Document:

exv4w1

 

Exhibit 4.1

AMENDED AND RESTATED

DIGITAL ANGEL CORPORATION

TRANSITION STOCK OPTION PLAN

1.   NAME AND PURPOSE

	 	1.1	 	Name.

          The name of this Plan is the “Digital Angel Corporation Transition Stock
Option Plan.”

	 	1.2	 	Purpose.

          The Company has established this Plan to retain, motivate and reward
Employees and Directors of Digital Angel Corporation, a Delaware corporation
acquired by the Company as a result of a merger completed on March 27, 2002 and
to encourage ownership of the Company’s Common Stock by them.

2.   DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION

	 	2.1	 	General Definitions.

          The following words and phrases, when used in the Plan, unless otherwise
specifically defined or unless the context clearly otherwise requires, shall
have the following respective meanings:

	 	2.1.1.	 	Affiliate.

		
	 	          A Parent or Subsidiary of the Company.

	 	2.1.2.	 	Agreement.

		
	 	          The document which evidences the grant of any Benefit under the Plan
and which sets forth the Benefit and the terms, conditions and provisions
of, and restrictions relating to, such Benefit.

	 	2.1.3.	 	Benefit.

		
	 	          Any benefit granted to a Participant under the Plan.

	 	2.1.4.	 	Board.

		
	 	          The Board of Directors of the Company.

	 	2.1.5.	 	Cash Award.

		
	 	          A Benefit payable in the form of cash.

 

 

	 	2.1.6.	 	Change of Control.

		
	 	          If any “person” (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) is or becomes the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company’s then outstanding securities; upon the first
purchase of the Common Stock pursuant to a tender or exchange offer
(other than a tender or exchange offer made by the Company); upon the
approval by the Company’s stockholders of a merger or consolidation, a
sale or disposition of all or substantially of the Company’s assets or a
plan of liquidation or dissolution of the Company; or if during an period
of 2 consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election or nomination for the election by
the Company’s stockholders of each new director was approved by a vote of
at least 2/3 of the Board then still in office who were members of the
Board at the beginning of the period. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur if the Company either
merges or consolidates with or into another company or sells or disposes
of all or substantially all of its assets to another company, if such
merger, consolidation, sale or disposition is in connection with a
corporate restructuring wherein the stockholders of the Company
immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation,
sale or disposition of at least 80% of the combined voting power of all
outstanding classes of securities of the company resulting from such
merger or consolidation, or to which the Company sells or disposes of its
assets, in substantially the same proportion as their ownership in the
Company immediately before such merger, consolidation, sale or
disposition.

	 	2.1.7.	 	Code.

		
	 	          The Internal Revenue Code of 1986, as amended. Any reference to the
Code includes the regulations promulgated pursuant to the Code.

	 	2.1.8.	 	Company.

		
	 	          Digital Angel Corporation

	 	2.1.9.	 	Committee.

		
	 	          The Committee described in Section 0.

	 	2.1.10.	 	Common Stock.

		
	 	          The Company’s common stock, par value $.005 per Share.

	 	2.1.11.	 	Director.

		
	 	          A member of the Board or a member of the Board of Directors of an
Affiliate.

 

 

	 	2.1.12.	 	Effective Date.

		
	 	          April 11, 2002.

	 	2.1.13.	 	Employee.

		
	 	          Any person employed by the Employer.

	 	2.1.14.	 	Employer.

		
	 	          The Company and all Affiliates.

	 	2.1.15.	 	Exchange Act.

		
	 	          The Securities Exchange Act of 1934, as amended.

	 	2.1.16.	 	Fair Market Value.

		
	 	          The last sale price, regular way, or, in case no such sale takes
place on such date, the average of the closing bid and asked prices,
regular way, of the Shares, 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, Inc. (the
“NYSE”) or, if the Shares are not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Shares are listed or admitted to trading
or, if the Shares are not listed or admitted to trading on any national
securities exchange, the last quoted sale price on such date or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such date, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use, or, if on any such date the Shares are not
quoted by any such organization, the average of the closing bid and asked
prices on such date as furnished by a professional market maker making a
market in the Shares selected by the Committee. If the Shares are not
publicly held or so listed or publicly traded, the determination of the
Fair Market Value per Share shall be made in good faith by the Committee.

	 	2.1.17.	 	Fiscal Year.

		
	 	          The taxable year of the Company which is the calendar year.

	 	2.1.18.	 	ISO.

		
	 	          An Incentive Stock Option as defined in Section 422 of the Code.

	 	2.1.19.	 	NQSO.

		
	 	          A non-qualified stock Option, which is an Option that does not
qualify as an ISO.

	 	2.1.20.	 	Option.

 

 

		
	 	          An option to purchase Shares granted under the Plan.

	 	2.1.21.	 	Other Stock Based Award.

		
	 	          An award under Section 0 that is
valued in whole or in part by reference to, or is otherwise based on,
Common Stock.

	 	2.1.22.	 	Parent.

		
	 	          Any corporation (other than the Company or a Subsidiary) in an
unbroken chain of corporations ending with the Company, if, at the time
of the grant of an Option or other Benefit, each of the corporations
(other than the Company) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.

	 	2.1.23.	 	Participant.

		
	 	          An individual who is granted a Benefit under the Plan. Benefits may
be granted only to Employees and Directors.

