the conditions and
          restrictions on issuance set forth herein.

         

        Section
          5.    Liquidation,
          Dissolution or Winding Up.

         

        (A)       
          In
          the
          event of any voluntary or involuntary liquidation, dissolution or winding
          up of
          the Corporation, the holders of the Series D Preferred Stock shall be entitled
          to receive the greater of (a)  $25,000.00 per
          share, plus accrued dividends to the date of distribution, whether or not
          earned
          or declared, or (b) an amount per share, subject to the provision for
          adjustment hereinafter set forth, equal to 1,000 times the aggregate amount
          to be distributed per share to holders of Common Stock. In the event the
          Corporation shall at any time after the Rights Declaration Date (i) declare
          any dividend on Common Stock payable in shares of Common Stock,
          (ii) subdivide the outstanding Common Stock, or (iii) combine the
          outstanding Common Stock into a smaller number of shares, then in each
          such case
          the amount to which holders of shares of Series D Preferred Stock were
          entitled
          immediately prior to such event pursuant to clause (b) of the preceding
          sentence shall be adjusted by multiplying such amount by a fraction the
          numerator of which is the number of shares of Common Stock outstanding
          immediately after such event and the denominator of which is the number
          of
          shares of Common Stock that were outstanding immediately prior to such
          event.

         

        Consolidation,
          Merger, etc.
          In case
          the Corporation shall enter into any consolidation, merger, combination
          or other
          transaction in which the shares of Common Stock are exchanged for or changed
          into other stock or securities, cash and/or any other property, then in
          any such
          case the shares of Series D Preferred Stock shall at the same time be similarly
          exchanged or changed in an amount per share (subject to the provision for
          adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
          of stock, securities, cash and/or any other property (payable in kind),
          as the
          case may be, into which or for which each share of Common Stock is changed
          or
          exchanged. In the event the Corporation shall at any time after the Rights
          Declaration Date (i) declare any dividend on Common Stock payable in shares
          of Common Stock, (ii) subdivide the outstanding Common Stock, or
          (iii) combine the outstanding Common Stock into a smaller number of shares,
          then in each such case the amount set forth in the preceding sentence with
          respect to the exchange or change of shares of Series D Preferred Stock
          shall be
          adjusted by multiplying such amount by a fraction the numerator of which
          is the
          number of shares of Common Stock outstanding immediately after such event
          and
          the denominator of which is the number of shares of Common Stock that were
          outstanding immediately prior to such event.

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

        Section
          6.    No
          Redemption.
          The
          shares of Series D Preferred Stock shall not be redeemable.

         

        Section
          7.    Fractional
          Shares.
          Series
          D Preferred Stock may be issued in fractions of a share which shall entitle
          the
          holder, in proportion to such holder’s fractional shares, to exercise voting
          rights, receive dividends, participate in distributions and have the benefit
          of
          all other rights of holders of Series D Preferred Stock. All payments made
          with
          respect to fractional shares hereunder shall be rounded to the nearest
          whole
          cent.

         

        Section
          8.    Certain
          Restrictions.

         

        (A)       
          Whenever
          quarterly dividends or other dividends or distributions payable on the
          Series D
          Preferred Stock as provided in Section 2 are in arrears, thereafter and
          until all accrued and unpaid dividends and distributions, whether or not
          declared, on shares of Series D Preferred Stock outstanding shall have
          been paid
          in full, the Corporation shall not:

         

        (i)    declare
          or pay dividends on, make any other distributions on, or redeem or purchase
          or
          otherwise acquire for consideration any shares of stock ranking junior
          (either
          as to dividends or upon liquidation, dissolution or winding up) to the
          Series D
          Preferred Stock;

         

        (ii)    declare
          or pay dividends on or make any other distributions on any shares of stock
          ranking on a parity (either as to dividends or upon liquidation, dissolution
          or
          winding up) with the Series D Preferred Stock, except dividends paid ratably
          on
          the Series D Preferred Stock and all such parity stock on which dividends
          are
          payable or in arrears in proportion to the total amounts to which the holders
          of
          all such shares are then entitled;

         

        (iii)   redeem
          or
          purchase or otherwise acquire for consideration shares of any stock ranking
          on a
          parity (either as to dividends or upon liquidation, dissolution or winding
          up)
          with the Series D Preferred Stock, provided that the Corporation may at
          any time
          redeem, purchase or otherwise acquire shares of any such parity stock in
          exchange for shares of any stock of the Corporation ranking junior (either
          as to
          dividends or upon dissolution, liquidation or winding up) to the Series
          D
          Preferred Stock; or

         

        (iv)   purchase
          or otherwise acquire for consideration any shares of Series D Preferred
          Stock,
          or any shares of stock ranking on a parity with the Series D Preferred
          Stock,
          except in accordance with a purchase offer made in writing or by publication
          (as
          determined by the Board of Directors) to all holders of such shares upon
          such
          terms as the Board of Directors, after consideration of the respective
          annual
          dividend rates and other relative rights and preferences of the respective
          series and classes shall determine in good faith will result in fair and
          equitable treatment among the respective series or classes.

