Document:

Exhibit 10.4

 

PATENT AND SOFTWARE LICENSE AGREEMENT

 

This PATENT AND SOFTWARE LICENSE AGREEMENT (the
“Agreement”), effective this 30th day of April, 2004 (the “Effective Date”), is
between Pharmacopeia Drug Discovery, Inc., a corporation organized and existing
under the laws of the State of Delaware and having a principal place of
business at 3000 Eastpark Boulevard, Cranbury New Jersey 08512 (“PDD”), and
Pharmacopeia, Inc., a corporation organized and existing under the laws of the
State of Delaware and having a place of business at 9685 Scranton Road, San
Diego, California 92121-3752 (“Pharmacopeia”), for itself and on behalf of
Accelrys Inc. and each of Pharmacopeia’s subsidiaries other than PDD
(Pharmacopeia and such subsidiaries other than PDD being referred to herein
collectively as the “Pharmacopeia Group”).

 

WHEREAS, the
Pharmacopeia Group is the owner of certain software product(s), together with
the related documentation and components thereto, as well as all rights, title
and interest in and to the inventions disclosed in certain patents and patent
applications;

 

WHEREAS, PDD is the
owner of all rights, title and interest in and to the inventions disclosed in
certain patents and patent applications;

 

WHEREAS, PDD has
incurred significant expenses in connection with the filing, prosecution and
maintenance of such patents and patent applications;

 

WHEREAS, PDD desires
to obtain, and the Pharmacopeia Group desires to grant, a license to PDD to the
software and a license to practice the inventions claimed by the Licensed
Patents; and

 

WHEREAS, the
Pharmacopeia Group desires to obtain, and PDD desires to grant, a license to
practice the inventions claimed by the PDD patents;

 

NOW THEREFORE, the
parties agree as follows:

 

1.             Definitions. For all purposes
of this Agreement, the following terms have the meanings set forth below:

 

1.1.          “Affiliate” of a party
means any legal entity directly or indirectly controlling, controlled by or
under common control with that party. For purposes of this Agreement, “control”
means the direct or indirect ownership of more than fifty percent (50%) of the
outstanding voting securities of the legal entity, or the right to receive more
than fifty percent (50%) of the profits or earnings of the legal entity, or the
right to direct the policy decisions of the legal entity.

 

1.2.          “Documentation” means
the then current on-line help, guides, and manuals published by the
Pharmacopeia Group and made generally available by the Pharmacopeia Group for
the Software.  Documentation shall include
any updated Documentation that the Pharmacopeia Group provides with Updates.

 

1.3.          “Licensed Patents” means
the patents and patent applications listed on Exhibit A attached hereto, and
any and all patents issuing from the patent applications listed on such Exhibit
A, or issuing from any divisions or continuations of such applications, as well
as all re-issues, re-examinations, renewals or extensions of such patents.

 

1.4.          “PDD Patents” means the
patents and patent applications listed on Exhibit C attached hereto, and any
and all patents issuing from the patent applications listed on such

 

 

Exhibit C, or issuing from any
divisions or continuations of such applications, as well as all re-issues,
re-examinations, renewals or extensions of such patents.

 

1.5.          “PDD Patent Product”
means a software product, developed or commercialized by the Pharmacopeia
Group, which meets the following description: (i) in the absence of the license
granted under Section 3.4.a of this Agreement, the making, using, copying, sale,
rental, lease or offer for sale, rental or lease of such software product would
infringe any claim of a PDD Patent, or (ii) any software product designed or
developed for use with software described in (i)

 

1.6.          “PDD’s Internal
Business” means the design and manufacture of compounds for sale to and use by
third parties, for its own use, and for use in performing drug discovery and
development services for third parties; the selection and evaluation of
appropriate target molecules; the development of assays for screening against
target molecules; the screening of compounds against target molecules for its
own internal research or for third parties and interpreting and advising on the
results of such screening; and the performing of medicinal/pharmaceutical
chemistry services for its own internal research or for third parties.

 

1.7.          “Software” means the
software product(s), together with the Documentation and components (including
new releases, enhancements, and modifications provided under warranty or maintenance,
if applicable) listed on attached Exhibit B.

 

1.8.          “Software License Term”
means the period commencing on the Effective Date and ending on April 30, 2007.

 

1.9.          “Source Code” means the
program instructions for the software programs known as TopKat, LibProp and
ADME Profiler, as those programs are constructed as of the Effective Date.

 

1.10.        “Update(s)” means new
releases, corrections, enhancements, improvements and modifications of the
Software and/or Documentation that are (a) subsequent releases of the Software
that (i) add new features, functionality, and/or improved performance, (ii)
operate on new or other databases, operating systems, or client or server
platforms, or (iii) add new foreign language capabilities; (b) bug or error
fixes, patches, workarounds, and maintenance releases; (c) new point releases,
including those denoted by a change to the right of the first decimal point
(e.g., version 3.0 to 3.1) and (d) new major version releases, regardless of
the version name or number, but including those denoted by (i) a change to the
left of the first decimal point (e.g., version 5.0 to 6.0) and/or (ii) the
addition of a date designation or a change in an existing date designation
(e.g., version 1999 to 2000); provided, however that Updates shall not include
new or separate products which are offered only for an additional fee to its
customers generally, including those customers purchasing maintenance services.

 

1.11.        “User(s)” means the named
or specified (by password or other user identification) individuals authorized
by PDD to use the Software, regardless of whether the individual is actively
using the Software at any given time. 
PDD may replace Users and authorize new Users as necessary to reflect personnel
changes provided that the number of Users at any given time does not exceed the
maximum number of Users at any given time. 
Users may include the employees of PDD or third parties; provided that
such third party is limited to use of the Software (i) only as configured and
deployed by PDD, and (ii) solely in connection with PDD’s business operations
as conducted by or through such third party, including but not limited to the

 

 

2

 

installation, administration or
implementation of the Software for PDD. 
PDD agrees that it is responsible for ensuring that any usage by its
employees and any such third parties is in accordance with the terms and
conditions of this Agreement.  It is
expressly understood and agreed that Users shall not include the employees or
consultants of, or third parties working with, any individual or entity that
acquires a controlling interest in PDD or PDD’s Internal Business, whether by
merger, consolidation, reorganization or similar transaction or by sale,
transfer or disposition of all or substantially all PDD’s assets, properties or
business.

 

2.             Software License
to PDD.

 

2.1.          License Grant.
Subject to the terms and conditions of this Agreement, the Pharmacopeia Group
hereby grants, and PDD accepts for the Software License Term, a worldwide,
paid-up, royalty-free, irrevocable (subject to Section 2.2), nontransferable
(with no right to sublicense) and non-exclusive license to use the Software for
the sole purpose of processing the work of PDD’s Internal Business.

 

a.             PDD
may only use the Software at the specific location(s) at which the Software
currently is utilized or to which the Software is subsequently delivered.

 

b.             For
host-locked licenses, PDD may use the Software only on the central processing
unit (the “Licensed CPU”) originally designated for installation or as agreed
to by the relevant member of Pharmacopeia Group, and only at the specific
location at which the Software is currently utilized or to which the Software
is subsequently delivered.  For floating
licenses, the Software may be accessed by any computer that is commercially
supported by PDD and within PDD’s authorized network at the specific location
at which the Software is currently utilized or to which the Software is
subsequently delivered.

 

c.             The
Software may be used simultaneously by no more than the maximum number of Users
set forth on Exhibit B, and may not be electronically or otherwise transferred
to a different physical location.

 

i.              If,
during the License Term, PDD desires to use the Software for additional
simultaneous Users, at another site, or on a different Licensed CPU (for
host-locked licenses), PDD shall secure the prior approval of the relevant
member of the Pharmacopeia Group, which will not be unreasonably withheld but
which will be conditioned upon payment by PDD of the Pharmacopeia Group’s
then-current license fees for such additional Users, additional site or
different Licensed CPU.

 

ii.             If,
after the expiration or termination of the License Term, PDD desires to use the
Software for additional simultaneous users, at another site, or on a different
Licensed CPU (for host-locked licenses), PDD shall secure the prior approval of
the relevant member of the Pharmacopeia Group, which may be granted subject to
additional charges.

 

2.2.          License Term. The
license granted in Section 2.1 shall be in effect for the Software License
Term, unless earlier terminated by one of the parties as set forth in Section
8.2 or 8.4, or extended by mutual written agreement of the parties.

 

2.3.          Software Ownership.
The Software, documentation, and supporting materials and all worldwide
intellectual property rights therein are the sole and exclusive property of the

 

3

 

Pharmacopeia Group and its
licensors or suppliers.  Except to the
limited extent required for PDD to use the Software pursuant to the license
granted in Section 2.1, nothing in this Agreement will be deemed to grant, by
implication, estoppel or otherwise, a license in any existing or future patents
of the Pharmacopeia Group.  No title or
ownership rights to the Software are transferred to PDD by this Agreement, but
shall remain with the Pharmacopeia Group and/or its licensors or suppliers.  All rights not expressly granted by the
Pharmacopeia Group with respect to the Software under this Agreement are
reserved by the Pharmacopeia Group.

 

2.4.          Software Maintenance.

 

a.             During
the Software License Term, the Pharmacopeia Group will provide maintenance
services that include both Update Service and Hotline Support as described in
this Section 2.4.a.i and 2.4.a.ii at no additional cost or expense to PDD.

 

i.              Update
Service includes the provision to PDD of all Updates that are made by the
Pharmacopeia Group during the Software License Term within thirty (30) days of
the date such Updates are available to the Pharmacopeia Group’s other
customers.

 

ii.             Hotline
Support includes commercially reasonable telephone and electronic mail
assistance and consultation to assist PDD in resolving problems with the use of
the Software, including the verification, diagnosis, and correction of material
errors and defects in the Software. 
Maintenance service does not include new products sold separately by the
Pharmacopeia Group, which products must be separately licensed by PDD.

 

For clarity,
installation, implementation, integration or similar services do not fall
within the maintenance services to be provided by the Pharmacopeia Group under
this Agreement.  Should PDD require such
services, these may be available subject to payment of the Pharmacopeia Group’s
then-standard fees for such services and execution of the Pharmacopeia Group’s
then-standard terms and conditions for such services.

 

b.             After
the Software License Term, upon payment of the applicable maintenance fee by
PDD, maintenance services will be provided under the Pharmacopeia Group’s
standard commercial terms for customers using the Software for twelve-month
periods unless terminated by either party upon thirty (30) days written notice
prior to the renewal date.  Annual
maintenance fees are payable in advance on the anniversary date of the order.

 

2.5.          Non-Disclosure;
Alterations; Copies.

 

a.             PDD
acknowledges and agrees that the Software, its structure, organization, source
code and related documentation are valuable and proprietary trade secrets of
the Pharmacopeia Group.  PDD shall (i)
maintain the confidentiality of the Software, using, at a minimum, the same
safeguards afforded its own confidential, proprietary trade secrets, but in no
event less than reasonable care; (ii) not disclose, provide, transfer, rent,
sublicense, or otherwise make available any portion of the Software to any
third party, without first obtaining the written approval of the relevant
member of the Pharmacopeia’s Group. 
PDD’s non-disclosure obligation shall not apply

 

4

 

to information
now or hereafter in the public domain through no fault of PDD, information in
the possession of PDD prior to disclosure by the Pharmacopeia Group,
information properly obtained without restriction from a third party who is not
bound by an obligation of confidentiality to the Pharmacopeia Group, or
information independently developed by PDD without reference to the Software.

 

b.             PDD
acknowledges any actual or threatened breach of the obligations of
confidentiality set forth in Section 2.5.a will constitute immediate,
irreparable harm to the Pharmacopeia Group for which monetary damages would be
an inadequate remedy, and that the Pharmacopeia Group may, in addition to any
other remedy under this Agreement, seek injunctive or other appropriate
equitable relief as remedy for such breach.

 

c.             PDD
shall not alter, modify, adapt, translate, reverse engineer, decompile,
disassemble, or create derivative works from the Software, nor take any other
steps intended to produce a source language statement of the Software or any
part thereof without the express prior written consent of the relevant member
of the Pharmacopeia Group.

 

d.             PDD
is authorized to copy the Software solely for backup, archival, and disaster
recovery purposes and only to the minimum extent necessary to accomplish such
purposes.  PDD shall not remove any
copyright or proprietary rights notices from the Software and shall reproduce
all such notices on any copies that it makes.

 

2.6.          Publication
Acknowledgement. If the Software is used by PDD to obtain results that are
published in a scientific journal or other publication, PDD will acknowledge
its use of the Software with an appropriate citation, which shall include the
Pharmacopeia Group’s then current full corporate name and the name of the
Software product used.

 

2.7.          Applicable Laws.
PDD agrees to comply with all applicable laws and regulations in its
performance under this Agreement.  PDD
acknowledges that the Software may be subject to U.S. Export controls, and
agrees not to export the Software or any part or direct product thereof in
violation of U.S. Bureau of Industry Security regulations.  In furtherance of these obligations, PDD
hereby represents, warrants and covenants that it will not use, or authorize or
permit any other person, firm, corporation or other entity to use, the Software
or make the Software available for use in connection with the design,
development, production, stockpiling or use of any chemical or biological
weapons.  PDD agrees to defend,
indemnify, and hold harmless the Pharmacopeia Group from and against any
violation of such laws or regulations by PDD or any of its respective agents,
officers, directors or employees.  This
indemnity provision shall survive any termination of this Agreement.

 

3.             Patent Licenses.

 

3.1.          License Grant to PDD.

 

a.             The
Pharmacopeia Group grants to PDD, and PDD accepts, a worldwide, paid-up,
royalty-free, irrevocable, nontransferable and non-exclusive license to the
Licensed Patents solely for use in PDD’s Internal Business.