	 	2.1.24.	 	Performance Based Compensation.

		
	 	          Compensation which meets the requirements of Section 162(m)(4)(C) of
the Code.

	 	2.1.25.	 	Performance Share.

		
	 	          A Share awarded to a Participant under Section O of the Plan.

	 	2.1.26.	 	Plan.

		
	 	          The Digital Angel Corporation Transition Stock Option Plan and all
amendments and supplements to it.

	 	2.1.27.	 	Reload Option.

		
	 	          An Option to purchase the number of Shares used by a Participant to
exercise an Option and to satisfy any withholding requirement incident to
the exercise of such Option.

	 	2.1.28.	 	Restricted Stock.

		
	 	          Shares issued under Section 0 of
the Plan.

	 	2.1.29.	 	Rule 16b-3.

		
	 	          Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to time.

 

 

	 	2.1.30.	 	SEC.

		
	 	               
     The Securities and Exchange Commission.

	 	2.1.31.	 	Share.

		
	 	               
     A share of Common Stock.

	 	2.1.32.	 	SAR.

		
	 	               
     A stock appreciation right, which is the right to receive an amount
equal to the appreciation, if any, in the Fair Market Value of a Share
from the date of the grant of the right to the date of its payment.

	 	2.1.33.	 	Subsidiary.

		
	 	               
     Any corporation, other than the Company, in an unbroken chain of
corporations beginning with the Company if, at the time of grant of an
Option or other Benefit, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the
other corporations in such chain.

	 	2.2.	 	Other Definitions.

                    In addition to the above definitions, certain words and phrases used in
the Plan and any Agreement may be defined in other portions of the Plan or in
such Agreement.

	 	2.3.	 	Conflicts.

                    In the case of any conflict in the terms of the Plan relating to a
Benefit, the provisions in the section of the Plan which specifically grants
such Benefit shall control those in a different section. In the case of any
conflict between the terms of the Plan relating to a Benefit and the terms of
an Agreement relating to a Benefit, the terms of the Plan shall control.

	3.	 	COMMON STOCK

	 	3.1.	 	Number of Shares.

                    The number of Shares which may be issued or sold or for which Options,
SARs or Performance Shares may be granted under the Plan shall be 11,195,312.
Such Shares may be authorized but unissued Shares, Shares held in the treasury,
or both. The full number of Shares available may be used for any type of
Option or other Benefit.

	 	3.2.	 	Reusage.

                    If an Option or SAR expires or is terminated, surrendered, or canceled
without having been fully exercised, if Restricted Shares or Performance Shares
are forfeited, or if any other grant results in any Shares not being issued,
the Shares covered by such Option or SAR, grant of

 

Restricted Shares, Performance Shares or other grant, as the case may be, shall
again be available for use under the Plan. Any Shares which are used as full
or partial payment to the Company upon exercise of an Option or for any other
Benefit that requires a payment to the Company shall be available for purposes
of the Plan.

	 	3.3.	 	Adjustments.

               
     If there is any change in the Common Stock of the Company by reason of any
stock dividend, spin-off, split-up, spin-out, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares, or otherwise,
the number of SARs and number and class of shares available for Options and
grants of Restricted Stock, Performance Shares and Other Stock Based Awards and
the number of Shares subject to outstanding Options, SARs, grants of Restricted
Stock which are not vested, grants of Performance Shares which are not vested,
and Other Stock Based Awards, and the price thereof, as applicable, shall be
appropriately adjusted by the Committee.

	4.	 	ELIGIBILITY

	 	4.1.	 	Determined By Committee.

               
     The Participants in this Plan shall be those persons who received options
to purchase Digital Angel Corporation common stock pursuant to the Digital
Angel.net, Inc. Restated Flexible Stock Plan on or prior to March 27, 2002.

	5.	 	ADMINISTRATION

	 	5.1.	 	Committee.

               
     The Plan shall be administered by the Committee. The Committee shall
consist of the Board, unless the Board appoints a Committee of two or more but
less than all of the Board. If the Committee does not include the entire
Board, it shall serve at the pleasure of the Board, which may from time to time
appoint members in substitution for members previously appointed and fill
vacancies, however caused, in the Committee. The Committee may select one of
its members as its Chairman and shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee made at a meeting at which a
quorum is present shall be made by a majority of its members present at the
meeting. Any decision or determination reduced to writing and signed by a
majority of the members shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held.

	 	5.2.	 	Authority.

		
	 	               
     Subject to the terms of the Plan, the Committee shall have discretionary
authority to:
	 
	 	               
     (a)   determine the individuals to whom Benefits are granted, the type
and amounts of Benefits to be granted and the date of issuance and
duration of all such grants;
	 
	 	               
     (b)   determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;

 

		
	 	               
     (c)   interpret and construe the Plan and all Agreements;
	 
	 	               
     (d)   prescribe, amend and rescind rules and regulations relating to
the Plan;
	 
	 	               
     (e)   determine the content and form of all Agreements;
	 
	 	               
     (f)   determine all questions relating to Benefits under the Plan;
	 
	 	               
     (g)   maintain accounts, records and ledgers relating to Benefits;
	 
	 	               
     (h)   maintain records concerning its decisions and proceedings;
	 
	 	               
     (i)   employ agents, attorneys, accountants or other persons for such
purposes as the Committee considers necessary or desirable;
	 
	 	               
     (j)   take, at any time, any action required or permitted by Section
9.1 or 9.2(a), respectively, irrespective of whether any Change of
Control has occurred or is imminent;
	 
	 	               
     (k)   determine, except to the extent otherwise provided in the Plan,
whether and the extent to which Benefits under the Plan will be
structured to conform to the requirements applicable to Performance-Based
Compensation, and to take such action, establish such procedures, and
impose such restrictions at the time such Benefits are granted as the
Committee determines to be necessary or appropriate to conform to such
requirements; and
	 
	 	               
     (l)   do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry out the purposes
of the Plan.