         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

        (B)        
          The
          Corporation shall not permit any subsidiary of the Corporation to purchase
          or
          otherwise acquire for consideration any shares of stock of the Corporation
          unless the Corporation could, under paragraph (A) of this Section 9,
          purchase or otherwise acquire such shares at such time and in such
          manner.

         

        Section
          10.   Ranking.
          The
          Series D Preferred Stock shall be junior to all other Series of the
          Corporation’s preferred stock as to the payment of dividends and the
          distribution of assets, unless the terms of any series shall provide
          otherwise.

         

        Section
          11.   Amendment.
          The
          Certificate of Incorporation of the Corporation shall not be amended in
          any
          manner which would materially alter or change the powers, preferences or
          special
          rights of the Series D Preferred Stock so as to affect them adversely without
          the affirmative vote of the holders of two-thirds or more of the outstanding
          shares of Series D Preferred Stock voting together as a single
          class.

         

        IN
          WITNESS WHEREOF, we have executed and subscribed this Certificate and do
          affirm
          the foregoing as true under the penalties of perjury this 22nd day of December,
          2006.

         

        

        
          	 	 
	 	
                  Friedhelm
                    Blobel, President and Chief Executive Officer

                
	 	 
	
                  Attest:

                	 
	 
	
                  Richard
                    Waldron, Chief Financial Officer

                

        

         

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

     

    
      EXHIBIT
        B

      [Form
        of
        Right Certificate]

       

      
        	
                Certificate
                  No. W-

              	
                ___________
                  Rights

              

      

      

       

      NOT
        EXERCISABLE AFTER DECEMBER 19, 2016, OR EARLIER IF REDEEMED OR EXCHANGED.
        AT THE
        OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $0.001 PER RIGHT OR
        EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
        IN
        THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A
        PERSON
        WHO IS AN ACQUIRING PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY
        OWNED
        BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
        SHALL
        BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

       

      RIGHT
        CERTIFICATE

       

      SCICLONE
        PHARMACEUTICALS, INC.

       

      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 Rights Agreement dated as of December 19,
        2006
        (the “Rights Agreement”) between SciClone Pharmaceuticals, Inc., a Delaware
        corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey
        limited liability company (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. Pacific time on December 19, 2016, at the
        principal office of the Rights Agent, or of its successors as Rights Agent,
        designated for such purpose, one one-thousandth of a fully paid and
        nonassessable share of Series D Preferred Stock of the Company (“Preferred
        Stock”) at a purchase price of $25.00 per one one-thousandth of a share, as the
        same may from time to time be adjusted in accordance with the Rights Agreement
        (the “Purchase Price”), upon presentation and surrender of this Right
        Certificate with the Form of Election to Purchase duly executed. Capitalized
        terms used herein and not otherwise defined herein shall have the meanings
        ascribed to such terms in the Rights Agreement.

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      As
        provided in the Rights Agreement, the Purchase Price and the number of shares
        of
        Preferred Stock or other securities which may be purchased upon the exercise
        of
        the Rights evidenced by this Right Certificate are subject to modification
        and
        adjustment upon the happening of certain events and, upon the happening of
        certain events, securities other than shares of Preferred Stock, or other
        property, may be acquired upon exercise of the Rights evidenced by this Right
        Certificate, as provided by the Rights Agreement.

       

      Upon
        the
        occurrence of a Flip-In Event, if the Rights evidenced by this Rights
        Certificate are beneficially owned by (i) an Acquiring Person or an
        Affiliate or Associate of any such Acquiring Person, (ii) a transferee of
        any such Acquiring Person, Associate or Affiliate, or (iii) under certain
        circumstances specified in the Rights Agreement, a transferee of a Person
        who,
        after such transfer, became an Acquiring Person, or any Affiliate or Associate
        of an Acquiring Person, such Rights shall be null and void and will no longer
        be
        transferable and no holder hereof shall have any right with respect to such
        Rights from and after the occurrence of such Flip-In Events.

       

      This
        Right Certificate is subject to all the terms, provisions and conditions
        of the
        Rights Agreement, which terms, provisions and conditions are 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 of the Rights Agent, the Company and the
        holders of record of the Right Certificates, which limitation of rights include
        the temporary suspension of the exercisability of such Rights under the specific
        circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
        are on file at the principal executive office of the Company and are available
        upon written request to the Company.