 

b.             The
rights and licenses granted are personal and may not be sub-licensed, assigned
or otherwise transferred except only as expressly set forth in this Agreement.

 

5

 

c.             Notwithstanding
Section 3.1.b, PDD may grant a sublicense to the Licensed Patents to those of
its customers who practice the Licensed Patents in a field that is not
competitive with the software products and services provided by the
Pharmacopeia Group.

 

d.             PDD
and the Pharmacopeia Group each acknowledges and agrees that no right or
license in or to any patent or proprietary right of the Pharmacopeia Group,
other than to the Licensed Patents as expressly set forth herein, is granted by
this Agreement, either expressly or by implication.

 

3.2.          Maintenance of
Intellectual Property Rights.

 

a.             As
of the Effective Date and until the termination or expiration of the license
granted in Section 3.1.a, the Pharmacopeia Group shall be responsible, at the
Pharmacopeia Group’s sole discretion and expense, for preparing, filing,
prosecuting and maintaining in such countries where the Pharmacopeia Group
deems appropriate, those patents and patent applications incorporated in the
Licensed Patents and conducting any interference, re-examination, reissue and
opposition proceedings relating to such Licensed Patent.  PDD agrees to cooperate in any manner
reasonably requested in connection with all such actions by the Pharmacopeia
Group; provided that PDD is reimbursed by the Pharmacopeia Group for any
expenses resulting from such cooperation.

 

b.             As
of the Effective Date and until the termination or expiration of the license
granted in Section 3.1.a, the Pharmacopeia Group shall keep PDD fully informed
as to the status of patent matters described in Section 3.2.a including,
without limitation, by providing copies of any substantive documents that the
Pharmacopeia Group receives from any patent offices concerning the Licensed
Patents promptly after receipt by the Pharmacopeia Group and by providing PDD
with the opportunity to fully review and comment on any substantive documents
which will be filed in any patent office as far in advance of a filing date as
reasonable.  The documents shall
include, without limitation, and where applicable, office actions, notice of
all fees due, notices of interference, reissue, re-examination, or opposition
proceedings or requests for patent term extensions.

 

c.             As
of the Effective Date and until the termination or expiration of the license
granted in Section 3.1.a, in the event the Pharmacopeia Group decides to cease
prosecuting or maintaining any patents and patent applications incorporated in
the Licensed Patents, or decides not to conduct any interference, re-examination,
reissue or opposition proceedings with respect thereto, the Pharmacopeia Group
will inform PDD of such decision at a time sufficient to allow PDD to respond
to any outstanding office action or other obligation, and PDD will have the
right but not the obligation to maintain such patents and patent applications,
and to conduct any interference, re-examination, reissue or opposition
proceedings with respect thereto, at PDD’s sole expense.  The Pharmacopeia Group agrees to assign such
patent applications to PDD, and to cooperate in any manner reasonably requested
in connection with any such actions by PDD, at the expense of PDD.

 

6

 

3.3.          Patent Enforcement.

 

a.             As
of the Effective Date and until the termination or expiration of the license
granted in Section 3.1.a, in the event the Pharmacopeia Group learns that any
third party, including without limitation a customer of the Pharmacopeia Group,
is or might be infringing, or preparing to infringe, any Licensed Patent, then
the Pharmacopeia Group will promptly notify PDD of such information.  Upon such notice, PDD and the Pharmacopeia
Group will consult one another in a timely manner concerning any appropriate
response to such infringement or noncompliance.  Each party agrees to cooperate in all reasonable respects with the
other in any action either may take against infringement of any Licensed
Patent.

 

b.             The
Pharmacopeia Group may, but is not obligated to, enforce the Licensed Patents,
at the Pharmacopeia Group’s own expense, against any such third party
infringing the same.  PDD may join any
such lawsuit at its own expense.  In the
event the Pharmacopeia Group elects not to enforce the Licensed Patents against
such third party infringer, PDD may assume the responsibility for enforcing the
Licensed Patents, at PDD’s sole expense. However, absent the Pharmacopeia
Group’s permission, PDD may not enforce the Licensed Patents against any third
party.

 

c.             The
Pharmacopeia Group will not enter into any settlement or compromise with such
an infringing third party that requires PDD to sublicense or relinquish any of
the rights granted to PDD hereunder without PDD’s prior written consent.  In the event PDD assumes the responsibility
for enforcing the Licensed Patents against such third party, PDD will not enter
into any settlement or compromise with an infringing third party without the
consent of the Pharmacopeia Group.

 

d.             In
any action to enforce any Licensed Patents, either party, at the reasonable
request and sole expense of the other party, will cooperate to the fullest
extent reasonably possible with the other party, including being joined as a
party to the action, if necessary.  This
provision does not require, and may not be construed to require, either party to
undertake any activities, including legal discovery, at the request of any
third party except as may be required by lawful process of a court of competent
jurisdiction.

 

e.             Any
consideration received or recovered by either party from any litigation or settlement
of any claim or suit pursuant to Section 3.3.b will first be applied to
reimburse the Pharmacopeia Group and PDD, as applicable, for such party’s
respective litigation expenditures related to enforcing the Licensed Patents
licensed to PDD under this Agreement. 
Any additional recovery, beyond the collective expenditures, will be
divided between PDD and the Pharmacopeia Group in proportion to each party’s
respective share of the litigation expenditures related to the Licensed Patents
licensed to PDD under this Agreement.

 

3.4.          License Grant to the
Pharmacopeia Group.

 

a.             PDD
grants to the Pharmacopeia Group and the Pharmacopeia Group accepts, a
worldwide, paid-up, royalty-free, irrevocable, and non-exclusive license under
the PDD Patents to make, use, copy, sell, rent, lease or offer to sell, rent or
lease PDD Patent Products.

 

7

 

i.              Other
than as set forth in Section 3.4.a.ii, below, the rights and license granted in
Section 3.4.a are personal and may not be sub-licensed, assigned or otherwise
transferred absent the express written consent of PDD, which consent will not
be unreasonably withheld.

 

ii.             PDD
grants to the Pharmacopeia Group and the Pharmacopeia Group accepts, the right
to sublicense to the transferees of PDD Patent Products the rights granted in
Section 3.4.a for the limited purpose of practicing the PDD Patents in the form
of using the PDD Patent Products.  No
other right to sublicense the rights granted in Section 3.4.a are granted in
this Agreement.

 

b.             PDD
and the Pharmacopeia Group each acknowledges and agrees that no right or
license in or to any patent or proprietary right of PDD, other than to the PDD
Patents as expressly set forth herein, is granted by this Agreement, either
expressly or by implication.

 

c.             In
consideration for the license granted under this Agreement, the Pharmacopeia
Group agrees to grant PDD, and PDD accepts, a nontransferable right to use only
for its own internal purposes, free of charge, any PDD Patent Product.  Within thirty (30) days after the first
commercial sale, rental or lease of any PDD Patent Product or any update,
upgrade or enhancement thereof, the Pharmacopeia Group shall provide at least
one copy of the compiled code for such PDD Patent Product to PDD, in a format
as normally provided by the Pharmacopeia Group to its paying customers.  The Pharmacopeia Group further agrees to
provide, at no charge to PDD, support and documentation for such PDD Patent
Product, comparable to the support and documentation for such software normally
provided by the Pharmacopeia Group to its paying customers.

 

3.5.          Maintenance of
Intellectual Property Rights.

 

a.             As
of the effective Date, PDD shall be responsible, at PDD’s sole discretion and
expense, for preparing, filing, prosecuting and maintaining in such countries
where PDD deems appropriate, those patents and patent applications incorporated
in the PDD Patents and conducting any interference, re-examination, reissue and
opposition proceedings relating to such Patent Rights.  The Pharmacopeia Group agrees to cooperate
in any manner reasonably requested in connection with all such actions by PDD;
provided that the Pharmacopeia Group is reimbursed by PDD for any expenses
resulting from such cooperation.

 

b.             In
the event PDD decides to cease prosecuting or maintaining any patents and
patent applications incorporated in the PDD Patents, or decides not to conduct
any interference, re-examination, reissue or opposition proceedings with
respect thereto, PDD will inform the Pharmacopeia Group of such decision at a
time sufficient to allow the Pharmacopeia Group to respond to any outstanding
office action or other obligation, and the Pharmacopeia Group will have the
right but not the obligation to maintain such patents and patent applications,
and to conduct any interference, re-examination, reissue or opposition
proceedings with respect thereto, at the Pharmacopeia Group’s sole
expense.  PDD agrees to cooperate in any
manner reasonably requested in connection with any such actions by the
Pharmacopeia Group, at the expense of the Pharmacopeia Group.

 

8

 

3.6.          Patent Enforcement.

 

a.             In
the event the Pharmacopeia Group learns that any third party, other than a
customer of PDD, is or might be infringing, or preparing to infringe, any PDD
Patent, then the Pharmacopeia Group will promptly notify PDD of such
information.  Upon such notice, the
Pharmacopeia Group and PDD will consult one another in a timely manner
concerning any appropriate response to such infringement or noncompliance.  Each party agrees to cooperate in all
reasonable respects with the other in any action either may take against
infringement of any PDD Patent.

 

b.             PDD
may, but is not obligated to, enforce the PDD Patents, at PDD’s own expense,
against any third party infringing the same. 
The Pharmacopeia Group may join any such lawsuit at its own
expense.  In the event PDD elects not to
enforce the PDD Patents against a third party infringer, the Pharmacopeia Group
may, only with the express written consent of PDD, which consent will not be
unreasonably withheld, assume the responsibility for enforcing the PDD Patents,
at the Pharmacopeia Group’s sole expense.

 

c.             PDD
will not enter into any settlement or compromise with an infringing third party
that requires the Pharmacopeia Group to sublicense or relinquish any of the
rights granted to the Pharmacopeia Group hereunder without the Pharmacopeia
Group’s prior written consent.  In the
event the Pharmacopeia Group assumes the responsibility for enforcing the PDD
Patents against a third party, the Pharmacopeia Group will not enter into any
settlement or compromise with an infringing third party without the consent of
PDD.

 

d.             In
any action to enforce any PDD Patents, either party, at the reasonable request
and sole expense of the other party, will cooperate to the fullest extent
reasonably possible with the other party, including being joined as a party to
the action, if necessary.  This provision
does not require, and may not be construed to require, either party to
undertake any activities, including legal discovery, at the request of any
third party except as may be required by lawful process of a court of competent
jurisdiction.

 

e.             Any
consideration received or recovered by either party from any litigation or
settlement of any claim or suit pursuant to Section 3.6b will first be applied
to reimburse the Pharmacopeia Group and PDD, as applicable, for such party’s
respective litigation expenditures related to enforcing the PDD Patents
licensed to the Pharmacopeia Group under this Agreement.  Any additional recovery, beyond the
collective expenditures, will be divided between PDD and the Pharmacopeia Group
in proportion to each party’s respective share of the litigation expenditures related
to the PDD Patents licensed to the Pharmacopeia Group under this Agreement.

 

4.             Source Code.

 

4.1.          Both parties will
provide the other party with a copy of any Source Code it has in its
possession.

 

4.2.          License
Grant.

 

a.             The
Pharmacopeia Group grants to PDD and PDD accepts a non-exclusive,
non-transferable, royalty-free, fully paid, perpetual, non-terminable license
to use the Source Code solely for PDD’s Internal Business.

 

9

 

b.             The
Pharmacopeia Group grants to PDD and PDD accepts a non-exclusive,
non-transferable license to modify, enhance, adapt and make derivative works
from the Source Code solely for use in PDD’s Internal Business.

 

4.3.          License Limitations

 

a.             The
Licenses granted in Section 4.2.a is subject to all use restrictions and
confidentiality obligations set forth in this Agreement respecting the Software
licensed to PDD under this Agreement.

 

b.             The
Pharmacopeia Group does not supply maintenance and support services for Source
Code under this Agreement.

 

4.4.          Proprietary Rights in
Modifications.

 

a.             Any
and all right, title, intellectual property rights and/or other ownership or
proprietary interest, whether in the United States or abroad, in or to any and
all improvements, enhancements, modifications, or derivative versions
(hereinafter collectively referred to as “Modifications”) of the Source Code,
if any, developed by or for PDD with the use of the Source Code provided by The
Pharmacopeia Group shall vest exclusively in The Pharmacopeia Group and/or its
licensors.

 

b.             PDD
hereby irrevocably assigns all such rights and interest in Modifications to The
Pharmacopeia Group and/or its licensors.

 

i.              To
the extent PDD cannot assign such rights, PDD hereby waives and agrees never to
assert such rights against The Pharmacopeia Group or any of The Pharmacopeia
Group’s licensees.

 

ii.             If
PDD has any right to the Modifications that cannot be assigned to The
Pharmacopeia Group or waived by PDD, PDD unconditionally and irrevocably grants
to The Pharmacopeia Group, during the term of such rights, an exclusive,
irrevocable, perpetual, worldwide, fully paid and royalty-free license, with
rights to sublicense throughout multiple levels of sublicensees, to reproduce,
create derivative works of, distribute, publicly perform and publicly display
by all means now known or later developed such rights.

 

iii.            PDD
agrees to obtain such assignment, waiver, covenant not to assert such rights,
or license from any subsidiary, subcontractor, or employee who creates, either
in whole or part, the Modifications.

 

iv.            At
the expense of the Pharmacopeia Group, PDD agrees to render reasonable
cooperation to The Pharmacopeia Group in the procurement and maintenance of The
Pharmacopeia Group’s rights in the Modifications and to execute all documents
which The Pharmacopeia Group reasonably deems necessary and desirable for
vesting the Pharmacopeia Group with such rights throughout the world, including
litigation of applicable patents, copyrights and other proceedings.