	 	5.3.	 	Delegation.

               
     Except as required by Rule 16b-3 with respect to grants of Options, Stock
Appreciation Awards, Performance Shares, Other Stock Based Awards, or other
Benefits to individuals who are subject to Section 0 of the Exchange Act or as
otherwise required for compliance with Rule 16b-3 or other applicable law, the
Committee may delegate all or any part of its authority under the Plan to any
Employee, Employees or committee.

	 	5.4.	 	Determination.

               
     All determinations of the Committee shall be final.

	6.	 	AMENDMENT

	 	6.1.	 	Power of Board.

               
     Except as hereinafter provided, the Board shall have the sole right and
power to amend the Plan at any time and from time to time.

	 	6.2.	 	Limitation.

 

               
     The Board may not amend the Plan, without approval of the stockholders of
the Company:

		
	 	               
     (a)   in a manner which would cause Options which are intended to
qualify as ISOs to fail to qualify;
	 
	 	               
     (b)   in a manner which would cause the Plan to fail to meet the
requirements of Rule 16b-3; or
	 
	 	               
     (c)   in a manner which would violate applicable law.

	7.	 	TERM AND TERMINATION

	 	7.1.	 	Term.

               
     The Plan shall commence as of the Effective Date and, subject to the terms
of the Plan, including those requiring approval by the stockholders of the
Company and those limiting the period over which ISOs or any other Benefits may
be granted, shall continue in full force and effect until terminated.

	 	7.2.	 	Termination.

               
     The Plan may be terminated at any time by the Board.

	8.	 	MODIFICATION OR TERMINATION OF BENEFITS

	 	8.1.	 	General.

               
     Subject to the provisions of Section 0, the amendment or termination of
the Plan shall not adversely affect a Participant’s right to any Benefit
granted prior to such amendment or termination.

	 	8.2.	 	Committee’s Right.

               
     Any Benefit granted may be converted, modified, forfeited or canceled, in
whole or in part, by the Committee if and to the extent permitted in the Plan
or applicable Agreement or with the consent of the Participant to whom such
Benefit was granted. Except as may be provided in an Agreement, the Committee
may, in its sole discretion, in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting of, any Benefit.

	9.	 	CHANGE OF CONTROL

	 	9.1.	 	Vesting and Payment.

               
     In the event of a Change of Control:

		
	 	               
     (a)   all outstanding Options shall become fully exercisable,
except to the extent that the right to exercise the Option is
subject to restrictions established in connection with an SAR that
is issued in tandem with the Option;

 

		
	 	               
     (b)   all outstanding SARs shall become immediately payable,
except to the extent that the right to exercise the SAR is subject
to restrictions established in connection with an Option that is
issued in tandem with the SAR.
	 
	 	               
     (c)   all Shares of Restricted Stock shall become fully vested;
	 
	 	               
     (d)   all Performance Shares shall be deemed to be fully earned
and shall be paid out in such manner as determined by the
Committee; and
	 
	 	               
     (e)   all Cash Awards, Other Stock Based Awards and other
Benefits shall become fully vested and/or earned and paid out in
such manner as determined by the Committee.

	 	9.2.	 	Other Action

               
     In the event of a Change of Control, the Committee, in its sole
discretion, may, in addition to the provisions of Section 9.1 above and to the
extent not inconsistent therewith:

		
	 	               
     (a)   provide for the purchase of any
Benefit for an amount of cash equal to the amount which
could have been attained upon the exercise or
realization of such Benefit had such Benefit been
currently exercisable or payable;
	 
	 	               
     (b)   make such adjustment to the Benefits
then outstanding as the Committee deems appropriate to
reflect such transaction or change; and/or
	 
	 	               
     (c)   cause the Benefits then outstanding
to be assumed, or new Benefits substituted therefor, by
the surviving corporation in such change.

	10.	 	AGREEMENTS AND CERTAIN BENEFITS

	 	10.1.	 	Grant Evidenced by Agreement.

               
     The grant of any Benefit under the Plan may be evidenced by an Agreement
which shall describe the specific Benefit granted and the terms and conditions
of the Benefit. The granting of any Benefit shall be subject to, and
conditioned upon, the recipient’s execution of any Agreement required by the
Committee. Except as otherwise provided in an Agreement, all capitalized terms
used in the Agreement shall have the same meaning as in the Plan, and the
Agreement shall be subject to all of the terms of the Plan.