       

      This
        Right Certificate, with or without other Right Certificates, upon surrender
        at
        the principal office of the Rights Agent designated for such purpose, may
        be
        exchanged for another Right Certificate or Right Certificates of like tenor
        and
        date evidencing Rights entitling the holder of record to purchase a like
        aggregate number of shares of Preferred Stock as the Rights evidenced by
        the
        Right Certificate or Right Certificates surrendered shall have entitled such
        holder to purchase. If this Right Certificate shall be exercised in part,
        the
        holder shall be entitled to receive upon surrender hereof, another Right
        Certificate or Right Certificates for the number of whole Rights not
        exercised.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      Subject
        to the provisions of the Rights Agreement, at any time prior to the earlier
        of
        (i) the occurrence of a Flip-In Event (as such term is defined in the
        Rights Agreement) or (ii) the Expiration Date (as such term is defined in
        the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
        by the Company at its option at a redemption price of $0.001 per Right. Subject
        to the provisions of the Rights Agreement, the Company may, at its option,
        at
        any time after a Flip-In Event, exchange all or part of the Rights evidenced
        by
        this Certificate for shares of the Company’s Common Stock or for Preferred Stock
        (or shares of a class or series of the Company’s preferred stock having the same
        rights, privileges and preferences as the Preferred Stock).

       

      In
        the
        event (i) any Person or group becomes an Acquiring Person or (ii) any
        of the types of transactions, acquisitions or other events described above
        as
        self-dealing transactions occur, and prior to the acquisition by such person
        or
        group of 50% or more of the outstanding shares of Common Stock, the Board
        of
        Directors may require all or any portion of the outstanding Rights (other
        than
        Rights owned by such Acquiring Person which have become null and void) to
        be
        exchanged for Common Stock on a pro rata basis, at an exchange ratio of one
        share of Common Stock or one one-thousandth of a share of Preferred Stock
        (or of
        a share of a class or series of the Company’s Preferred Stock having equivalent
        rights, preferences and privileges), per Right (subject to
        adjustment).

       

      No
        fractional shares of Preferred Stock shall be issued upon the exercise of
        any
        Right or Rights evidenced hereby (other than fractions which are integral
        multiples of one one-thousandth of a share of Preferred Stock, which may,
        at the
        option of the Company, be evidenced by depositary receipts), and no fractional
        shares of Common Stock will be issued upon the exchange of any Right or Rights
        evidenced hereby, and in lieu thereof, as provided in the Rights Agreement,
        fractions of shares of Preferred Stock or Common Stock shall receive an amount
        in cash equal to the same fraction of the then Current Market Price (as such
        term is defined in the Rights Agreement) of a share of Preferred Stock or
        Common
        Stock, as the case may be.

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      No
        holder
        of this Right Certificate, as such, shall be entitled to vote or receive
        dividends or be deemed for any purpose the holder of Common 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 in 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 (other than certain actions specified
        in
        the Rights Agreement) or to receive dividends or subscription rights, or
        otherwise, until the Right or Rights evidenced by this Right Certificate
        shall
        have been exercised or exchanged as provided in the Rights
        Agreement.

       

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

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      WITNESS
        the facsimile signature of the proper officers of the Company and its corporate
        seal. Dated as of ________________________, _____.

      

      
        	
                ATTEST:

              	 	SCICLONE
                PHARMACEUTICALS, INC.
	 	 	 	 
	 	 	
                By:

              	 
	
                Secretary

              	 	 	 
	 	 	
                Title:

              	 
	 	 	 
	
                COUNTERSIGNED:

              	 	
                MELLON
                  INVESTOR SERVICES LLC

                As
                  Rights Agent

              
	 	 	 	 
	 	 	
                By:

              	 
	 	 	Authorized
                Officer

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Form
        of
        Reverse Side of Right Certificate

       

      FORM
        OF ASSIGNMENT

       

      (To
        be
        executed by the registered holder if such holder

      desires
        to transfer any or all of the Rights

      represented
        by this Right Certificate)

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sells, assigns and transfers unto

       

      
        	 
	
                 

                 

              
	
                (Name,
                  address and social security or other

                identifying
                  number of transferee)

              
	 
	
                ___________________________________
                  (_______________) of the Rights represented by this Right
                  Certificate, together with all right, title and interest in and
                  to said
                  Rights, and hereby irrevocably constitutes and appoints
                  _________________________ attorney to transfer said Rights on the
                  books of the within-named Company with full power of
                  substitution.