 

v.             In
the event that PDD is unable for any reason whatsoever to secure a signature on
behalf of The Pharmacopeia Group to any

 

10

 

document it
believes is reasonably required in order to apply for or execute any patent,
copyright or other application with respect to the Modifications, PDD hereby
irrevocably designates and appoints The Pharmacopeia Group and its duly
authorized officers and agents as PDD’s agents and its attorneys-in-fact solely
to act for and in its behalf and instead of it, to execute and file any such
application and to do all other lawfully permitted acts to further the
prosecution and issuance of patents, copyrights or other rights therein with
the same legal force and effect as if executed by PDD.

 

vi.            PDD
agrees to communicate and disclose to The Pharmacopeia Group in writing the
content and nature of the Modifications, promptly upon the development of the
Modifications.

 

c.             Subject
to the terms and conditions of this Agreement, The Pharmacopeia Group hereby
grants to PDD a non-exclusive, non-transferable, royalty-free, fully paid,
non-terminable license to use the Modifications solely for PDD’s Internal
Business needs.

 

i.              PDD may not
sublicense or distribute the Modifications or make them available to any other
third party.

 

ii.             Nothing herein shall
obligate PDD to effect any Modifications to the Software.

 

iii.            The Pharmacopeia Group
shall have no maintenance, support, warranty or indemnity obligations with
respect to Modifications created by or for PDD, and The Pharmacopeia Group
disclaims all express and implied warranties relating to such Modifications,
including the implied warranties of merchantability, fitness for a particular
purpose and non-infringement.

 

5.             Use of Names.  Other
than as required by Section 2.6 above, nothing in this Agreement confers to
either party any right to use in publicity, advertising, promotion or marketing
any name, trade name, trade mark or other designation of the other party,
without the other party’s prior express permission.

 

6.             Warranties.

 

6.1.          Each of PDD and
Pharmacopeia, for itself and on behalf of the Pharmacopeia Group, represents
and warrants to the other party that

 

a.             the
representing party is a company or corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized;

 

b.             such
party has the legal power and authority to execute, deliver and perform this
Agreement;

 

c.             the
execution, delivery and performance by such party of this Agreement has been
duly authorized by all necessary corporate action;

 

d.             this
Agreement constitutes the legal, valid and binding obligation of such party
(and, in the case of Pharmacopeia, the Pharmacopeia Group), enforceable against

 

11

 

such party
(and, in the case of Pharmacopeia, the Pharmacopeia Group) in accordance with
its terms;

 

e.             the
execution, delivery and performance of this Agreement will not cause or result
in a violation of any law, of such party’s charter documents, or of any
contract by which such party (or, in the case of Pharmacopeia, the Pharmacopeia
Group) is bound; and

 

f.              the
representing party (and, in the case of Pharmacopeia, the Pharmacopeia Group)
has not, to the best of the representing party’s knowledge, entered into, nor
will the representing party (or, in the case of Pharmacopeia, the Pharmacopeia
Group) after the Effective Date knowingly enter into any written or oral
agreement that is or would be inconsistent with the representing party’s (or,
in the case of Pharmacopeia, the Pharmacopeia Group’s) obligations under this
Agreement or deprives or would deprive the other party of any rights granted
under this Agreement.

 

6.2.          Pharmacopeia warrants,
for itself and on behalf of the Pharmacopeia Group, that

 

a.             the
Pharmacopeia Group has the unencumbered right to grant to PDD the licenses
conveyed herein according to the terms of this Agreement;

 

b.             for
the twelve (12) months following the Effective Date (the “Warranty Period”),
the Software will perform substantially in accordance with any specifications
set forth in the Documentation when properly operated on the designated
hardware and operating system; and

 

c.             the
Pharmacopeia Group is not aware of any claim or demand of any right in or to
any of the Software;

 

d.             as
of the Effective Date, none of the Licensed Patents is the subject of any
litigation;

 

e.             the
Pharmacopeia Group is not aware of any claim or demand of any right in or to
any of the Licensed Patents; and

 

f.              that
it has the right to grant the license to the Source Code according to the terms
of this Agreement.

 

6.3.          PDD warrants that

 

a.             as
of the Effective Date, PDD is not aware that any of the Licensed Patents or PDD
Patents is the subject of any litigation; PDD is not aware of any claim or
demand of any right in or to any of the Licensed Patents or PDD Patents; and

 

b.             PDD
has the unencumbered right to grant to the Pharmacopeia Group the licenses
conveyed herein according to the terms of this Agreement.

 

6.4.          The Pharmacopeia Group’s
sole obligation and PDD’s exclusive remedy for a breach of the warranty set
forth in Section 6.2.b is for the Pharmacopeia Group to replace defective
Software media or materials and to use commercially reasonable efforts to
correct any material error or defect in the Software as expeditiously as
reasonably possible.  This warranty does
not apply to problems arising from (i) PDD’s modification or misuse of the
Software; (ii) malfunction of PDD’s equipment, operating system, or software
not supplied by the

 

12

 

Pharmacopeia Group; or (iii)
attempts to use the Software in a manner or purpose for which it was not
intended.

 

6.5.          THE PHARMACOPEIA GROUP
MAKES NO WARRANTY OR REPRESENTATION THAT THE PRACTICE OF ANY OF THE INVENTIONS
DISCLOSED IN THE LICENSED PATENTS WILL NOT INFRINGE ANY PATENT, TRADE SECRET OR
OTHER PROPRIETARY RIGHT, FOREIGN OR DOMESTIC, OF ANY THIRD PARTY.

 

6.6.          THE PHARMACOPEIA GROUP
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY RELATING TO THE
SOURCE CODE, INCLUDING, WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

 

6.7.          EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, THE PHARMACOPEIA GROUP MAKES NO OTHER WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, REGARDING THE SOFTWARE.  NEITHER THE PHARMACOPEIA GROUP NOR ITS
LICENSORS OR SUPPLIERS WARRANT THAT THE SOFTWARE OR ANY USE OF THE SOFTWARE OR
EQUIPMENT WILL BE UN-INTERRUPTED OR ERROR-FREE.  PDD ACKNOWLEDGES THAT IT HAS RELIED ON NO WARRANTIES OTHER THAN
THE EXPRESS WARRANTIES IN THIS AGREEMENT.

 

6.8.          PDD MAKES NO WARRANTY OR
REPRESENTATION THAT THE PRACTICE OF ANY OF THE INVENTIONS DISCLOSED IN THE PDD
PATENTS WILL NOT INFRINGE ANY PATENT, TRADE SECRET OR OTHER PROPRIETARY RIGHT,
FOREIGN OR DOMESTIC, OF ANY THIRD PARTY.

 

6.9.          PDD MAKES NO WARRANTY OR
REPRESENTATION THAT THE PRODUCTION, USE, SALE, IMPORT OR EXPORT OF ANY PDD
PATENT PRODUCT WILL NOT INFRINGE ANY PATENT, TRADE SECRET OR OTHER PROPRIETARY
RIGHT, FOREIGN OR DOMESTIC, OF ANY THIRD PARTY.

 

6.10.        EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, NEITHER THE PHARMACOPEIA GROUP NOR PDD MAKE ANY OTHER
WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NONE ARE CREATED,
WHETHER UNDER THE UNIFORM COMMERCIAL CODE, CUSTOM OR USAGE IN THE INDUSTRY OR
THE COURSE OF DEALINGS BETWEEN THE PARTIES.

 

7.             Indemnification.

 

7.1.          Subject to the terms of
Section 7.11, the Pharmacopeia Group shall at its expense defend PDD, its
Affiliates after the Effective Date and their directors, officers, agents,
employees, representatives and assigns, against any claim, liabilities,
damages, expenses and losses (including reasonable attorney fees and costs) and
shall indemnify and hold PDD, such Affiliates and other indemnitees harmless
from any final judgment arising out of (i) the negligent actions of the
Pharmacopeia Group, its employees or any third party acting on behalf or under
authority of the Pharmacopeia Group in the performance of this Agreement and
(ii) the breach of any representation or warranty of the Pharmacopeia Group in
this Agreement.

 

7.2.          Subject to the terms of
Section 7.11, PDD shall at its expense defend the Pharmacopeia Group, its
Affiliates after the Effective Date and their directors, officers, agents,

 

13

 

employees, representatives and
assigns, against any claim, liabilities, damages, expenses and losses
(including reasonable attorney fees and costs) and shall indemnify and hold the
Pharmacopeia Group, such Affiliates and other indemnitees harmless from any
final judgment arising out of (i) the negligent actions of PDD, its employees
or any third party acting on behalf or under authority of PDD in the
performance of this Agreement and (ii) the breach of any representation or
warranty of PDD in this Agreement.

 

7.3.          Subject to the terms of
Section 7.11, The Pharmacopeia Group shall at its expense defend PDD, its
Affiliates after the Effective Date and their directors, officers, agents,
employees, representatives and assigns, against any claim, liabilities,
damages, expenses and losses (including reasonable attorney fees and costs) and
shall indemnify and hold PDD, such Affiliates and other indemnitees harmless
from any final judgment that a current, unmodified copy of the Software
infringes a U.S. patent or copyright, provided that (i) the Pharmacopeia Group
is given prompt written notice of any such claim, (ii) the Pharmacopeia Group
shall have sole control of the settlement or defense of any action against PDD
to which this indemnity applies; and (iii) PDD cooperates with the Pharmacopeia
Group, at the Pharmacopeia Group’s expense, in every reasonable way to
facilitate such defense.

 

7.4.          Should the use of the
Software be enjoined, or should the Pharmacopeia Group desire to minimize its
liabilities hereunder, the Pharmacopeia Group shall have the right, at the
Pharmacopeia Group’s sole option and expense, to secure the right for PDD to
continue use of the Software or to replace or modify the Software to make it
noninfringing.

 

7.5.          The Pharmacopeia Group
shall at its expense defend PDD, its Affiliates after the Effective Date and
their directors, officers, agents, employees, representatives and assigns,
against any claim, liabilities, damages, expenses and losses (including
reasonable attorney fees and costs) and shall indemnify and hold PDD, such
Affiliates and other indemnitees harmless from any final judgment that the
Source Code as provided hereunder infringes a U.S. patent or copyright,
provided that (i) the Pharmacopeia Group is given prompt written notice of any
such claim, (ii) the Pharmacopeia Group shall have sole control of the
settlement or defense of any action against PDD to which this indemnity
applies; and (iii) PDD cooperates with the Pharmacopeia Group, at the
Pharmacopeia Group’s expense, in every reasonable way to facilitate such
defense.

 

7.6.          Should the use of the
Source Code be enjoined, or should the Pharmacopeia Group desire to minimize
its liabilities hereunder, the Pharmacopeia Group shall have the right, at the
Pharmacopeia Group’s sole option and expense, to secure the right for PDD to
continue use of the Source Code or to replace or modify the Source Code to make
it noninfringing

 

7.7.          Upon seeking
indemnification under this Agreement, the party seeking indemnification (the
“Requesting Party”), will give the other party (the “Indemnifying Party”)
prompt written notice of the commencement of any action (and any prior claims
relating to such action) for which the Requesting Party seeks
indemnification.  The Indemnifying Party
will have no liability or responsibility of any kind to the Requesting Party if
it is not promptly notified and does not have adequate opportunity to defend.

 

7.8.          If the Indemnifying
Party is given prompt notice and has adequate opportunity to defend, but fails
or declines to assume the defense of any such claim or action within thirty
(30) days after notice thereof, the Requesting Party may assume the defense of
such claim or action

 

14

 

for the account and at the risk
of the Indemnifying Party, and any liabilities related thereto shall be
conclusively deemed a liability of the Indemnifying Party.

 

7.9.          Except as provided in
Section 7.8, the Indemnifying Party will have sole control of the defense of
the action and of all negotiations for its settlement or compromise.  The Indemnifying Party, however, is not
permitted to settle or compromise any claim or action that imposes any
restrictions or obligations on the Requesting Party, without the Requesting
Party’s prior written consent.

 

7.10.        The indemnification rights
under this Agreement are in addition to all other rights which the parties may
have at law or in equity or otherwise.

 

7.11.        IN NO EVENT SHALL ANY OF
THE PHARMACOPEIA GROUP OR PDD OR THE LICENSORS OR SUPPLIERS OF EITHER THE
PHARMACOPEIA GROUP OR PDD BE LIABLE FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF
GOODWILL, DATA LOSS, BUSINESS DISRUPTION, OR COMPUTER FAILURE.  EACH PARTY ACKNOWLEDGES THAT THE LICENSING
RIGHTS REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND THAT NEITHER
PARTY WOULD ENTER INTO THIS AGREEMENT ON THE TERMS HEREOF WITHOUT THESE
LIMITATIONS ON EACH PARTY’S LIABILITY.

 

8.             Term and
Termination.

 

8.1.          This Agreement is
effective as of the Effective Date and continues until the termination or
expiration of the last to terminate or expire of the Licensed Patents. Unless
earlier terminated pursuant to the provisions of Section 8.2 or Section 8.4,
the license granted in Section 3.4.a shall terminate upon the expiration of the
last to expire PDD Patent.

 

8.2.          The Pharmacopeia Group
has the right to terminate a license granted in Sections 2.1, 3.1.a, or 4.2 of
this Agreement if PDD breaches any material provision of this Agreement with
respect to such particular license and fails to remedy such breach within sixty
(60) days after receiving written notice of such breach.  This right of termination, however, cannot
be exercised if at any time during said time period, PDD advises the
Pharmacopeia Group that it challenges the alleged breach.  In such event, PDD and the Pharmacopeia
Group will negotiate in good faith to resolve any disputed breach.