	 	10.2.	 	Provisions of Agreement.

               
     Each Agreement shall contain such provisions that the Committee shall
determine to be necessary, desirable and appropriate for the Benefit granted
which may include, but not necessarily be limited to, the following with
respect to any Benefit: description of the type of Benefit; the Benefit’s
duration; its transferability; if an Option, the exercise price, the exercise
period and the person or persons who may exercise the Option; the effect upon
such Benefit of the Participant’s death, disability, changes of duties or
termination of employment; the Benefit’s

 

conditions; when, if, and how any Benefit may be forfeited, converted into
another Benefit, modified, exchanged for another Benefit, or replaced; and the
restrictions on any Shares purchased or granted under the Plan.

	 	10.3.	 	Transferability.

               
     Unless otherwise specified in an Agreement or permitted by the Committee,
each Benefit granted shall be not transferable other than by will or the laws
of descent and distribution and shall be exercisable during a Participant’s
lifetime only by him.

	11.	 	REPLACEMENT AND TANDEM AWARDS

	 	11.1.	 	Replacement.

               
     The Committee may permit a Participant to elect to surrender a Benefit in
exchange for a new Benefit.

	 	11.2.	 	Tandem Awards.

               
     Awards may be granted by the Committee in tandem. However, no Benefit may
be granted in tandem with an ISO except SARs.

	12.	 	PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING

	 	12.1.	 	Payment.

               
     Upon the exercise of an Option or in the case of any other Benefit that
requires a payment by a Participant to the Company, the amount due the Company
is to be paid:

		
	 	               
     (a)   in cash, including by means of a so-called “cashless exercise”
of an Option;
	 
	 	               
     (b)   by the surrender of all or part of a Benefit (including the
Benefit being exercised);
	 
	 	               
     (c)   by the tender to the Company of Shares owned by the optionee and
registered in his name having a Fair Market Value equal to the amount due
to the Company;
	 
	 	               
     (d)   in other property, rights and credits deemed acceptable by the
Committee, including the Participant’s promissory note;
	 
	 	               
     (e)   by any combination of the payment methods specified in (a), (b),
(c) and (d) above.

               
     Notwithstanding, the foregoing, any method of payment other than (a) may
be used only with the consent of the Committee or if and to the extent so
provided in an Agreement. The proceeds of the sale of Shares purchased
pursuant to an Option and any payment to the Company for other Benefits shall
be added to the general funds of the Company or to the Shares held in treasury,
as the case may be, and used for the corporate purposes of the Company as the
Board shall determine.

 

	 	12.2.	 	Dividend Equivalents.

               
     Grants of Benefits in Shares or Share equivalents may include dividend
equivalent payments or dividend credit rights.

	 	12.3.	 	Deferral.

               
     The right to receive any Benefit under the Plan may, at the request of the
Participant, be deferred for such period and upon such terms as the Committee
shall determine, which may include crediting of interest on deferrals of cash
and crediting of dividends on deferrals denominated in Shares.

	 	12.4.	 	Withholding.

               
     The Company may, at the time any distribution is made under the Plan,
whether in cash or in Shares, or at the time any Option is exercised, withhold
from such distribution or Shares issuable upon the exercise of an Option, any
amount necessary to satisfy federal, state and local income and/or other tax
withholding requirements with respect to such distribution or exercise of such
Options. The Committee or the Company may require a participant to tender to
the Company cash and/or Shares in the amount necessary to comply with any such
withholding requirements.

	13.	 	OPTIONS

	 	13.1.	 	Types of Options.

               
     It is intended that both ISOs and NQSOs, which may be Reload Options, may
be granted by the Committee under the Plan.

	 	13.2.	 	Grant of ISOs and Option Price.

               
     Each ISO must be granted to an Employee and granted within ten years from
the earlier of the date of adoption by the Board or the Effective Date. The
purchase price for Shares under any ISO shall be no less than the Fair Market
Value of the Shares at the time the Option is granted.

	 	13.3.	 	Other Requirements for ISOs.

     The terms of each Option which is intended to qualify as an ISO shall meet
all requirements of Section 422 of the Code.

	 	13.4.	 	NQSOs.

               
     The terms of each NQSO shall provide that such Option will not be treated
as an ISO. The purchase price for Shares under any NQSO shall be no less than
85% of the Fair Market Value of the Shares at the time the Option is granted.

	 	13.5.	 	Determination by Committee.

 

                    Except as otherwise provided in Section 0 through Section 0, the terms of
all Options shall be determined by the Committee.

	14.	 	SARS

	 	14.1.	 	Grant and Payment.

               
     The Committee may grant SARs. Upon electing to receive payment of a SAR,
a Participant shall receive payment in cash, in Shares, or in any combination
of cash and Shares, as the Committee shall determine.

	 	14.2.	 	Grant of Tandem Award.

               
     The Committee may grant SARs in tandem with an Option, in which case: the
exercise of the Option shall cause a correlative reduction in SARs standing to
a Participant’s credit which were granted in tandem with the Option; and the
payment of SARs shall cause a correlative reduction of the Shares under such
Option.

	 	14.3.	 	ISO Tandem Award.

               
     When SARs are granted in tandem with an ISO, the SARs shall have such
terms and conditions as shall be required for the ISO to qualify as an ISO.

	 	14.4.	 	Payment of Award.

               
     SARs shall be paid by the Company to a Participant, to the extent payment
is elected by the Participant (and is otherwise due and payable), as soon as
practicable after the date on which such election is made.