              

      

       

      
        	 	
                Dated:

              	 	
                ,

              	 	 	 
	 	 	
                (Signature)

              
	 
	
                Signature
                  Guaranteed:

              

      

       

       

      CERTIFICATE

       

      The
        undersigned hereby certifies by checking the appropriate boxes
        that:

       

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

       

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

       

      
        	 	
                Dated:

              	 	
                ,

              	 	 	 
	 	 	
                (Signature)

              
	 
	
                Signature
                  Guaranteed:

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Form
        of
        Reverse Side of Right Certificate

      (continued)

       

      NOTICE

       

      The
        signatures to the foregoing Assignment and the foregoing Certificate, if
        applicable, must correspond to the name as written upon the face of this
        Right
        Certificate in every particular, without alteration or enlargement or any
        change
        whatsoever, and must be guaranteed by a participant in a Securities Transfer
        Association (“STA”) recognized signature program.

       

      In
        the
        event that the foregoing Certificate is not duly executed, with signature
        guaranteed, the Company may deem the Rights represented by this Right
        Certificate to be beneficially owned by an Acquiring Person or an Affiliate
        or
        Associate of an Acquiring Person (as such capitalized terms are defined in
        the
        Rights Agreement), and not issue any Right Certificate or Right Certificates
        in
        exchange for this Right Certificate.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      Form
        of
        Reverse of Right Certificate

      (continued)

       

      FORM
        OF ELECTION TO PURCHASE

       

      (To
        be
        executed by the registered holder if such holder

      desires
        to exercise any or all of the Rights

      represented
        by this Right Certificate)

       

      To
        SciClone Pharmaceuticals, Inc.:

       

      The
        undersigned hereby irrevocably elects to exercise _______________ (__________)
        of the Rights represented by this Right Certificate to purchase the shares
        of
        the Common Stock of the Company, or other securities or property issuable
        upon
        the exercise of said number of Rights pursuant to the Rights
        Agreement.

       

      The
        undersigned hereby requests that a certificate for any such securities and
        any
        such property be issued in the name of and delivered to:

       

      
        

      

      
         

        
          

        

      (Name,
        address and social security or other

      identifying
        number of issuee)

       

      The
        undersigned hereby further requests that if said number of Rights shall not
        be
        all the Rights represented by this Right Certificate, a new Right Certificate
        for the remaining balance of such Rights be issued in the name of and delivered
        to:

       

        
          

        

      

       

        
          

        

      

      

      (Name,
        address and social security or other

      identifying
        number of issuee)

       

      
        
          	 	
                  Dated:

                	 	
                  ,

                	 	 	 
	 	 	
                  (Signature)

                
	 
	
                  Signature
                    Guaranteed:

                

        

        

          
            
              
              

            

            
              8

              
                

              

            

            
              
              

            

          

        

         

      

      Form
        of
        Reverse Side of Right Certificate

      (continued)

      

       

      CERTIFICATE

       

      The
        undersigned hereby certifies by checking the appropriate boxes
        that:

       

      (1)    the
        Rights evidenced by this Right 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 or an Affiliate or Associate of any such Acquiring Person (as such
        terms
        are defined pursuant to the Rights Agreement);

       

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

       

      
        
          	 	
                  Dated:

                	 	
                  ,

                	 	 	 
	 	 	
                  (Signature)

                
	 
	
                  Signature
                    Guaranteed:

                

        

         

         

      

      NOTICE

       

      The
        signature to the foregoing Election to Purchase and the foregoing Certificate,
        if applicable, must correspond to the name as written upon the face of the
        this
        Right Certificate in every particular, without alteration or enlargement
        or any
        change whatsoever, and must be guaranteed by a member firm of a registered
        national securities exchange, a member of the National Association of Securities
        Dealers, Inc., or a commercial bank or trust company having an office or
        correspondent in the United States.

       

      In
        the
        event that the foregoing Certificate is not executed, with signature guaranteed,
        the Company may deem the Rights represented by this Right Certificate to
        be
        beneficially owned by an Acquiring Person or an Affiliate or Associate of
        an
        Acquiring Person (as such capitalized terms are defined in the Rights
        Agreement), and not issue any Right Certificate or Right Certificates in
        exchange for this Right Certificate.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

    
      EXHIBIT
        C

      

      UNDER
        CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED DECEMBER
        19,
        2006 (THE “RIGHTS AGREEMENT”) BETWEEN SCICLONE PHARMACEUTICALS, INC. AND MELLON
        INVESTOR SERVICES LLC RIGHTS ISSUED TO, BENEFICIALLY OWNED BY OR TRANSFERRED
        TO
        ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
        AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT)
        THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO
        LONGER
        BE TRANSFERABLE.

       

      SCICLONE
        PHARMACEUTICALS, INC.

      

      Summary
        of Terms of

      Rights
        Agreement

      

      

      
        	
                Nature
                  of Right:

              	 	
                When
                  exercisable, each Right (a “Right”) will initially entitle the holder to
                  purchase one one-thousandth of a share of Series D Preferred Stock
                  (“Preferred Stock”) of SciClone Pharmaceuticals, Inc. (the
                  “Company”).