 

8.3.          PDD has the right to
terminate a license granted under Section 3.4.a of this Agreement if the
Pharmacopeia Group breaches any material provision of this Agreement with
respect to such license and fails to remedy such breach within sixty (60) days
after receiving written notice of such breach. 
This right of termination, however, cannot be exercised if at any time
during said time period, the Pharmacopeia Group advises PDD that it challenges
the alleged breach.  In such event, PDD
and the Pharmacopeia Group will negotiate in good faith to resolve any disputed
breach.

 

8.4.          In the event any
proceeding is instituted by or against any member of the Pharmacopeia Group or
PDD seeking to adjudicate it bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking an entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or any substantial part of its property or taking any action to

 

15

 

authorize any of the foregoing
or similar actions by or against any such Pharmacopeia Group member or PDD, all
rights and licenses granted hereunder are and shall otherwise be deemed to be,
for the purposes of Section 365(n) of the Bankruptcy Code (11 U.S.C. 365(n)),
licenses of rights to “intellectual property” as defined under Section 101(52)
of the Bankruptcy Code.

 

8.5.          Termination or
expiration of this Agreement does not release PDD or the Pharmacopeia Group
from any obligation theretofore accrued.

 

8.6.          Upon any termination or
expiration of any license right granted under Section 2.1, PDD shall make no
further use of that portion of the Software subject to such license right and
shall either return to the Pharmacopeia Group or destroy originals and all
copies of the Software and supporting materials subject to such license
right.  PDD shall supply a written
affidavit executed by an officer of PDD to the Pharmacopeia Group certifying
that it no longer possesses any embodiments of the Software or supporting
materials subject to such license right. 
No refunds or credits will be due PDD.

 

9.             Miscellaneous.

 

9.1.          Relationship of the
Parties.  The relationship of PDD
and the Pharmacopeia Group under this Agreement is that of independent
contractors.  The provisions of this
Agreement will not be construed to create between PDD and the Pharmacopeia
Group the relationship of principal and agent, joint venturers, co-partners or
any other similar relationship, the existence of which is hereby denied by PDD
and the Pharmacopeia Group.  Neither
party nor any member of the Pharmacopeia Group will be liable in any way for
any engagement, obligation, liability, contract, representation or warranty of
the other party to or with any third party. 
PDD is not an agent for the Pharmacopeia Group and the Pharmacopeia
Group is not an agent for PDD for any purpose and each party has no right or
authority to assume or create any obligations, express or implied, on behalf or
in the name of the other party.

 

9.2.          Notices.  Any notice or other communication required
or permitted to be given by either party under this Agreement shall be in
writing and shall be effective when delivered, if delivered by hand or by
electronic facsimile, or one (1) day after being sent by overnight express
courier (e.g. Federal Express), or five (5) days after mailing if mailed by
registered or certified mail, postage prepaid and return receipt
requested.  Any such notice or
communication shall be addressed to each party or the Pharmacopeia Group at the
following addresses or such other address as may be designated by notice
pursuant to this Section 9.2: 

 

	
  If to PDD:

  	
   

  	
  If to
  Pharmacopeia or any other member of

  the Pharmacopeia Group:

  
	
   

  	
   

  	
   

  
	
   

  	
  Pharmacopeia
  Drug Discovery, Inc.

  	
   

  	
   

  	
  Pharmacopeia,
  Inc. / Accelrys, Inc.

  
	
   

  	
  3000
  Eastpark Boulevard

  	
   

  	
   

  	
  9685
  Scranton Road

  
	
   

  	
  Cranbury New
  Jersey 08512

  	
   

  	
   

  	
  San Diego,
  CA 92121-3752

  
	
   

  	
  Facsimile:
  (609) 452-3672

  	
   

  	
   

  	
  Facsimile:
  (858) 799-5100

  
	
   

  	
  Attn:
  General Counsel

  	
   

  	
   

  	
  Attn:
  General Counsel

  

 

16

 

9.3.          Waiver.  No waiver of any breach of any provision of
this Agreement will constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provision of this Agreement; and no waiver will
be effective unless in writing.

 

9.4.          Survival.  The following Sections shall survive any
termination or expiration of this Agreement: Sections 2.5, 2.6, 2.7, 3.1.a,
4.2, 6.2.b, 6.4, 6.5, 6.6, 6.8, 6.9, 6.10, 9.1, 9.2, 9.3, 9.4, 9.6, 9.7, 9.8,
9.9, 9.10, 9.11, and 9.13 and Article 7 survive any termination or expiration
of this Agreement

 

9.5.          Force Majeur. In
the event that the performance of this Agreement or of an obligation under this
Agreement, is prevented, restricted or interfered with by reason of any cause
not within the control of the respective party, and which could not by reasonable
diligence have been avoided by such party, the party so affected, upon the
giving of prompt notice to the other party, as to the nature and probable
duration of such event, will be excused from such performance to the extent and
for the duration of such prevention, restriction or interference, provided that
the party so affected uses its reasonable efforts to avoid or remove such cause
of non-performance and will fulfill and continue performance under this
Agreement whenever and to the extent such cause or causes are removed.  For the purpose of this Section, but without
limiting the generality hereof, the following are not within the control of a
party: acts of God; acts or omissions of a governmental agency or body;
compliance with requests, recommendations, rules, regulations, or orders of any
governmental authority or any officer, department, agency, or instrument
thereof; flood; storm; earthquake; fire; war; insurrection; riot; terrorist
incidents, accidents; acts of the public enemy; invasion; disease: quarantine
restrictions; strike; labor lockout; differences with workmen; embargoes;
delays or failures in transportation; and acts of a similar nature.

 

9.6.          Choice of Law.  This Agreement shall be construed and take
effect in all respects in accordance with the laws of the State of Delaware,
without regard to its conflict of laws principals.  The United Nations Convention on Contracts for the International
Sale of Goods is expressly excluded from this Agreement.

 

9.7.          Severability.  If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, unenforceable or
void, such will be without effect on the validity, legality and enforceability
of the remaining provisions or this Agreement as a whole.  Such invalid, illegal, unenforceable or void
provision shall be changed and interpreted to accomplish the objectives of such
provision to the greatest extent possible under applicable law, and such
decision shall not affect the validity or enforceability of any or all of the
remaining provisions.

 

9.8.          Headings.  The section and paragraph headings and
numbering are for convenience only and cannot have any effect on the
interpretation or construction of this Agreement.

 

9.9.          Assignment.  This Agreement is binding upon and inures to
the benefit of the heirs, successors and assigns of the parties hereto,
provided that this Agreement, in whole or in part, is not assignable by either
party, except that either party may assign this Agreement to any successor by
merger or sale of substantially all of its business or assets to which this
Agreement pertains; provided, however, that PDD may not assign this Agreement
to any competitor of the Pharmacopeia Group that is engaged in the sale of
software.  Any effort to assign in
violation

 

17

 

hereof is considered void.  In the event of any assignment, the
assigning party must provide the other party with appropriate documentation of
the assignment.

 

9.10.        Merger.  Each party acknowledges that it has read
this Agreement, understands it, and agrees to be bound by its terms and further
agrees that it constitutes the complete and exclusive understanding between the
parties, which supersedes and merges all prior proposals, understandings, representations,
and agreements, oral and written, between the parties regarding the subject
matter of this Agreement; and no party has relied on any representation not
expressly set forth or referred to in this Agreement.

 

9.11.        Amendment.  No amendment, variation, waiver or
modification of any of the terms or provisions of this Agreement will be
effective unless set forth in writing, specifically referencing this Agreement,
and duly signed by an authorized officer of the party to be bound thereby.

 

9.12.        Execution.  This Agreement may be executed in two or
more counterparts, all of which constitute one and the same legal instrument.

 

9.13.        Going Forward.  The Pharmacopeia Group and PDD agree to
execute, acknowledge and deliver such further instruments and do all other such
acts as may be necessary or appropriate to effect the purpose and intent of
this Agreement.

 

[Remainder of page intentionally left blank]

 

18

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the Effective Date.

 

	
  Pharmacopeia, Inc.

  	
  Pharmacopeia Drug Discovery, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/ John J.
  Hanlon

  	
   

  	
  By:

  	
  /s/ Joseph
  A. Mollica, Ph.D.

  	
   

  
	
   

  	
  Name:  John J. Hanlon

  	
   

  	
  Name:  Joseph A. Mollica, Ph.D.

  
	
   

  	
  Title:  Chief Financial Officer

  	
   

  	
  Title:  President and Chief Executive Officer

  
	
   

  	
   

  
	
  Accelrys Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark J.
  Emkjer

  	
   

  
	
   

  	
  Name:  Mark J. Emkjer

  
	
   

  	
  Title:  President and Chief Executive OfficerExhibit 10.5

 

 

 

 

PHARMACOPEIA DRUG DISCOVERY, INC.

 

 

and

 

 

AMERICAN STOCK TRANSFER & TRUST COMPANY

 

 

 

RIGHTS AGREEMENT

 

 

 

Dated as of April 30, 2004

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.

  	
  CERTAIN
  DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.

  	
  APPOINTMENT
  OF RIGHTS AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.

  	
  ISSUE
  OF RIGHT CERTIFICATES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.

  	
  FORM
  OF RIGHT CERTIFICATES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.

  	
  COUNTERSIGNATURE
  AND REGISTRATION.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6. 

  	
  TRANSFER,
  SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
  DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. 

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.

  	
  EXERCISE
  OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.

  	
  CANCELLATION
  AND DESTRUCTION OF RIGHT CERTIFICATES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.

  	
  RESERVATION
  AND AVAILABILITY OF SHARES OF CAPITAL STOCK.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  10.

  	
  PREFERRED
  STOCK RECORD DATE.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  11.

  	
  ADJUSTMENT
  OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.

  	
  CERTIFICATE
  OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.

  	
  CONSOLIDATION,
  MERGER OR SALE OR TRANSFER OF ASSETS, CASH FLOW OR EARNING POWER.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.

  	
  FRACTIONAL
  RIGHTS AND FRACTIONAL SHARES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  15.

  	
  RIGHTS
  OF ACTION.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  16.

  	
  AGREEMENT
  OF RIGHT HOLDERS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.

  	
  RIGHT
  CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  18.

  	
  CONCERNING
  THE RIGHTS AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  19.

  	
  MERGER
  OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  20.

  	
  DUTIES
  OF RIGHTS AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  21.

  	
  CHANGE
  OF RIGHTS AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  22.

  	
  ISSUANCE
  OF NEW RIGHT CERTIFICATES.

  	
   

  

 

 

	
  SECTION
  23.

  	
  REDEMPTION
  AND TERMINATION.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  24.

  	
  EXCHANGE.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  25.

  	
  NOTICE
  OF CERTAIN EVENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  26.

  	
  NOTICES.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  27.

  	
  SUPPLEMENTS
  AND AMENDMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  28.

  	
  SUCCESSORS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  29.

  	
  DETERMINATIONS
  AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  30.

  	
  BENEFITS
  OF THIS AGREEMENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  31.

  	
  SEVERABILITY.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  32.

  	
  GOVERNING
  LAW.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  33.

  	
  COUNTERPARTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  34.

  	
  DESCRIPTIVE
  HEADINGS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
  CERTIFICATE
  OF DESIGNATION

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
  FORM
  OF RIGHT CERTIFICATE

  	
   

  

 

ii

 

RIGHTS AGREEMENT

 

RIGHTS AGREEMENT, dated as of April 30, 2004 (the “Agreement”), between
PHARMACOPEIA DRUG DISCOVERY, INC., a Delaware corporation (the “Company”), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
“Rights Agent”).

W I T N E S S E T H

 

WHEREAS, on April 6, 2004 (the “Rights Dividend Declaration Date”), the
Board of Directors of the Company (the “Board of Directors”) authorized and
declared a dividend distribution of one right (each, a “Right”) for each share
of common stock, par value $.01 per share, of the Company (the “Common Stock”)
outstanding at the Close of Business (as hereinafter defined) on April 30, 2004
(the “Record Date”), and has authorized (i) the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p))
for each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company’s treasury) and the
earliest of the Distribution Date (as defined in Section 3), the Redemption
Date and the Final Expiration Date (as such terms are defined in Section 7) and
(ii) in certain circumstances as provided in Section 22, the issuance of one
Right with respect to each share of Common Stock that shall become outstanding
between the Distribution Date and the earlier of the Redemption Date and the
Final Expiration Date, each Right initially representing the right to purchase
one ten-thousandth of a share of Series A Junior Participating Preferred Stock
of the Company (the “Preferred Stock”) having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences
and Rights attached as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and intending to be legally bound hereby, the
parties agree as follows:

 

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

 

(a)                                  “Acquiring
Person” shall mean any Person who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of fifteen percent
(15%) or more of the shares of the Common Stock then outstanding, but shall not
include any Exempt Person.  For purposes
of determining whether a Person is an Acquiring Person, such Person shall not be
deemed to be the Beneficial Owner of the shares of Common Stock beneficially
owned by an Exempt Person. 
Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of an acquisition of Beneficial
Ownership of Common Stock by the Company that, by reducing the number of shares
of Common Stock (or securities convertible into or exchangeable for Common
Stock) outstanding, increases the percentage of Common Stock beneficially owned
by such Person (together with all Affiliates and Associates of such Person) to
fifteen percent (15%) or more of the shares of Common Stock then outstanding; provided,
however, that if any Person (other than Exempt Persons) shall
become the Beneficial Owner of fifteen percent (15%) or more of the shares of
Common Stock then outstanding by reason of share purchases by the

 

 

Company
and shall, after such share purchases by the Company, become the Beneficial
Owner of any additional shares of Common Stock, then such Person shall be an
Acquiring Person.  Notwithstanding the
foregoing, if the Board of Directors determines in good faith that a Person who
would otherwise be an Acquiring Person has become such inadvertently, and 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, then such
Person shall not, solely as a result of such inadvertent acquisition, be deemed
to be an Acquiring Person for any purpose of this Agreement.