	15.	 	ANNUAL LIMITATIONS

	 	15.1.	 	Limitation on Options and SARs.

               
     The number of (a) Shares covered by Options where the purchase price is no
less than the Fair Market Value of the Shares on the date of grant plus (b)
SARs which may be granted to any Participant in any Fiscal Year shall not
exceed 1,000,000.

	 	15.2.	 	Computations.

               
     For purposes of Section 0: Shares covered by an Option that is canceled
shall count against the maximum, and, if the exercise price under an Option is
reduced, the transaction shall be treated as a cancellation of the Option and a
grant of a new Option; and SARs covered by a grant of SARs that is canceled
shall count against the maximum, and, if the Fair Market Value of a Share on
which the appreciation under a grant of SARs will be calculated is reduced, the
transaction will be treated as a cancellation of the SARs and the grant of a
new grant of SARs.

	16.	 	RESTRICTED STOCK AND PERFORMANCE SHARES

	 	16.1.	 	Restricted Stock.

 

               
     The Committee may grant Benefits in Shares available under Section 0 of
the Plan as Restricted Stock. Shares of Restricted Stock shall be issued and
delivered at the time of the grant or as otherwise determined by the Committee,
but shall be subject to forfeiture until provided otherwise in the applicable
Agreement or the Plan. Each certificate representing Shares of Restricted
Stock shall bear a legend referring to the Plan and the risk of forfeiture of
the Shares and stating that such Shares are nontransferable until all
restrictions have been satisfied and the legend has been removed. At the
discretion of the Committee, the grantee may or may not be entitled to full
voting and dividend rights with respect to all shares of Restricted Stock from
the date of grant.

	 	16.2.	 	Cost of Restricted Stock.

               
     Unless otherwise determined by the Committee, grants of Shares of
Restricted Stock shall be made at a per Share cost to the Participant equal to
par value.

	 	16.3.	 	Non-Transferability.

               
     Shares of Restricted Stock shall not be transferable until after the
removal of the legend with respect to such Shares.

	 	16.4.	 	Performance Shares.

               
     Performance Shares are the right of an individual to whom a grant of such
Shares is made to receive Shares or cash equal to the Fair Market Value of such
Shares at a future date in accordance with the terms and conditions of such
grant. The terms and conditions shall be determined by the Committee, in its
sole discretion, but generally are expected to be based substantially upon the
attainment of targeted profit and/or performance objectives.

	 	16.5.	 	Grant.

               
     The Committee may grant an award of Performance Shares. The number of
Performance Shares and the terms and conditions of the grant shall be set forth
in the applicable Agreement.

	17.	 	CASH AWARDS

	 	17.1.	 	Grant.

               
     The Committee may grant Cash Awards at such times and (subject to Section
0) in such amounts as it deems appropriate.

	 	17.2.	 	Rule 16b-3.

               
     The amount of any Cash Award in any Fiscal Year to any Participant who is
subject to Section 0 of the Exchange Act shall not exceed the greater of
$100,000 or 100% of his cash compensation (excluding any Cash Award under this
Section 0) for such Fiscal Year.

	 	17.3.	 	Restrictions.

 

               
     Cash Awards may be subject or not subject to conditions (such as an
investment requirement), restricted or nonrestricted, vested or subject to
forfeiture and may be payable currently or in the future or both.

	18.	 	OTHER STOCK BASED AWARDS AND OTHER BENEFITS

	 	18.1.	 	Other Stock Based Awards.

               
     The Committee shall have the right to grant Other Stock Based Awards which
may include, without limitation, the grant of Shares based on certain
conditions, the payment of cash based on the performance of the Common Stock,
and the grant of securities convertible into Shares.

	 	18.2.	 	Other Benefits.

               
     The Committee shall have the right to provide types of Benefits under the
Plan in addition to those specifically listed, if the Committee believes that
such Benefits would further the purposes for which the Plan was established.

	19.	 	MISCELLANEOUS PROVISIONS

	 	19.1.	 	Underscored References.

               
     The underscored references contained in the Plan are included only for
convenience, and they shall not be construed as a part of the Plan or in any
respect affecting or modifying its provisions.

	 	19.2.	 	Number and Gender.

               
     The masculine and neuter, wherever used in the Plan, shall refer to either
the masculine, neuter or feminine; and, unless the context otherwise requires,
the singular shall include the plural and the plural the singular.

	 	19.3.	 	Unfunded Status of Plan.

               
     The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payments or deliveries of Shares
not yet made to a Participant by the Company, nothing contained herein shall
give any rights that are greater than those of a general creditor of the
Company. The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Shares
or payments hereunder consistent with the foregoing.

	 	19.4.	 	Termination of Employment.

               
     If the employment of a Participant by the Company terminates for any
reason, except as otherwise provided in an Agreement, all unexercised,
deferred, and unpaid Benefits may be exercisable or paid only in accordance
with rules established by the Committee. These rules may provide, as the
Committee may deem appropriate, for the expiration, forfeiture, continuation,
or acceleration of the vesting of all or part of the Benefits.