              
	 	 	 
	
                Means
                  of Distribution:

              	 	
                The
                  Rights will be distributed to holders of the Company’s outstanding Common
                  Stock as a dividend of one Right for each share of Common Stock.
                  The
                  Rights will also be attached to all future issuances of Common
                  Stock prior
                  to the Distribution Date (as defined below).

              
	 	 	 
	
                Exercisability:

              	 	
                Rights
                  become exercisable on the earlier of: (i) the date of public
                  announcement by the Company or by any person or group (an “Acquiring
                  Person”) that such person or group has acquired beneficial ownership of
                  15% or more of the Company’s outstanding Common Stock, or (ii) the
                  tenth business day (unless extended by the Board prior to the time
                  a
                  person becomes an Acquiring Person) following the commencement,
                  or
                  announcement of an intention to commence, by any person or group
                  of a
                  tender or exchange offer which would result in such person owning
                  15% or
                  more of the outstanding Common Stock of the Company (the earlier
                  of such
                  dates is referred to as the “Distribution Date”), provided
                  that an Acquiring Person does not include an Exempt Person or
                  Grandfathered Person (as such terms are defined in the Rights Agreement).
                  Rights will trade separately from the Common Stock once the Rights
                  become
                  exercisable.

              
	 	 	 
	
                Purchase
                  Price:

              	 	
                $25.00
                  per one one-thousandth of a share of Series D Preferred, which
                  is the
                  amount that in the judgment of the Board of Directors represents
                  the
                  long-term value of one share of Common Stock over the term of the
                  Rights
                  Agreement (the “Purchase Price”).

              
	 	 	 
	
                Term:

              	 	
                The
                  Rights will expire upon the earlier of (i) ten years after the date
                  of issuance, or December 19, 2016 or (ii) redemption or exchange by
                  the Company as described below.

              
	 	 	 
	
                Redemption
                  of Rights:

              	 	
                Rights
                  are redeemable at a price of $0.001 per Right, by the vote of the
                  Company’s Board of Directors, at any time until the occurrence of a
                  Flip-In Event (defined below).

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      
        	
                Preferred
                  Stock:

              	 	
                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
                  other
                  series). Each share of Preferred Stock will have a preferential
                  cumulative
                  quarterly dividend in an amount equal to the greater of (a)
                  $625.00 or b) 1,000 times the dividend declared on each share of
                  Common Stock. In the event of liquidation, the holders of Preferred
                  Stock
                  will receive a preferred liquidation payment equal to the greater
                  of (a)
                  $25,000.00 per share, plus accrued dividends to the date of
                  distribution whether or not earned or declared, or (b) an amount per
                  share equal to 1,000 times the aggregate payment to be distributed
                  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 for or changed into other securities, cash
                  and/or
                  other property, 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 anti-dilution provisions. Fractional
                  shares (in
                  integral multiples of one one-thousandth) of Preferred Stock will
                  be
                  issuable; however, the Company may elect to distribute depositary
                  receipts
                  in lieu of such fractional shares. In lieu of fractional shares
                  other than
                  fractions that are multiples of one one-thousandth of a share,
                  an
                  adjustment in cash will be made based on the market price of the
                  Preferred
                  Stock on the last trading date prior to the date of exercise. Because
                  of
                  the nature of the Preferred Stock’s dividend, liquidation and voting
                  rights, the value of one one-thousandth of a share of Preferred
                  Stock
                  purchasable upon exercise of each Right should approximate the
                  value of
                  one share of Common Stock.

              
	 	 	 
	
                Rights
                  in Event of Self-Dealing Transaction or Acquisition of Substantial
                  Amount
                  of Common Stock:

              	 	
                In
                  the event that an Acquiring Person engages in certain self-dealing
                  transactions with the Company, or becomes a Beneficial Owner of
                  15% or
                  more of the outstanding Common Stock (“Flip-In Events”), a holder of a
                  Right thereafter has the right to purchase, upon payment of the
                  then
                  current Purchase Price, in lieu of one one-thousandth of a share
                  of
                  Preferred Stock per outstanding Right, such number of shares of
                  Common
                  Stock having a market value at the time of the transaction equal
                  to the
                  Purchase Price divided by one-half the Current Market Price (as
                  defined in
                  the Rights Agreement) of the Common Stock. Notwithstanding the
                  foregoing,
                  Rights held by the Acquiring Person or any Associate or Affiliate
                  thereof
                  or certain transferees will be null and void and no longer be
                  transferable.