 

(b)                                 “Affiliate”
and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as such rule
is in effect on the Record Date.

 

(c)                                  “Agreement”
shall have the meaning as set forth in the introductory paragraph.

 

(d)                                 A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” and shall be deemed to have “Beneficial Ownership”
of, any securities:

 

(i)                                     that
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, owns or 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 (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 (1) securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (2) securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event, or (3) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event, if such Rights
were acquired by such Person or such Person’s Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) or Section 22 or pursuant to
Section 11(a)(i) in connection with an adjustment made with respect to any of
the Rights heretofore specified in this clause (3); or

 

(B)                                has
the right to vote or otherwise has Beneficial Ownership (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
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, pursuant to this
subparagraph (B), any security as a result of any agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (1) arises solely from a revocable proxy or consent given to
such Person 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

 

2

 

(ii)                                  that
are beneficially owned, including pursuant to subparagraphs (i)(A) and (B) of
this subsection (d) directly or indirectly, by any other Person (or Affiliate
or Associate thereof) with which such Person or any of such Person’s Affiliates
or Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso in subparagraph (i)(B) of this
subsection (d)) or disposing of any voting securities of the Company;

 

provided,
however, that nothing in this subsection (d) shall cause a Person
engaged in business as an underwriter of securities to be the Beneficial Owner
of, or to beneficially own, any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition; provided, further,
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(d)), including, without limitation, in a
fiduciary capacity, by an Exempt Person.

 

(e)                                  “Board
of Directors” shall have the meaning set forth in the first recital clause
at the beginning of this Agreement.

 

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

 

(g)                                 “Close
of Business” on any given date shall mean 5:00 P.M., New York, 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, New York time, on the next succeeding
Business Day.

 

(h)                                 “Common
Stock” when used with reference to the Company shall mean the common stock,
par value $.01 per share, and when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such Person or, if such Person is a Subsidiary of another
Person, the Person or Persons that ultimately control such first-mentioned
Person.

 

(i)                                     “Company”
shall have the meaning as set forth in the introductory paragraph.

 

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

 

(k)                                  “Current
Per Share Market Price” shall have the meaning set forth in Section 11(d).

 

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

 

3

 

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

 

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

 

(o)                                 “Exchange
Act Regulations” shall mean the General Rules and Regulations under the
Exchange Act.

 

(p)                                 “Exchange
Shares” shall have the meaning set forth in Section 24(a).

 

(q)                                 “Exempt
Person” shall mean (i) the Company, (ii) Pharmacopeia, Inc. until after the
consummation of the spin-off of the Company by Pharmacopeia, Inc. pursuant to
the Master Separation and Distribution Agreement by and between the Company and
Pharmacopeia, Inc., dated as of April 30, 2004, (iii) any wholly-owned
Subsidiary of the Company, (iv) any employee benefit plan of the Company, or of
any Subsidiary of the Company, or (v) any entity holding shares of Common Stock
for the benefit of present or future participants (e.g., a trustee or plan
fiduciary) pursuant to the terms of any such aforementioned employee benefit
plan.

 

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

 

(s)                                  “NASDAQ”
shall have the meaning set forth in Section 11(d)(i).

 

(t)                                    “Person”
shall mean any individual, firm, corporation, partnership, limited liability
company or other entity, and shall include any successor (by merger or
otherwise) of such entity.

 

(u)                                 “Preferred
Stock” shall mean shares of Series A Junior Participating Preferred Stock,
par value $.01 per share, of the Company, and, to the extent that there are not
a sufficient number of shares of Series A Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.

 

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

 

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

 

(x)                                   “Record
Date” shall have the meaning set forth in the first recital clause at the
beginning of this Agreement.

 

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

 

4

 

(z)                                   “Right”
shall have the meaning set forth in the first recital clause at the beginning
of this Agreement.

 

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

 

(bb)                          “Rights
Agent” shall have the meaning set forth in the introductory paragraph of
this Agreement.

 

(cc)                            “Rights
Dividend Declaration Date” shall have the meaning set forth in the first
recital clause at the beginning of this Agreement.

 

(dd)                          “Section
11(a)(ii) Event” shall have the meaning set forth in Section 11(a)(ii).

 

(ee)                            “Section
11(a)(ii) Trigger Date” shall have the meaning set forth in Section
11(a)(iii).

 

(ff)                                “Section
13 Event” shall have the meaning set forth in Section 13(a).

 

(gg)                          “Securities
Act” shall have the meaning set forth in Section 9(c).

 

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

 

(ii)                                  “Stock
Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report
filed or amended pursuant to Section 13(d) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.

 

(jj)                                  “Subsidiary”
of any Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person.

 

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

 

(ll)                                  “Surviving
Corporation” shall have the meaning set forth in Section 11(q).

 

(mm)                      “Trading
Day” shall have the meaning set forth in Section 11(d)(i).

 

(nn)                          “Triggering
Event” shall mean any Section 11(a)(ii) Event or Section 13 Event.

 

SECTION 2.                                Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as 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 such co-Rights Agents as it may deem necessary or desirable
upon ten (10) days

 

5

 

prior written notice to the
Rights Agent.  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 Agents. 
In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agents shall be as the
Company shall determine.

 

SECTION 3.                                Issue
of Right Certificates.  (a)  Until the earlier of (i) the Close of
Business on the tenth calendar day after the Stock Acquisition Date (or, if the
tenth day after the Stock Acquisition Date occurs before the Record Date, the
Close of Business on the Record Date), or (ii) the Close of Business on 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, and of which the Company will give the Rights Agent prompt written
notice) after the date that a tender or exchange offer by any Person (other
than an Exempt Person) is first published or sent or given within the meaning
of Rule 14d- 2 of the Exchange Act Regulations, the consummation of which would
result in Beneficial Ownership by a Person (other than an Exempt Person) of
fifteen percent (15%) or more of the outstanding Common Stock (including any
such date that is after the date of this Agreement and prior to the issuance of
the Rights) (the earlier of (i) and (ii) being herein referred to as the
“Distribution Date”), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares
of Common Stock registered in the names of the holders of the Common Stock
thereof (which certificates for Common Stock shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer to the
Company).  As soon as practicable after
the Distribution Date, the Rights Agent will send, by first-class mail, postage-prepaid,
to each record holder of shares of Common Stock as of the Close of Business on
the Distribution Date, or, with respect to Common Stock so issued on or after
the Distribution Date (unless otherwise provided with respect thereto as
aforesaid), to the record holder of such Common Stock on the date of issuance,
at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form attached as Exhibit B (the “Right
Certificate”), evidencing one Right for each share of Common Stock so held,
subject to adjustments as provided herein. 
In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p), at the time of
distribution of the Right Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)) so that
Right Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights (calculated in accordance
with Section 14(a)).  As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

 

(b)                                 With
respect to certificates for shares of Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for shares of Common Stock registered in the names of the holders
thereof.  Until the earlier of the
Distribution Date or the Final Expiration Date, the surrender for transfer of
any certificate for Common Stock outstanding on the Record Date shall also
constitute the transfer of the Rights associated with such shares of Common
Stock represented thereby.

 

(c)                                  Rights
shall be issued in respect of all shares of Common Stock which are issued
(whether originally issued or delivered from the Company’s treasury) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final

 

6

 

Expiration Date, or in certain
circumstances as provided in Section 22, after the Distribution Date, but prior
to the Final Expiration Date. 
Certificates representing shares of Common Stock issued after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date (including, without limitation, reacquired shares of
Common Stock referred to in the last sentence of this paragraph (c)) shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:

 

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Pharmacopeia Drug
Discovery, Inc. (the “Company”) and American Stock Transfer & Trust Company
(the “Rights Agent”), dated as of April 30, 2004 (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 offices of the Company.  Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.  The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without charge,
promptly following receipt of a written request therefor.  Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may become null and void and
may not be transferable.

 

With respect to such certificates bearing the foregoing legend, until
the earlier of the Distribution Date or the Final Expiration Date, the Rights
associated with the shares of Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of the
shares of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
by such certificates.  In the event that
the Company purchases or acquires any shares of Common Stock after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or
the Final 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
which are no longer outstanding.

 

SECTION 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) shall be substantially in the form attached as Exhibit B, 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 duties, rights or responsibilities of the Rights
Agent and as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or any securities
association on whose interdealer quotation system the Rights may from time to
time be authorized for quotation, or to conform to usage.  Subject to the provisions of Section 11 and
Section 22, the Right Certificates that are issued in respect of Common Stock
that were issued and outstanding as of the Record Date, shall be dated as of
the Record Date, and all Right

 

7

 

Certificates that are issued in
respect of other Common Stock shall be dated as of the respective dates of
issuance of such Common Stock, and in either case on their faces shall entitle
the holders thereof to purchase such number of one one-ten thousandths of a
share of Preferred Stock as shall be set forth therein at the price set forth
therein (such purchase price per one one-ten thousandth of a share the
“Purchase Price”), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

 

(b)                                 Any
Right Certificate issued pursuant to Section 3(a) or Section 22 that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate of an Acquiring Person) which becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate of an Acquiring Person)
who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or any Associate
or Affiliate of such Acquiring Person) to holders of equity interests in such
Acquiring Person (or of such Associate or Affiliate) or to any Person with whom
the Acquiring Person has any agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer that the Board of Directors has
determined is part of a plan, agreement, arrangement or understanding which has
as a primary purpose or effect the avoidance of Section 7(e) or Section 11, and
any Right Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:

 

The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement).  Accordingly, this
Right Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of the Rights Agreement.

 

The absence of the foregoing
legend on any Right Certificate shall in no way affect any of the other
provisions of this Agreement, including, without limitation, the provisions of
Section 7(e).  The Company shall
instruct the Rights Agent in writing of the Rights which should be so legended
and shall supply the Rights Agent with such legended Right Certificates.

 

SECTION 5.                                Countersignature
and Registration.  (a)  The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board of Directors, its President
or any Vice President, either manually or by facsimile signature, and shall
have affixed thereto the Company’s seal or a facsimile thereof that shall be
attested by the secretary or an assistant secretary of the Company, either
manually or by facsimile signature.  The
Right Certificates shall be countersigned by the Rights Agent, either manually
or by facsimile signature, and shall not be valid for any purpose unless so
countersigned.  In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and

 

8

 

issued 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, the Rights Agent will keep, or cause to be kept, at the
office of the Rights Agent designated for such purposes, 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 as evidenced on its face by each of the Right Certificates and the date
of each of the Right Certificates.

 

SECTION 6.                                Transfer,
Split-Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates. 
(a)  Subject to the provisions of
Section 4(b), Section 7(e), Section 11 and Section 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-ten
thousandths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as
the Right Certificate or Certificates surrendered then entitles such holder to
purchase.  Any registered holder desiring
to transfer, 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
transferred, split up, combined or exchanged, with the form of assignment and
certificate appropriately executed, at the office of the Rights Agent
designated for such purpose.  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 until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company and the Rights Agent shall reasonably
request.  Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e), Section 11 and Section 14,
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested.  The Company may require payment 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 under any Section of this Agreement requiring the payment of taxes
or charges unless and until it is satisfied that all such taxes and/or charges
have been paid.

 

(b)                                 Upon
receipt by the Company and the Rights Agent of evidence 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, at the Company’s request, 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

 

9

 

Certificate if mutilated, the
Company will make 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.

 

SECTION 7.                                Exercise
of Rights; Purchase Price; Expiration Date of Rights.  (a) 
Subject to Section 7(e), the registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a)), 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 and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-ten thousandths of a share of
Preferred Stock (or other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior to the
earliest of (i) the Close of Business on the tenth anniversary hereof, or such
later date as may be established by the Board of Directors prior to the
expiration of the Rights (such date, as it may be extended by the Board of
Directors, the “Final Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the “Redemption Date”), or (iii) the time
at which such Rights are exchanged as provided in Section 24.

 

(b)                                 The
Purchase Price for each one one-ten thousandth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be $75.00, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
and shall be payable in lawful money of the United States of America, subject
to paragraph (c) below.

 

(c)                                  Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase and the certificate on the reverse side thereof duly
executed, accompanied by payment of the Purchase Price per one one-ten
thousandth of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax or charge required to be paid by the holder of such
Right Certificate in accordance with Section 9(e) (as determined by the Rights
Agent), the Rights Agent shall, subject to Section 20(k), thereupon promptly
(i) (A) requisition from any transfer agent of the shares of Preferred Stock
(or make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-ten thousandths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-ten thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional interests in shares
in accordance with Section 14, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or, upon the order of
the registered

 

10

 

holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Right Certificate.  The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash or by
certified or bank check or money order payable to the order of the
Company.  In the event the Company is
obligated to issue other securities (including shares of Common Stock) of the
Company, or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such other securities or other property
are available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement.  The Company
reserves the right to require, prior to the occurrence of a Triggering Event,
that upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.

 

(d)                                 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 and delivered to the order of the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14.

 

(e)                                  Notwithstanding
anything to the contrary in this Agreement, from and after the first occurrence
of any Triggering Event, any Rights beneficially owned by (i) any Acquiring
Person (or any Associate or Affiliate of an Acquiring Person), (ii) a
transferee of an Acquiring Person (or any Associate or Affiliate of an
Acquiring Person) which becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or any Associate or
Affiliate of an Acquiring Person) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or of such Associate or
Affiliate) or to any Person with whom the Acquiring Person has any agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights, or (B) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect the avoidance of this Section
7(e), shall be null and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise.  The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) are complied with, but neither the Company
nor the Rights Agent  shall have any
liability to any holder of Rights or any other Person as a result of the Company’s
failure to make any determination under this Section 7(e) or such Section 4(b)
with respect to any Acquiring Person or its Affiliates, Associates or
transferees.