 

	 	19.5.	 	Designation of Beneficiary.

               
     A Participant may file with the Committee a written designation of a
beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries as the Committee may from
time to time prescribe) to exercise, in the event of the death of the
Participant, an Option, or to receive, in such event, any Benefits. The
Committee reserves the right to review and approve beneficiary designations. A
Participant may from time to time revoke or change any such designation of
beneficiary and any designation of beneficiary under the Plan shall be
controlling over any other disposition, testamentary or otherwise; provided,
however, that if the Committee shall be in doubt as to the right of any such
beneficiary to exercise any Option or to receive any Benefit, the Committee may
determine to recognize only an exercise by the legal representative of the
recipient, in which case the Company, the Committee and the members thereof
shall not be under any further liability to anyone.

	 	19.6.	 	Governing Law.

               
     This Plan shall be construed and administered in accordance with the laws
of the State of Delaware, without giving effect to conflict of laws principles.

	 	19.7.	 	Purchase for Investment.

               
     The Committee may require each person purchasing Shares pursuant to an
Option or other award under the Plan to represent to and agree with the Company
in writing that such person is acquiring the Shares for investment and without
a view to distribution or resale. The certificates for such Shares may include
any legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under all applicable laws, rules and regulations, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate references to such restrictions.

	 	19.8.	 	No Employment Contract.

               
     Neither the adoption of the Plan nor any Benefit granted hereunder shall
confer upon any Employee any right to continued employment nor shall the Plan
or any Benefit interfere in any way with the right of the Employer to terminate
the employment of any of its Employees at any time.

	 	19.9.	 	No Effect on Other Benefits.

               
     The receipt of Benefits under the Plan shall have no effect on any
benefits to which a Participant may be entitled from the Employer, under
another plan or otherwise, or preclude a Participant from receiving any such
benefits.exv4w1

 

Exhibit 4.1

RIGHTS AGREEMENT

by and between

NOVAVAX, INC.

and

EQUISERVE TRUST COMPANY, N.A., as Rights Agent

Dated as of

August 8, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Section	 	 	 	Page
		 	 	 	
	Section 1.	 	
Certain Definitions
	 	 	4	 
	 
	Section 2.	 	
Appointment of Rights Agent
	 	 	10	 
	 
	Section 3.	 	
Issuance of Right Certificates
	 	 	10	 
	 
	Section 4.	 	
Form of Right Certificates
	 	 	12	 
	 
	Section 5.	 	
Countersignature and Registration
	 	 	13	 
	 
	Section 6.	 	
Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates
	 	 	13	 
	 
	Section 7.	 	
Exercise of Rights; Exercise Price; Expiration Date of Rights;
Invalidation of Certain Rights
	 	 	14	 
	 
	Section 8.	 	
Cancellation and Destruction of Right Certificates
	 	 	16	 
	 
	Section 9.	 	
Reservation and Availability of Shares of Preferred Stock
	 	 	16	 
	 
	Section 10.	 	
Preferred Stock Record Date
	 	 	18	 
	 
	Section 11.	 	
Adjustment of Exercise Price or Number of Shares
	 	 	18	 
	 
	Section 12.	 	
Certification of Adjusted Exercise Price or Number of Shares
	 	 	24	 
	 
	Section 13.	 	
Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	25	 
	 
	Section 14.	 	
Fractional Rights and Fractional Shares
	 	 	28	 
	 
	Section 15.	 	
Rights of Action
	 	 	29	 
	 
	Section 16.	 	
Agreement of Right Holders
	 	 	29	 
	 
	Section 17.	 	
Right of Certificate Holder Not Deemed a Stockholder
	 	 	30	 
	 
	Section 18.	 	
Concerning the Rights Agent
	 	 	31	 
	 
	Section 19.	 	
Merger or Consolidation of, or Change in Name of, the Rights Agent
	 	 	31	 
	 
	Section 20.	 	
Duties of Rights Agent
	 	 	32	 

2

 

TABLE OF CONTENTS

(cont’d)

	 	 	 	 	 	 	 
	Section	 	 	 	Page
		 	 	 	
	Section 21.	 	
Change of Rights Agent
	 	 	34	 
	 
	Section 22.	 	
Issuance of New Right Certificates
	 	 	35	 
	 
	Section 23.	 	
Redemption
	 	 	35	 
	 
	Section 24.	 	
Notice of Proposed Actions
	 	 	36	 
	 
	Section 25.	 	
Notices
	 	 	37	 
	 
	Section 26.	 	
Supplements and Amendments
	 	 	38	 
	 
	Section 27.	 	
Exchange
	 	 	38	 
	 
	Section 28.	 	
Successors
	 	 	40	 
	 
	Section 29.	 	
Benefits of the Agreement
	 	 	40	 
	 
	Section 30.	 	
Delaware Contract
	 	 	40	 
	 
	Section 31.	 	
Counterparts
	 	 	40	 
	 
	Section 32.	 	
Descriptive Headings
	 	 	40	 
	 
	Section 33.	 	
Severability
	 	 	40	 
	 
	Section 34.	 	
Determinations and Actions by the Board of Directors
	 	 	40	 
	 
	Exhibit A	 	
-Summary of Rights	 	 	 	 
	 
	Exhibit B	 	
-Form of Right Certificate	 	 	 	 
	 
	Exhibit C	 	
-Form of Certificate of Designations of Series D Junior
Participating Preferred Stock	 	 	 	 

3

 

RIGHTS AGREEMENT

     Rights Agreement (this “Agreement”), dated as of August 8, 2002, by and
between Novavax, Inc., a Delaware corporation (the “Corporation”), and
EquiServe Trust Company, N.A., a National Banking Association (the “Rights
Agent”).