              
	 	 	 
	 	 	
                Self-dealing
                  transactions are defined to include a consolidation, merger or
                  other
                  combination of an Acquiring Person with the Company in which the
                  Company
                  is the surviving corporation, the transfer of assets to the Company
                  in
                  exchange for securities of the Company, the acquisition of securities
                  of
                  the Company (other than in a pro rata distribution to all stockholders),
                  the sale, purchase, transfer, distribution, lease, mortgage, pledge
                  or
                  acquisition of assets by the Acquiring Person to, from or with
                  the Company
                  on other than an arm’s length basis, compensation to an Acquiring Person
                  for services (other than for employment as a regular or part-time
                  employee
                  or director on a basis consistent with the Company’s past practice), a
                  loan or provision of other financial assistance (except proportionately
                  as
                  a stockholder) to an Acquiring Person or the licensing, sale or
                  other
                  transfer of proprietary technology or know-how from the Company
                  to the
                  Acquiring Person on terms not approved by the Board of Directors
                  or a
                  reclassification, recapitalization or other transaction with the
                  effect of
                  increasing by more than 1% the Acquiring Person’s proportionate share of
                  any class of securities of the
                  Company.

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      
        	
                Rights
                  in Event of

                Business
                  Combination:

              	 	
                If,
                  following the occurrence of a Flip-In Event, the Company is acquired
                  by
                  any person in a merger or other business combination transaction
                  in which
                  the Common Stock is exchanged or converted or in which the Company
                  is not
                  the surviving corporation, or 50% or more of its assets or earnings
                  power
                  are sold to any person (“Flip-Over Events”), each holder of a Right (other
                  than an Acquiring Person, or Affiliates or Associates thereof)
                  shall
                  thereafter have the right to purchase, upon payment of the then
                  current
                  Purchase Price, such number of shares of common stock of the acquiring
                  company having a current market value equal to the Purchase Price
                  divided
                  by one-half the Current Market Price of such common
                  stock.

              
	 	 	 
	
                Exchange
                  Option:

              	 	
                In
                  the event (i) any person or group becomes an Acquiring Person or
                  (ii) any of the types of transactions, acquisitions or other events
                  described above as self-dealing transactions occur, and prior to
                  the
                  acquisition by such person or group of 50% or more of the outstanding
                  shares of Common Stock, the Board may require all or any portion
                  of the
                  outstanding Rights (other than Rights owned by such Acquiring Person
                  which
                  have become void) to be exchanged for Common Stock on a pro rata
                  basis, at
                  an exchange ratio of one share of Common Stock or one one-thousandth
                  of a
                  share of Preferred Stock (or of a share of a class or series of
                  the
                  Company’s Preferred Stock having equivalent rights, preferences and
                  privileges), per Right (subject to adjustment).

              
	 	 	 
	
                Fractional
                  Shares:

              	 	
                No
                  fractional shares of Common Stock will be issued upon exercise
                  of the
                  Rights and, in lieu thereof, a payment in cash will be made to
                  the holder
                  of such Rights equal to the same fraction of the current market
                  value of a
                  share of Common Stock.

              
	 	 	 
	
                Adjustment:

              	 	
                The
                  Purchase Price payable, and the number of shares of Preferred Stock
                  or
                  other securities or property issuable, upon exercise of the Rights
                  are
                  subject to adjustment from time to time to prevent dilution (i) in
                  the event of a stock dividend on, or a subdivision, combination
                  or
                  reclassification of the Preferred Stock, (ii) upon the grant to
                  holders of the Preferred Stock of certain rights or warrants to
                  subscribe
                  for Preferred Stock or convertible securities 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 dividends payable in Preferred Stock) or of subscription
                  rights
                  or warrants (other than those referred to above). The number of
                  Rights
                  associated with each share of Common Stock is also subject to adjustment
                  in the event of a stock split of the Common Stock or a stock dividend
                  on
                  the Common Stock payable in Common Stock or subdivisions, consolidations
                  or combinations of the Common Stock occurring, in any such case,
                  prior to
                  the Distribution Date.

              
	 	 	 
	
                Rights
                  as Stockholder:

              	 	
                The
                  Rights themselves do not entitle the holder thereof to any rights
                  as a
                  stockholder, including, without limitation, voting rights or to
                  receive
                  dividends.

              
	 	 	 
	
                Amendment
                  of Rights:

              	 	
                Until
                  the Rights become nonredeemable, the Company may, except with respect
                  to
                  the redemption price, amend the Rights Agreement in any manner.
                  After the
                  Rights become nonredeemable, the Company may amend the Rights Agreement
                  to
                  cure any ambiguity, to correct or supplement any provision which
                  may be
                  defective or inconsistent with any other provisions, to shorten
                  or
                  lengthen any time period under the Rights Agreement, or to change
                  or
                  supplement any provision in any manner the Company may deem necessary
                  or
                  desirable, provided that no such amendment may adversely affect
                  the
                  interests of the holders of the Rights (other than the Acquiring
                  Person or
                  its Affiliates or Associates) or cause the Rights to again be redeemable
                  or the Rights Agreement to again be freely
                  amendable.