 

(f)                                    Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported transfer or exercise unless such
registered holder shall have (i) properly completed and signed the certificate
following the form of assignment or election to purchase set forth on the
reverse side of the Right Certificate surrendered for such assignment or
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 and the Rights Agent shall reasonably request.

 

11

 

SECTION 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
Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Right Certificate 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.

 

SECTION 9.                                Reservation
and Availability of Shares of Capital Stock.  (a)  Subject to the
Company’s rights under Section 11(a)(iii) to otherwise fulfill its obligations
hereunder, the Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares of Common Stock and/or other securities held in
its treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights
pursuant to the terms of this Agreement; provided, however, that
such action need not be taken with respect to shares of Preferred Stock (or
other securities) issuable upon exercise of the Rights until after such time as
the Rights become exercisable, and with respect to shares of Preferred Stock
and/or other securities issuable upon the occurrence of a Triggering Event,
until the occurrence of such event.

 

(b)                                 So
long as the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of Rights may be listed on any United States
national securities exchange or authorized for quotation on any interdealer
quotation system of any securities association, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable,
all shares reserved for such issuance to be listed on such exchange or quoted
on such system upon official notice of issuance upon such exercise.

 

(c)                                  The
Company shall use its best efforts to (i) file, as soon as is practicable
following the earliest date after the first occurrence of a Triggering Event in
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(ii) (or Sections
11(a)(iii) and 13), or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act of
1933, as amended (the “Securities Act”), with respect to the securities that
may be acquired upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, or (B) the earlier of the Redemption Date or
the Final Expiration Date.  The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states and other

 

12

 

appropriate jurisdictions in
connection with the exercisability of the Rights.  The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective
and to take such actions under such other securities or blue sky laws and
permit them 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, each
time with prompt notice thereof to the Rights Agent.  In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend, with prompt notice thereof to the Rights Agent, the
exercisability of the Rights until such time as a registration statement has
been declared effective. 
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained or the exercise
thereof shall not be permitted under applicable law, or a registration
statement shall not have been declared effective.

 

(d)                                 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, shares of Common Stock and/or 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), be
duly and validly authorized and issued and fully paid and nonassessable.

 

(e)                                  The
Company further covenants and agrees that, subject to Sections 6 and 7(c), it will
pay when due and payable, any and all transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates and of
any certificates for a number of one-ten thousandths of a share of Preferred
Stock (or shares of Common Stock and/or other securities, as the case may be)
upon the exercise of Rights.  The
Company shall not, however, be required to pay any transfer tax or charge that
may be payable in respect of any transfer or delivery of Right Certificates to
a Person other than, or the issuance or delivery of a number of one-ten
thousandths of a share of Preferred Stock or depositary receipts for a number
of one-ten thousandths of a share of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be), in respect of a name other than,
that of the registered holder of the Right Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number
of one-ten thousandths of a share of Preferred Stock or depositary receipts for
a number of one-ten thousandths of a share of Preferred Stock (or shares of
Common Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until any such
transfer tax or charge shall have been paid (any such transfer 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
transfer tax or charge is due.

 

SECTION 10.                          Preferred
Stock Record Date.  Each Person in
whose name any certificate for a number of one-ten thousandths of a share of
Preferred Stock (or shares of Common Stock and/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 such fractional shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate

 

13

 

evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes or charges) was made; provided, however, that if the date
of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed or a date on which the exercisability of the Rights is
suspended pursuant to Section 9(c), such Person shall be deemed to have become
the record holder of such shares on, and such certificate shall be dated, as
applicable, the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are open or the next succeeding Business Day on which such suspension
is no longer in effect.  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 shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

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

 

(a)  (i)                 In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on the shares of
Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding shares of Preferred Stock, (C) combine the outstanding shares of
Preferred Stock into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the shares of Preferred Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e), 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
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. 
If an event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), 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 23 hereof and prior to the Final Expiration Date, in the event any
Person, at any time after the date of this Agreement is or becomes an Acquiring
Person, then, promptly following the occurrence of such event (a “Section
11(a)(ii) Event”), proper provision shall be made so that each holder of a
Right, except as provided below and in Section 7(e), shall thereafter have a
right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one one-ten
thousandths of a share of Preferred Stock for which a Right was

 

14

 

theretofore exercisable, such
number of shares of Common Stock as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-ten
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of the Section 11(a)(ii) Event, and
(y) dividing that product (which, following such first occurrence shall
thereafter be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by fifty percent (50%) of the Current Per Share
Market Price (determined pursuant to Section 11(d)) of the Common Stock on the
date of the occurrence of the Section 11(a)(ii) Event (such number of shares is
herein called the “Adjustment Shares”); provided, however, that
the Purchase Price and number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any event occurring after the date of
such first occurrence.

 

(iii)                               In
the event that after the Distribution Date or the occurrence of a Section
11(a)(ii) Event, the number of shares of Preferred Stock or Common Stock which
are authorized by the Company’s certificate of incorporation, as amended, but
which are not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, are not sufficient to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company by vote of a majority of its Board of Directors shall:  (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of a Right (the “Current
Value”),  over (2) the Purchase Price
(such excess being the “Spread”) and (B) with respect to each Right, make
adequate provision to substitute for such Adjustment Shares, upon exercise of
the Rights, (1) cash, (2) a reduction in the Purchase Price, (3) shares of
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock, such as the
Preferred Stock, which the Board of Directors has deemed to have substantially
the same value and economic rights as shares of Common Stock (such shares or
units of shares of preferred stock being referred to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors; provided, however, that if
the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the Distribution Date, or in
the case of a Section 11(a)(ii) Event the later of (x) the first occurrence of
a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the “Section 11(a)(ii) Trigger Date”), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common 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 Preferred Stock or Common Stock
could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than one hundred twenty (120) days after the Distribution Date or
the Section 11(a)(ii) Trigger Date, as the case may be, in order that the
Company may seek stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the “Substitution Period”).  To the extent that the Company determines
that some action is to be taken pursuant to the first and/or second sentences
of this Section 11(a)(iii), the Company (x) shall provide, subject to Section
7(e), that such action shall apply uniformly to all outstanding Rights, and (y)
may

 

15

 

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 such first sentence 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, each
time with prompt notice thereof to the Rights Agent.  For purposes of this Section 11(a)(iii), the value of each
Adjustment Share shall be the Current Per Share Market Price of the Common
Stock on the Distribution Date or the Section 11(a)(ii) Trigger Date and the
per share or per unit value of any Common Stock Equivalent shall be deemed to
equal the Current Per Share Market Price of the Common Stock on such date.

 

(b)                                 In
case the Company shall fix a record date for the issuance of rights (other than
Rights), options or warrants to all holders of Preferred Stock entitling them
to subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the Preferred Stock (“Equivalent
Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preferred Stock) less than the
Current Per Share Market Price (as determined pursuant to Section 11(d)) of the
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
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number
of additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). 
In case such subscription price may be paid in consideration part or all
of which shall be in a form other than cash, the value of such 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 and
shall be binding on the Rights Agent and the holders of the Rights.  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 that would then be in effect if such
record date had not been fixed.

 

(c)                                  In
case the Company shall fix a record date for the making of 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 (other than a
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record

 

16

 

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 Per Share Market
Price (as determined pursuant to Section 11(d)) of the 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 and shall be binding on the Rights Agent and the holders
of the Rights) of the portion of the cash, assets or evidences of indebtedness
so 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
Per Share Market Price (as determined pursuant to Section 11(d)) of the
Preferred Stock.  Such adjustments shall
be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price that would then be 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), the Current Per Share Market Price of the shares of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the twenty (20) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii), the Current
Per Share Market Price of the shares of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Stock for the ten (10) consecutive Trading Days immediately following such
date; provided, however, that in the event that the Current Per
Share Market Price of the shares of Common Stock is determined during a period
following the announcement by the issuer of such shares of Common Stock of (A)
a dividend or distribution on such shares of Common Stock payable in shares of
such Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such shares of Common Stock, and prior to the expiration of
twenty (20) Trading Days, or ten (10) Trading Days, as set forth above, after
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the Current Per Share Market Price shall be appropriately adjusted to take into
account ex-dividend trading.  The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal United States 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
United States national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the United States
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System (“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 United States professional market maker making a market in the
shares of Common Stock selected by the Board of Directors.  If on any such date no such market maker is
making a market in the shares of Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors shall be
used.  The term

 

17

 

“Trading Day” shall mean a day on which the principal United States
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 United States
national securities exchange, a Business Day. 
If the shares of Common Stock are not publicly held or not so listed or
traded, “Current Per Share 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.

 

(ii)                                  For
the purpose of any computation hereunder, the Current Per Share Market Price of
the shares 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 Per Share Market Price of the shares of Preferred Stock cannot be
determined in the manner provided above or if the shares of Preferred Stock are
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the Current Per Share Market Price of the shares of
Preferred Stock shall be conclusively deemed to be an amount equal to 10,000
(as such number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the shares of Common
Stock occurring after the date of this Agreement) multiplied by the Current Per
Share Market Price of the shares of Common Stock.  If neither the shares of Common Stock nor the shares of Preferred
Stock are publicly held or so listed or traded, Current Per Share Market Price
of the shares of Preferred Stock 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 that 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 one
ten-thousandth of a share of Common Stock or other share or one
one-hundred-millionth of a share of Preferred Stock, as the case may be.  Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the Final Expiration Date.

 

(f)                                    If
as a result of an adjustment made pursuant to Section 11(a)(ii) or Section
13(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right 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 Preferred Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on like
terms to any such other shares.

 

(g)                                 All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-ten thousandths of a share of
Preferred Stock

 

18

 

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-ten thousandths of a share
of Preferred Stock (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-ten thousandths of a share covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

 

(i)                                     The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the
number of one one-ten thousandths of a share of Preferred Stock purchasable
upon the exercise of a Right.  Each of
the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-ten thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-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, with prompt notice thereof to the Rights Agent, of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (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 Rights on such
record date Right Certificates evidencing, subject to Section 14, 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 countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.

 

(j)                                     Irrespective
of any adjustment or change in the Purchase Price or the number of one one-ten
thousandths of a share 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 one one-ten thousandths of a share and the
number of one one-ten thousandths of a share which were expressed in the initial
Right Certificates issued hereunder.

 

19

 

(k)                                  Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then stated par value, if any, of the number of one one-ten thousandths
of a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable such number of one one-ten thousandths of a share of
Preferred Stock at such adjusted Purchase Price.

 

(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 until the occurrence of such event the issuing to
the holder of any Right exercised after such record date the number of one
one-ten thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-ten thousandths of a share 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 (fractional or otherwise) 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 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 wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) dividends on shares of
Preferred Stock payable in shares of Preferred Stock or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its shares of Common Stock or Preferred Stock shall not
be taxable to such stockholders.

 

(n)                                 The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
(ii) merge with or into or engage in a share exchange with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets,
cash flow or earning power aggregating more than fifty percent (50%) of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), if (x) at the time of or immediately after such consolidation, merger,
share exchange or sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would 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, share exchange or sale, the stockholders of the Person
who constitutes, or would constitute, the “Principal Party” for purposes of
Section 13(a) shall have

 

20

 

received a distribution of
Rights previously owned by such Person or any of its Affiliates or Associates.

 

(o)                                 The
Company covenants and agrees that, after the Distribution Date, it shall not,
except as permitted by Section 23, Section 24 or Section 27, 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
otherwise eliminate the benefits intended to be afforded by the Rights.

 

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

 

(q)                                 Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior
to the Distribution Date consolidate with, or merge with or into, any other
Person for the primary purpose of a change of domicile of the Company, and, in
connection with such consolidation or merger, all of the outstanding shares of
Common Stock shall be changed into or exchanged for shares of Common Stock of
the surviving corporation of such consolidation or merger (the “Surviving
Corporation”), then proper provision shall be made so that Rights shall be
associated with each share of Common Stock of the Surviving Corporation, except
as provided in Section 7(e), such that the number of Rights associated with
each share of Common Stock of the Surviving Corporation following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock of the
Surviving Corporation which the shares of Common Stock were changed into or
exchanged for pursuant to the consolidation or merger.  Following such a consolidation or merger,
this Agreement shall remain in effect and all references to the Company shall
be deemed to be references to the Surviving Corporation.

 

SECTION 12.                          Certificate
of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 or Section 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement,
reasonably detailed, of the facts and computations accounting for such
adjustment and (b) promptly file with the Rights Agent, and with each transfer
agent for the shares of Preferred Stock and the Common

 

21

 

Stock, a copy of such
certificate.  The Rights Agent shall be
fully protected in relying on such certificate and on any adjustment contained
therein and shall have no duty with respect to and shall not be deemed to have
knowledge of any adjustment unless and until it shall have received such a
certificate.

 

SECTION 13.                          Consolidation,
Merger or Sale or Transfer of Assets, Cash Flow or Earning Power.  (a) 
In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall engage in a share exchange with or shall consolidate with, or
merge with or into, the Company, and the Company shall be the continuing or
surviving corporation of such share exchange, consolidation or merger and, in
connection with such share exchange, 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 cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets, cash flow or earning power aggregating fifty
percent (50%) or more of the assets, cash flow or earning power of the Company
and its Subsidiaries, taken as a whole to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o)) (any such event described in clause (x), (y)
or (z) being a “Section 13 Event”), then, and in each such case proper
provision shall be made so that:

 

(i)                                     each
holder of a Right, except as provided in Section 7(e), shall thereafter have
the right to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of 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 call, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-ten
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such one one-ten thousandths of a share for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and (2) dividing that product (which product, following
the first occurrence of a Section 13 Event, shall be referred to as the
“Purchase Price” for each Right and for all purposes of this Agreement) by
fifty percent (50%) of the Current Per Share Market Price (determined pursuant
to Section 11(d)(i)) of the shares of Common Stock of such Principal Party on
the date of consummation of such Section 13 Event;

 

(ii)                                  such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement;

 

22

 

(iii)                               the
term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 shall apply only
to such Principal Party following the first occurrence of a Section 13 Event;

 

(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 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; and

 

(v)                                 the
provisions of Section 11(a)(ii) shall be of no effect following the first
occurrence or any Section 13 Event.