W I T N E S S E T H

     WHEREAS, on August 7, 2002 the Board of Directors of the Corporation
authorized the issuance of, and declared, a dividend payable in one right (a
“Right”) for each share of common stock, $.01 par value per share (“Common
Stock”), of the Corporation outstanding as of close of business on August 16,
2002 (the “Record Date”), each such Right representing the right to purchase
one one-thousandth of a share of Series D Junior Participating Preferred Stock
of the Corporation (“Preferred Stock”) having the rights and preferences set
forth in the form of Certificate of Designations attached hereto as Exhibit C
duly adopted by the Board of Directors of the Corporation on August 7, 2002,
upon the terms and subject to the conditions hereinafter set forth; and

     WHEREAS, on such date, the Board of Directors of the Corporation further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earliest to occur of the Distribution Date, the Expiration Date or the Final
Expiration Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to shares of Common Stock that shall
become outstanding after the Distribution Date and prior to the Expiration Date
in accordance with Section 22 hereof;

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

                         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided by this Section 1, any
capitalized term defined in this Section 1 and used in the following
definitions having the meaning provided by this Section 1:

		
	 	     (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 15% or more of the Voting Stock then
outstanding; provided, however, that an Acquiring Person shall not
include: (i) an Exempt Person; or (ii) any Person who or which,
together with all Affiliates and Associates of such Person, would
be an Acquiring Person solely by reason of (A) being the Beneficial
Owner of shares of Voting Stock, the Beneficial Ownership of which
was acquired by such Person (together with all Affiliates and
Associates of such Person) pursuant to any action or transaction or
series of related actions or transactions approved by the Board of
Directors of the Corporation before such Person (together with all
Affiliates and Associates of such Person) otherwise became an
Acquiring Person or (B) a reduction in the number of issued and
outstanding shares of Voting Stock pursuant to a transaction or a
series of related transactions approved by the Board

4

 

		
	 	of Directors of the Corporation; provided, further, that in the
event a Person described in this clause (ii) does not become an
Acquiring Person by reason of subclause (A) or (B) of this clause
(ii), such Person nonetheless shall become an Acquiring Person in
the event such Person (together with all Affiliates and Associates
of such Person) thereafter acquires Beneficial Ownership of an
additional 1% or more of the Voting Stock, unless the acquisition
of such additional Voting Stock would not result in such Person
becoming an Acquiring Person by reason of subclause (A) or (B) of
this clause (ii). Notwithstanding the foregoing, if the Board of
Directors of the Corporation determines in good faith that a Person
who would otherwise be an “Acquiring Person” as defined pursuant to
the foregoing provisions of this paragraph (a) has become such
inadvertently, and, within 10 Business Days of being requested by
the Corporation to advise it regarding the same, certifies to the
Corporation that such Person acquired shares of Common Stock in
excess of 14.9% inadvertently or without knowledge of the terms of
the Rights, and who, together with all Affiliates and Associates,
thereafter does not acquire additional shares of Common Stock while
the Beneficial Owner of 15% of more of the shares of Common Stock
then outstanding, and such Person divests as promptly as
practicable (as determined in good faith by the Board of Directors
of the Corporation) a sufficient number of shares of Voting Stock
so that such Person would no longer be an “Acquiring Person” as
defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an “Acquiring Person” for any
purposes of this Agreement; provided, however, that if the Person
requested to so certify fails to do so within 10 Business Days,
then such Person shall become an Acquiring Person immediately after
such 10-Business-Day period.

		
	 	     (b) “Affiliate” shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.

		
	 	     (c) “Associate” of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or any Associate of
any Subsidiary thereof, or any Beneficial Owner of 10% or more of
any class of equity security thereof, (ii) with respect to an
association, any officer or director thereof or any Associate of a
Subsidiary thereof, (iii) with respect to a partnership, any
general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 10% or greater
ownership interest therein, and any Associate of any Subsidiary
thereof, (iv) with respect to a limited liability company, any
manager or managing member thereof and any Beneficial Owner of 10%
or more or any class of membership interest therein or other equity
security thereof, and any Associate of any Subsidiary thereof, (v)
with respect to a business trust, any officer or trustee thereof or
any Associate of any Subsidiary thereof, (vi) with respect to any
other trust or an estate, any trustee, executor or similar
fiduciary and any Person who has a 15% or greater interest as a
beneficiary in the income from or principal of such trust or
estate, (vii) with respect to a natural person, the parents and
children thereof and any spouse or relative thereof, or any
relative of such spouse, who has the same home as such person, and
(viii) any Affiliate of such Person.