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      
        	
                Independent
                  Director Evaluation:

              	 	
                Following
                  the adoption of the Rights Agreement, a committee comprised of
                  independent
                  members of the Company’s Board of Directors shall review the Rights
                  Agreement to determine whether the maintenance of the Rights Agreement
                  continues to be in the best interests of the Company and its stockholders.
                  Such review shall occur periodically, but at least every three
                  years.

              

      

       

       

      A
        copy of the Rights Agreement is available, free of charge, from the Company,
        901
        Mariner’s Island Boulevard, San Mateo, California 94404, Attention: Secretary.
        This summary description of the Rights Agreement does not purport to be complete
        and is qualified in its entirety by reference to the Rights Agreement, as
        amended from time to time, which is incorporated in this summary description
        by
        reference.

    

     

     

    4Unassociated Document

     

    LOCK-UP
      AGREEMENT

    

    by
      and between

    Argyle
      Security Acquisition Corporation 

    and
      

     

    
      
        

      

    

     

    THIS
      LOCK-UP AGREEMENT
      (this
“Lock-Up Agreement”), dated as of ___________, 2006, by and among ARGYLE
      SECURITY ACQUISITION CORPORATION,
      a
      Delaware corporation (the “Company”) and ______________ (the
“Stockholder”).

     

    WHEREAS,
      This
      Lock-Up Agreement is made pursuant to the Merger Agreement, dated December
      [__],
      2006, by and among the Company, ISI Security Group, Inc., a Delaware corporation
      and ISI Detention Contracting Group, Inc., a Delaware corporation (the “Merger
      Agreement”).

    

    WHEREAS,
      the
      Company has entered into the Merger Agreement pursuant to which it will, among
      other things, issue ________________ shares of its common stock (the “Shares”)
      to the Stockholder; and

    

    WHEREAS,
      it
      is a
      condition of the Merger Agreement that the Stockholder enter into a lock-up
      agreement with the Company in the form of this Lock-Up Agreement relating to
      the
      Shares.

    

    NOW,
      THEREFORE, in
      consideration of the foregoing and the terms, conditions and mutual covenants
      appearing in this Lock-Up Agreement, the parties hereto hereby agree as
      follows:

    

    Section
      1. Capitalized
      terms used and not otherwise defined herein that are defined in the Merger
      Agreement shall have the meanings given such terms in the Merger
      Agreement.

    

    Section
      2. (a)
      The
      Company agreed to file a registration statement with the SEC relating to the
      resale of the Shares on Form S-1, or such other form as may be applicable,
      within 30 days of Closing Date and to use commercially reasonable efforts to
      have such registration statement declared effective by the staff of the SEC
      within 150 days after the Closing Date. Regardless of the effective date of
      the
      registration statement, the Stockholder may not offer, sell, contract to sell,
      pledge or grant any option to purchase any of the Shares for a period commencing
      on the date hereof and ending on January 24, 2009, without the prior written
      consent of the Company, unless the Company consummated a transaction after
      the
      date of this Agreement which results in all of the Company’s stockholders having
      the right to exchange their shares of the Company’s common stock for cash,
      securities or other property. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) Notwithstanding
      the foregoing, the Stockholder may make transfers to (i) family members and/or
      estate planning vehicles (i.e.,
      family
      limited partnerships and trusts), or (ii)
      to
      any controlled affiliate of the Stockholder if, prior to such transfer, any
      person who is permitted to receive the Shares pursuant to paragraphs (i) and
      (ii), above, agrees in writing to be bound by the restrictions set forth herein;
      provided, further, however, that any such transfer is made in compliance with
      all applicable securities laws and the Company receives an opinion of counsel
      that such transfer does not violate applicable securities laws.

    

    (c) For
      the
      purpose of effectuating this Lock-Up Agreement, the Stockholder hereby consents
      to the Company issuing a stop transfer instruction to the transfer agent in
      accordance with the terms of this Lock-Up Agreement. Any sale of Shares in
      violation of this Lock-Up Agreement by the Stockholder without the consent
      of
      the Company shall constitute a material breach of this Agreement.