 

If, in the case of a
transaction of the kind described in clause (z) of the first sentence of this
Section 13(a), the Person or Persons to whom assets or earning power are sold
or otherwise transferred are individuals, then the preceding sentences of this
Section 13(a) shall be inapplicable, and the Company shall require as a
condition to such sale of transfer that such Person or Persons pay to each
holder of a Right Certificate, upon its surrender to the Rights Agent and in
exchange therefor (without requiring payment by such holder), cash in the
amount determined by multiplying the then current Purchase Price by the number
of shares of Common Stock for which a Right is then exercisable.

 

(b)                                 “Principal
Party” shall mean:

 

(i)                                     in
the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any securities for
or into which shares of Common Stock of the Company are converted in such share
exchange, merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and

 

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

 

provided, however, that in any such
case, (1) if the shares of Common Stock of such Person are not at such time and
has not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the shares of Common Stock of which are
and have been so registered, “Principal Party” shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the shares of Common Stock of two or more of which are
and have been so registered, “Principal Party” shall refer to whichever of such
Persons is the issuer of the shares of Common Stock having the greatest
aggregate market value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (1)
and (2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a “Subsidiary” of both or all of
such joint ventures and

 

23

 

the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.

 

(c)                                  The
Company shall not consummate any Section 13 Event unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock which
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 such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any Section 13 Event, the Principal Party
will:

 

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

 

(ii)                                  use
its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the securities or “blue sky” laws
of such jurisdictions as may be necessary or appropriate; and

 

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

 

(d)                                 In
case the Principal Party that 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 Current Per Share Market Price
(determined pursuant to Section 11(d)) or securities exercisable for, or
convertible into, shares of Common Stock of such Principal Party at less than
such Current Per Share 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 shares of Common Stock of
such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company 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.

 

(e)                                  The
provisions of this Section 13 shall similarly apply to successive share
exchanges, mergers or consolidations or sales or other transfers.  In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii) Event,

 

24

 

the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).

 

SECTION 14.                          Fractional
Rights and Fractional Shares. 
(a)  The Company shall not be
required to issue fractions of Rights, except prior to the Distribution Date as
provided in Section 11(p), or to distribute Right Certificates that evidence
fractional Rights.  In lieu of such
fractional Rights, there shall be paid to the registered holders 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 current market
value of a whole Right.  For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable.  The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the Rights are listed or admitted
to trading, or, if the Rights are not listed or admitted to trading on any
United States national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the United States
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights, selected by the Board of
Directors.  If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors shall be used
and shall be conclusive for all purposes.

 

(b)                                 The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one-ten thousandth of
a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-ten thousandth of a share of
Preferred Stock).  In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-ten
thousandth of a share of Preferred Stock, 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 Per Share
Market Price of a share of Preferred Stock on the day of exercise, determined
in accordance with Section 11(d).

 

(c)                                  Following
the occurrence of a Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon the exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock.  In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised, as herein provided, an amount an amount in
cash equal to the same fraction of the current market value of one share of
Common Stock.  For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be

 

25

 

the closing price of a share of
Common Stock (as determined pursuant to Section 11(d)) for the Trading Day
immediately prior to the date of such exercise.

 

(d)                                 The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares (except as provided by
this Section 14) upon exercise of a Right.

 

(e)                                  The
Rights Agent shall have no duty or obligation with respect to this Section 14
and Section 24(e) unless and until it has received specific instructions (and
sufficient cash, if required) from the Company with respect to its duties and
obligations under such Sections.

 

SECTION 15.                          Rights
of Action. All rights of action in respect of this Agreement, other than
rights of action vested in the Rights Agent under this Agreement, are vested in
the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the shares of Common Stock); and
any registered holder of any Right Certificate (or, prior to the Distribution
Date, of the shares of 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 shares of 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 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 Agreement.  Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.

 

SECTION 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 be transferable only in connection
with the transfer of the shares of Common Stock;

 

(b)                                 after
the Distribution Date, the Right Certificates are 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 and with the appropriate forms and certificates fully
completed and executed;

 

(c)                                  subject
to Section 6(a) and Section 7(f), 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 Certificates or the
associated Common Stock certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the

 

26

 

Company nor the Rights Agent,
subject to the last sentence of Section 7(e), shall be affected by any notice
to the contrary; and

 

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

 

SECTION 17.                          Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number
of one one-ten thousandths of a share of Preferred Stock or any other
securities of the Company that may at any time be issuable on the exercise of
the Rights represented thereby, 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 for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.

 

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

 

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

 

27

 

(c)                                  The
indemnity and compensation provided in this Section 18 shall survive the
expiration of the Rights and the termination of this Agreement and the
resignation and removal of the Rights Agent.

 

SECTION 19.                          Merger
or Consolidation or Change of Name of Rights Agent.  

(a)  Any Person into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any Person
succeeding to the corporate trust, stock transfer or stockholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21.  In case at the time such successor Rights
Agent shall succeed to the agency created by this 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 Right
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.

 

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

 

SECTION 20.                          Duties
of Rights Agent.  The Rights Agent
undertakes only the duties and obligations imposed by this Agreement 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), and the legal advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in good faith and in accordance with such legal advice or
opinion.

 

(b)                                 Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Per Share Market Price) be proved or established by the Company prior
to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a

 

28

 

certificate signed by the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization and protection to the Rights Agent for any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement
in reliance upon such certificate.

 

(c)                                  The
Rights Agent shall be liable hereunder only for its own gross negligence, bad
faith or willful misconduct.

 

(d)                                 The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the 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 be under any liability or responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be liable or responsible for any breach by the Company of any covenant
or condition contained in this Agreement or in any Right Certificate; nor shall
it be liable or responsible for any adjustment required under the provisions of
Section 11 or Section 13, or liable or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt by the Rights Agent of the
certificate describing any such adjustment contemplated by Section 12); 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 or
Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Common Stock or Preferred Stock
will, when so 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 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 of Directors, the President, any Vice President, the Secretary, any
Assistant Secretary, 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 it shall not be liable for any action taken, suffered or omitted by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while awaiting instructions. 
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
Agreement and the date on or after which such action shall be taken, suffered
or such omission shall be effective. 
The Rights Agent shall not be liable for any action taken by, suffered
by or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date

 

29

 

specified in such application
(which date shall not be less than five (5) 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.

 

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

 

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

 

(j)                                     No
provision of this Agreement shall require the Rights Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or in the exercise of its rights if 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 attached to the form of assignment or
form of election to purchase, as the case may be, has either not been completed
or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
or transfer without first consulting with the Company.  If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such certificate,
unless previously instructed otherwise in writing by the Company (which
instructions may impose on the Right Agent additional ministerial
responsibilities, but no discretionary responsibilities), the Rights Agent may
assume without further inquiry that the Right Certificate is not owned by a
person described in Section 4(b) or Section 7(e) and shall not be charged with
any knowledge to the contrary.

 

SECTION 21.                          Change
of Rights Agent.  The Rights Agent
or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the registered holders of the Right
Certificates by first-class mail.  The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
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

 

30

 

make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate or certificate for Common Stock,
as the case may be, for inspection by the Company), then 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 Person organized and doing business under the laws of the
United States or any state of the United States and in good standing, shall be
authorized to do business under the laws of the United States or any State,
shall be authorized under such laws to exercise the stockholder services
business, exercise corporate trust, stock transfer or stockholder services
powers, shall be subject to supervision or examination by federal or state
authorities and shall have at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000.  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 the Preferred Stock, and mail a notice thereof in writing to the holders of
record of the Right Certificates (or certificates for Common Stock prior to the
Distribution Date).  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 or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

 

SECTION 22.                          Issuance
of New Right Certificates. 
Notwithstanding any of the provisions of this 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 a majority of the Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.  In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the exchange, redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so issued or sold (i)
pursuant to the exercise of stock options or under any employee plan or
arrangement, or (ii) upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by a majority of the Board of Directors, 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.

 

SECTION 23.                          Redemption
and Termination.  (a)  The Company may, at its option, by action of
a majority of the Board of Directors, at any time prior to the earlier of (i)
the Close of Business on the tenth calendar day following the Stock Acquisition
Date (or, if the

 

31

 

Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth
calendar day following the Record Date), or (ii) the Close of Business on the
Final Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $.0001 per Right, 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”).  The Company may,
at its option, by action of a majority of the Board of Directors, pay the Redemption
Price either in shares of Common Stock (based on the Current Per Share Market
Price of the Common Stock, determined in accordance with Section 11(d), at the
time of redemption), cash (whether in United States dollars or in such other
currency or currencies as the Board of Directors may determine) or any other
form of consideration deemed appropriate by the Board of Directors.  Notwithstanding the foregoing, in the event
payment of the Redemption Price to a holder of Rights would result in the payment
of an amount not equal to $.01 or an integral multiple of $.01, the amount to
be paid shall be rounded upward to the next $.01.  Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company’s right of redemption
hereunder has expired.

 

(b)                                 Immediately
upon the action of the Board of Directors ordering the redemption of the Rights
pursuant to subsection (a) of this Section 23, 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 for each Right so held. 
Within ten (10) days after action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the shares of Common Stock.  Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made
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 7(e)) held by
each holder of Rights.

 

SECTION 24.                          Exchange.  (a) 
The Company may, at its option, by action of a majority of the Board of
Directors, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to the provisions of
Section 7(e)) for shares of Common Stock, each Right being exchangeable for one
share of Common Stock, appropriately adjusted to reflect any transaction
specified in Section 11(a)(i) occurring after the date hereof (such number of
shares of Common Stock issuable in exchange for one Right being referred to
herein as the “Exchange Shares”). 
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than any
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the shares of
Common Stock then outstanding.

 

(b)                                 Immediately
upon the action of a majority of the Board of Directors ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and

 

32

 

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 the
Exchange Shares.  The Company shall
promptly give public notice of any such exchange, with prompt notice thereof to
the Rights Agent; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange.  The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent.  Any notice 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 7(e)) held by each holder of Rights.

 

(c)                                  In
any exchange pursuant to this Section 24, the Company, at its option, may
substitute shares of Preferred Stock (or shares of Equivalent Preferred Stock,
as such term is defined in paragraph (b) of Section 11) for shares of Common
Stock exchangeable for Rights, at the initial rate of one one-ten thousandth of
a share of Preferred Stock (or share of Equivalent Preferred Stock) for each
share of Common Stock, as appropriately adjusted to reflect stock splits, stock
dividends and other similar transactions after the date hereof.

 

(d)                                 In
the event that there shall not be sufficient shares of Preferred Stock or
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
shares of Company shall take all such action as may be necessary to authorize
additional shares of Preferred Stock or Common Stock for issuance upon exchange
of the Rights or shall take such other action specified in Section 11(a)(iii).

 

(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, there shall be paid 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 subsection (e), the
current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second and
third sentences of Section 11(d)(i)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.

 

SECTION 25.                          Notice
of Certain Events.  (a)  In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of shares of Preferred Stock or to make any other
distribution to the holders of shares of Preferred Stock (other than a regular
quarterly cash dividend), or (ii) to offer to the holders of shares of
Preferred Stock rights or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
shares of Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
share exchange, consolidation or merger into or with any other Person (other
than a Subsidiary of

 

33

 

the Company in a transaction
that complies with Section 11(o)), 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 fifty percent (50%) or more of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies with
Section 11(o)) or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of
a Right Certificate, to the extent feasible and to the Rights Agent, in
accordance with Section 26, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least twenty (20) days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in the case of any
such other action, at least twenty (20) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier, provided, however,
that no such notice shall be required pursuant to this Section 25 if any
Subsidiary of the Company effects a consolidation or merger with or into, or
effects a sale or transfer of assets or earning power to, any other Subsidiary
of the Company.

 

(b)                                 In
case a Triggering Event shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to the Rights Agent and to each
holder of a Right Certificate, to the extent feasible and in accordance with
Section 26, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13, and (ii) all references in the preceding paragraph to
shares of Preferred Stock shall be deemed thereafter to refer to shares of
Common Stock and/or, if appropriate, other securities.

 

(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 on any such action.

 

SECTION 26.                          Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, or delivered (including by facsimile
transmission) at its address (until another address is filed in writing with
the Rights Agent) at:

 

Pharmacopeia
Drug Discovery, Inc.

P.O. Box 5350

Princeton, NJ 08543-5350

Attention: General Counsel

Facsimile No: (609) 452-3672

 

34

 

with a copy
to:

 

Dechert LLP

Princeton Pike Corporate Center

997 Lenox Drive

Building 3, Suite 210

Lawrenceville, NJ 08648-2317
Attention:
James J. Marino, Esq.

Facsimile No: (609) 620-3259

 

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

 

American Stock
Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention:  Corporate Trust Department

Facsimile No: (718) 921-8331

 

Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to or on the holder of any Right Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) 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 shown on the registry books of the Company.