    

    (d) The
      Stockholder acknowledges that its breach or impending violation of any of the
      provisions of this Lock-Up Agreement may cause irreparable damage to the Company
      for which remedies at law would be inadequate. The Stockholder further
      acknowledges and agrees that the provisions set forth herein are essential
      terms
      and conditions of the Lock-Up Agreement that the Company may seek to enforce
      in
      addition to any of its rights or remedies provided under any other agreement
      decree or order by any court of competent jurisdiction enjoining such impending
      or actual violation of any of such provisions. Such decree or order, to the
      extent appropriate, shall specifically enforce the full performance of any
      such
      provision by the Stockholders, and the Stockholders and the Company hereby
      consent to the jurisdiction of any such court of competent jurisdiction, state
      or federal, sitting in the City of San Antonio, Texas, and authorizes the entry
      on its behalf of any required appearance for such purpose. This remedy shall
      be
      in addition to all other remedies available to the Company at law or equity.
      If
      any portion of this Section 2 is adjudicated to be invalid or unenforceable,
      this Section 2 shall be deemed amended to delete there from the portion so
      adjudicated, such deletion to apply only with respect to the operation of this
      Section 2 in the jurisdiction in which such adjudication is made.

    

    Section
      3. Subject
      to Section 7 hereunder,
      this Lock-Up Agreement shall inure to the benefit of and be binding upon the
      Company and its successors and assigns, and upon the Stockholder and his or
      her
      heirs, executors, administrators, legatees and legal
      representatives.

    

    Section
      4. Should
      any part of this Lock-Up Agreement, for any reason whatsoever, be declared
      invalid, illegal, or incapable of being enforced in whole or in part, such
      decision shall not affect the validity of any remaining portion, which remaining
      portion shall remain in full force and effect as if this Lock-Up Agreement
      had
      been executed with the invalid portion thereof eliminated, and it is hereby
      declared the intention of the parties hereto that they would have executed
      the
      remaining portion of this Lock-Up Agreement without including therein any
      portion which may for any reason be declared invalid.

    

    Section
      5. If
      the
      Merger Agreement (other than the provisions thereof that survive termination)
      is
      terminated or is to be terminated prior to the payment for and delivery of
      the
      Shares, the Company will release the Stockholder from its obligations under
      this
      Lock-Up Agreement.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    Section
      6. This
      Lock-Up Agreement shall be construed and enforced in accordance with the laws
      of
      the State of Texas applicable to agreements made and to be performed in such
      State without application of the principles of conflicts of laws of such
      State.

    

    Section
      7. This
      Lock-Up Agreement and all rights hereunder are personal to the parties and
      shall
      not be assignable, and any purported assignment in violation thereof shall
      be
      null and void.

     

    Section
      8. All
      notices, requests, demands and other communications to any party hereunder
      shall
      be in writing and shall be given to such party at its address or telecopier
      number set forth below, or such other address or telecopier number as such
      party
      may hereinafter specify by notice to each other party hereto:

     

    if
      to the
      Company, to:

     

    Argyle
      Security Acquisition Corporation

    200
      Concord Plaza, Suite 700

    San
      Antonio, TX 78216

    Attn:
      Bob
      Marbut

    Telecopy:
      (210) 828-7300

     

    with
      a
copy
      to:

     

    Loeb
      & Loeb LLP

    345
      Park
      Avenue

    New
      York,
      New York 10154

    Attention:
      Mitchell S. Nussbaum

    Telecopy:
      

     

    if
      to the
Stockholder:

     

    c/o
      ISI
      Detention Contracting Group, Inc.

    12903
      Delivery Drive  

    
      
        San
          Antonio, Texas 78247

      

    

    Attention:
      Sam Youngblood

    Telecopy:
      210.495.5613

     

    with
      a
copy
      to:

     

    Hughes
      & Luce, LLP

    111
      Congress Ave; Ste. 900

    Austin,
      TX 78701

    Attention:
      Hull Youngblood

    Telecopy
      : 512.482.6859

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Each
      such
      notice, request or other communication shall be effective (i) if given by
      telecopy, when such telecopy is transmitted to the telecopy number specified
      herein and the appropriate answer back is received or, (ii) if given by
      certified mail, 72 hours after such communication is deposited in the mails
      with
      first class and certified postage prepaid, properly addressed or, (iii) if
      given
      by any other means, when delivered at the address specified herein.

    

    Section
      9. The
      failure of either party to insist upon the strict performance of any of the
      terms, conditions and provisions of this Lock-Up Agreement shall not be
      construed as a waiver or relinquishment of future compliance therewith, and
      said
      terms, conditions and provisions shall remain in full force and effect. No
      waiver of any term or any condition of this Lock-Up Agreement on the part of
      either party shall be effective for any purpose whatsoever unless such waiver
      is
      in writing and signed by such party.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Lock-Up Agreement as
      of
      the day and year first written above.

     

    
      	 	 	 
	 	
              ARGYLE
                SECURITY ACQUISITION CORP.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:
              

    

     

    
      	 	 	 
	 	STOCKHOLDER:
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

    
      
        
        

      

      
        -5-

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