 

SECTION 27.                          Supplements
and Amendments.  Prior to the
earlier of (i) the Distribution Date or (ii) the occurrence of a Triggering
Event, and subject to the penultimate sentence of this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
any provision of this Agreement (including supplements or amendments that may
be deemed to affect the interests of the holders of Right Certificates
adversely) without the approval of any holders of certificates representing
shares of Common Stock and associated Rights. 
From and after the earlier of (i) the Distribution Date or (ii) the
occurrence of a Triggering Event, and subject to the penultimate sentence, the
Company may, and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Right
Certificates (x) in any manner that will not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person), or (y) to cure any
ambiguity or to correct or supplement any provision contained herein which, in
the good faith determination of a majority of the Board of Directors, may be
defective or inconsistent with the other provisions contained herein or (z) to
shorten or lengthen any time period hereunder; provided, however,
that from and after the earlier of (i) the Distribution Date or (ii) the
occurrence of a Triggering Event, this Agreement shall not be supplemented or
amended to (x) shorten the Final Expiration Date or (y) lengthen (1) a time
period relating to when the Rights may be redeemed, or to modify the

 

35

 

ability (or inability) of the
Board of Directors to redeem the Rights, in either case at such time as the
Rights are not then redeemable or (2) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or, the benefits to, the holders of Rights (other than an
Acquiring Person or any Affiliate or Associate of an Acquiring Person).  Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27 (and such
supplement or amendment does not change or increase the Rights Agent’s duties,
liabilities, rights or obligations), the Rights Agent shall execute such
supplement or amendment.  Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made that changes the (i) Redemption Price, (ii) Purchase
Price or (iii) the number of one one-ten thousandths of a share of Preferred
Stock for which a Right is exercisable, and no such supplement or amendment
that changes the rights, duties, liabilities or obligations of the Rights Agent
under this Agreement shall be effective without the execution of such
supplement or amendment by the Rights Agent. 
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.

 

SECTION 28.                          Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

 

SECTION 29.                          Determinations
and Actions by the Board of Directors, etc.  For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock 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 Exchange Act
Regulations as in effect on the date hereof. 
Except as otherwise specifically provided herein, the Board of Directors
shall have the exclusive power and authority to administer this Agreement and
to exercise all 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 Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement and any determination as to whether actions of any Person shall
be such as to cause such Person to beneficially own shares held by another
Person).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors or any of the
directors on the Board of Directors to any liability to the holders of the
Rights.

 

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

 

36

 

registered holders of the Right
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).

 

SECTION 31.                          Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 shall
be reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.

 

SECTION 32.                          Governing
Law.  This Agreement, each Right 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 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.

 

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

 

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

 

37

 

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

 

 

	
   

  	
  PHARMACOPEIA DRUG DISCOVERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Joseph A. Mollica, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name:  Joseph A. Mollica,
  Ph.D.

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST

  COMPANY, as Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Paula Caroppoli

  	
   

  
	
   

  	
   

  	
  Name:  Paula Caroppoli

  
	
   

  	
   

  	
  Title:  Vice President

  

 

38

 

EXHIBIT A

 

CERTIFICATE OF DESIGNATION, PREFERENCES

AND RIGHTS OF SERIES A JUNIOR

PARTICIPATING PREFERRED STOCK

 

of

 

PHARMACOPEIA DRUG DISCOVERY, INC.

 

Pursuant to Section 151 of the General
Corporation Law

of the State of Delaware

 

The undersigned officer of PHARMACOPEIA DRUG DISCOVERY, INC., a
corporation organized and existing under the General Corporation Law of the
State of Delaware (the “Corporation”), in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:

 

That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation, as amended, of the Corporation (the
“Certificate of Incorporation”), the Board of Directors of the Corporation on
April 6, 2004 adopted the following resolution creating a series of 5,000
shares of Preferred Stock designated as Series A Junior Participating 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
voting 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 A Junior Participating Preferred Stock”
and the number of shares constituting such series shall be 5,000.  Such number of shares may be increased or
decreased by resolution of the Board prior to issuance; PROVIDED, that no
decrease shall reduce the number of shares of Series A Junior Participating
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A Junior
Participating Preferred Stock.

 

SECTION 2.                                Dividends
and Distributions.

 

(A)                              Subject
to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, if any, the holders of
shares of Series A Junior Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the

 

A-1

 

Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
last day of March, June, September and December in each year (each such date
being referred to herein as a “Quarterly Dividend Payment Date”), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $100
or (b) subject to the provision for adjustment hereinafter set forth, 10,000
times the aggregate per share amount of all cash dividends, and 10,000 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of common stock,
par value $.01 per share, of the Corporation (the “Common Stock”) or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. 
In the event the Corporation shall at any time after April 6, 2004 (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 A Junior
Participating 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.  In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare or
pay any dividend on the Series A Junior Participating Preferred Stock payable
in shares of Series A Junior Participating Preferred Stock, (ii) subdivide the
outstanding Series A Junior Participating Preferred Stock, or (iii) combine the
outstanding Series A Junior Participating Preferred Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the first sentence of this Section 2(A) shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Series A Junior Participating Preferred Stock that were
outstanding immediately prior to such event and the denominator of which is the
number of shares of Series A Junior Participating Preferred Stock outstanding
immediately after such event.

 

(B)                                The
Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in Paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no dividend
or distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $100 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.

 

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Junior Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly

 

A-2

 

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 A Junior Participating 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 A
Junior Participating 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 A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.

 

SECTION 3.                                Voting
Rights.  The holders of shares of
Series A Junior Participating Preferred Stock shall have the following voting
rights:

 

(A)                              Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to 10,000
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 A Junior Participating 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.  In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare or
pay any dividend on the Series A Junior Participating Preferred Stock payable
in shares of Series A Junior Participating Preferred Stock, (ii) subdivide the
outstanding Series A Junior Participating Preferred Stock, or (iii) combine the
outstanding Series A Junior Participating Preferred 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 A Junior
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Series A Junior Participating Preferred Stock
that were outstanding immediately prior to such event and the denominator of
which is the number of shares of Series A Junior Participating Preferred Stock
outstanding immediately after such event.

 

(B)                                Except
as otherwise provided herein or by law, the holders of shares of Series A
Junior Participating 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, or as otherwise provided by law, holders of Series A
Junior Participating Preferred Stock shall have no special voting rights and
their

 

A-3

 

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.                                Certain
Restrictions.

 

(A)                              Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating 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 A Junior Participating 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 A
Junior Participating 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 A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating 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 A Junior Participating 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 A Junior Participating Preferred Stock; or

 

(iv)                              purchase
or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series A Junior Participating 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.

 

(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 4, purchase
or otherwise acquire such shares at such time and in such manner.

 

SECTION 5.                                Reacquired
Shares.  Any shares of Series A
Junior Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof.  All such
shares shall upon

 

A-4

 

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 6.                                Liquidation,
Dissolution or Winding Up.  (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received an amount equal to $100 per share of Series A Participating
Preferred Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the “Series A Liquidation Preference”). 
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
“Common Adjustment”) equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii) 10,000 (as appropriately adjusted as set forth
in subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the “Adjustment Number”). 
Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 100
with respect to such Series A Junior Participating Preferred Stock and Common
Stock, on a per share basis, respectively.

 

(A)                              In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.  In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of
Common Stock.

 

(C)                                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
Adjustment Number in effect immediately prior to such event shall be adjusted
by multiplying such Adjustment 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. 
In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on the Series A Junior
Participating Preferred Stock payable in shares of Series A Junior
Participating Preferred Stock, (ii) subdivide the outstanding Series A Junior
Participating Preferred Stock, or (iii) combine the outstanding Series A Junior
Participating Preferred Stock into a smaller number of

 

A-5

 

shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction, the numerator of
which is the number of shares of Series A Junior Participating Preferred Stock
that were outstanding immediately prior to such event and the denominator of
which is the number of shares of Series A Junior Participating Preferred Stock
outstanding immediately after such event.

 

SECTION 7.                                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 A Junior Participating 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 10,000 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 A
Junior Participating 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. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on the Series A Junior
Participating Preferred Stock payable in shares of Series A Junior
Participating Preferred Stock, (ii) subdivide the outstanding Series A Junior
Participating Preferred Stock, or (iii) combine the outstanding Series A Junior
Participating Preferred Stock into a smaller number of shares, then in each
such case the amount set forth in the first sentence of this Section 7 with
respect to the exchange or change of shares of Series A Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Series A Junior Participating
Preferred Stock that were outstanding immediately prior to such event and the
denominator of which is the number of shares of Series A Junior Participating
Preferred Stock outstanding immediately after such event.

 

SECTION 8.                                No
Redemption.  The shares of Series A
Junior Participating Preferred Stock shall not be redeemable.

 

SECTION 9.                                Ranking.  The Series A Junior Participating Preferred
Stock shall rank 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 such series shall provide otherwise.

 

SECTION 10.                          Amendment.  At any time when any shares of Series A
Junior Participating Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.

 

A-6

 

SECTION 11.                          Fractional
Shares.  Series A Junior
Participating 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 to
have the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.

 

 

[Remainder of page intentionally left blank]

 

A-7

 

IN WITNESS
WHEREOF, we have executed and subscribed this Certificate and do affirm the
foregoing as true under the penalties of perjury this April 8, 2004.

 

 

	
   

  	
  PHARMACOPEIA DRUG DISCOVERY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Michael G. Lenahan

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Michael G. Lenahan

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and General

  
	
   

  	
   

  	
   

  	
  General Counsel

  
					

 

 

A-8

 

EXHIBIT B

 

[Form of Right Certificate]

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

 

NOT EXERCISABLE AFTER
[          ] OR EARLIER IF
NOTICE OF REDEMPTION IS GIVEN.  THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT.  UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM
IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.  [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*

 

Right Certificate

 

PHARMACOPEIA DRUG DISCOVERY, 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 April 30, 2004
(the “Rights Agreement”), between PHARMACOPEIA DRUG DISCOVERY, INC., a Delaware
corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST 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 PM
(New York, New York time) on [      ] at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-ten thousandth of a fully-paid,
nonassessable share of Series A Junior Participating Preferred Stock (the
“Preferred Stock”) of the Company (or in certain circumstances, cash, property
or other securities of the Company), at a purchase price of $75.00 per one
one-ten thousandth of a share (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase set
forth on the reverse hereof and the Certificate contained therein duly
executed.  The Purchase Price shall be paid
in cash.

 

The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
April      , 2004, based on the Preferred

 

*                 The
portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.

 

B-1

 

Stock as constituted at such date. 
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Rights Agreement.

 

As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities that 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, including
Triggering Events (as such term is defined in the Rights Agreement).  The Company reserves the right to require,
prior to the occurrence of a Triggering Event, that a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.

 

Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (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, concurrently with or after such
transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any rights whatsoever with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.

 

This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates.

 

Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the Rights Agent.

 

This Right Certificate, with or without other Right Certificates, upon
surrender at the 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 to purchase a like aggregate number
of one one-ten thousandths of a share 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 Certificates for
the number of whole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may, but are not required to, be redeemed by the Company at
a redemption price of $.0001 per Right, payable in shares of Common Stock (as
such term is defined in the Rights Agreement), cash or any other form of
consideration deemed appropriate by the Board of Directors at any time prior to
the earlier of the Close of Business (as such term is defined in the Rights
Agreement) on (i) the tenth calendar day following the Stock Acquisition Date
(as such time period may be extended or shortened pursuant to the Rights
Agreement) or (ii) the Final Expiration Date (as such term is defined in the
Rights Agreement).  In addition, the
Rights may

 

B-2

 

be exchanged at the Company’s option, in whole or in part, for shares
of Common Stock in the manner provided in the Rights Agreement, or shares of
preferred stock of the Company having substantially the same value and economic
rights as such shares.  Immediately upon
the action of a majority of the Board of Directors of the Company authorizing
any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and
the Rights will only enable holders to receive the shares issuable upon such
exchange.

 

No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-ten thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

 

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 the shares of
Preferred Stock or of any other securities of the Company that may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

 

B-3

 

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

 

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

 

	
  Dated as of 

  	
   

  	
  ,

  	
   

  	
   

  

 

	
   

  	
  PHARMACOPEIA DRUG DISCOVERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
  AMERICAN STOCK TRANSFER

  & TRUST COMPANY, as Rights Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
  Authorized Signature

  	
   

  
						

 

B-4

 

[Form of Reverse Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if
such

holder desires to transfer the Right Certificate.)

 

 

FOR VALUE RECEIVED,
                                               
hereby sells, assigns and transfers unto:

 

 

 

 

(Please print name and address of transferee)

 

 

 

(Please insert social security or other 

identifying number of the transferee)

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  
	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
							

 

Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.

 

B-5

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes
that:

 

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

 

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

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  
	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
										

 

Signatures
must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved
signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

 

NOTICE

 

The signatures
in the foregoing Assignment and Certificate 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.

 

WARNING

 

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

 

B-6

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if the registered holder desires to

exercise the Right Certificate.)

 

To:  PHARMACOPEIA DRUG
DISCOVERY, INC.

 

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

 

	
   

  	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  	
   

  
	
  (Please insert social security or other

  identifying number)

  

 

If such number
of Rights shall not be all the Rights evidenced by this Right Certificate, a
new Right Certificate for the balance remaining of such Rights shall be
registered in the name of and delivered to:

 

	
   

  	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  	
   

  
	
  (Please insert social security or other

  identifying number)

  

 

 

	
  Dated as of 

  	
   

  	
  ,

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  
	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
					

 

 

Signatures
must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved
signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

 

B-7

 

CERTIFICATE

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(iii)                               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 (as such terms are defined in the Rights
Agreement); and

 

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

 

 

	
  Dated as of 

  	
   

  	
  ,

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  
	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
					

 

Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.

 

NOTICE

 

The signatures in the foregoing Election to Purchase and Certificate
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.

 

WARNING

 

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

 

B-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]