5

 

		
	 	     (d) A person shall be deemed the “Beneficial Owner” of, or to
“Beneficially Own”, any securities (and correlative terms shall
have correlative meanings):

		
	 	     (i) which such Person or any of such Person’s Affiliates
or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Regulations
13D and 13G thereunder, in each case as in effect on the date
of this Agreement; or

		
	 	     (ii) which such Person or any of such Person’s
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time or the fulfillment of a condition or
both) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of
conversion rights, exchange rights, other rights (other than
the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “Beneficially Own”, securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person’s Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or
(B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to
“Beneficially Own”, any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act and (2) is not at the time reportable by
such Person on a Schedule 13D report under the Exchange Act
(or any comparable or successor report), other than by
reference to a proxy or consent solicitation being conducted
by such Person; or

		
	 	     (iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
(except as described in clause (B) of subparagraph (ii) of
this paragraph (d)) or disposing of any securities of the
Corporation; provided, however, that for purposes of
determining Beneficial Ownership of securities under this
Agreement, officers and directors of the Corporation solely
by reason of their status as such shall not constitute a
group (notwithstanding that they may be Associates of one
another or may be deemed to constitute a group for purposes
of Section 13(d) of the Exchange Act) and shall not be
deemed to own shares owned by another officer or
director of the Corporation.

6

 

		
	 	     Notwithstanding anything in this paragraph (d) to the contrary, a
Person engaged in the business of underwriting securities shall not be
deemed the “Beneficial Owner” of, or to “Beneficially Own,” any
securities acquired or otherwise beneficially owned in good faith in a
firm commitment underwriting until the expiration of 40 days after the
date of the sale of securities to the public pursuant to such firm
commitment underwriting.

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

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

		
	 	     (g) “Common Stock” when used with reference to the
Corporation shall collectively mean the Common Stock of the
Corporation as defined in the first recital hereof and any other
common stock of the Corporation into or for which it is changed,
converted or exchanged. “Common Stock” when used with reference to
any Person other than the Corporation which shall be organized in
corporate form shall mean the capital shares or other equity
security having of all classes of capital shares or equity
securities of such corporation the greatest aggregate voting power
in the election of directors. “Common Stock” when used with
reference to any Person which shall not be organized in corporate
form shall mean units of beneficial interest in the profits or
losses of such Person or other equity security of such Person
having of all classes of equity securities of such Person the
greatest aggregate voting power in the election of the directors,
trustees, managers or other Persons performing like governance
functions for such Person.

		
	 	     (h) “Corporation,” shall have the meaning provided at the
beginning hereof; provided, however, that “Corporation” shall also
include any successors to the Corporation as provided by Section 28
hereof and shall mean a Principal Party as provided by Section
13(a) and 13(b) hereof.

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

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

7

 

		
	 	     (k) “Exchange Ratio” shall have the meaning set forth in
Section 27 hereof.

		
	 	     (1) “Exempt Person” shall mean (i) the Corporation, (ii) any
subsidiary of the Corporation, or (iii) any employee benefit plan
or employee stock plan of the Corporation or any Subsidiary of the
Corporation or any trust or other entity organized, appointed,
established or holding Voting Stock for or pursuant to the terms of
any such plan.
	

		
	 	     (m) “Exercise Price” shall have the meaning set forth in
Section 4 hereof.

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

		
	 	     (o) “Fair Market Value” of any property shall mean fair
market value of such property as determined in accordance with
Section 11(b) hereof.

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

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

		
	 	     (r) “Person” shall mean any individual, company, firm,
corporation or other entity.

		
	 	     (s) “Preferred Stock” shall mean shares of Series D Junior
Participating Preferred Stock, par value $.001 per share, of the
Corporation having the rights, powers and preferences set forth in
the form of Certificate of Designations attached hereto as Exhibit
C, and, to the extent that there are not a sufficient number of
shares of Series D Junior Participating Preferred Stock authorized
to permit the full exercise of the Rights, any other series of
preferred stock of the Corporation designated for such purpose
containing terms substantially similar to the terms of the Series D
Junior Participating Preferred Stock.

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

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

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

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

8

 

		
	 	     (w) “Spread” shall mean the excess of (1) the Fair Market
Value of Preferred Stock issuable upon the exercise of a Right in
accordance with Section 11(a)(ii) over (2) the Exercise Price in
effect at the time of determination of the Spread.

		
	 	     (x) “Stock Acquisition Date” shall mean the first date in
which there will shall be a public announcement (which, for
purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the
Corporation or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the Board of
Directors of the Corporation shall become aware of the existence of
an Acquiring Person as confirmed by action of the Board of
Directors of the Corporation taken by the affirmative vote of a
majority of the Board of Directors of the Corporation.

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

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

		
	 	     (aa) “Trading Day” shall have the meaning set forth in
Section 11(b) hereof.

		
	 	     (bb) “Transfer Tax” shall mean any tax or charge, including
any documentary stamp tax, imposed or collected by any governmental
or regulatory authority in respect of any transfer of any security,
instrument or right, including the Rights, shares of the Common
Stock and shares of the Preferred Stock.

		
	 	     (cc) “Voting Stock” shall mean (i) the Common Stock of the
Corporation and (ii) any other shares of capital stock of the
Corporation entitled to vote generally in the election of directors
or entitled generally to vote together with the Common Stock in
respect of a merger, consolidation, sale of all or substantially
all of the Corporation’s assets, liquidation, dissolution or
winding up. For purposes of this Agreement, a stated percentage of
the Voting Stock shall mean a number of shares of the Voting Stock
as shall equal in voting power that stated percentage of the total
voting power of the then outstanding shares of Voting Stock in the
election of a majority of the Board of Directors of the Corporation
or in respect of a merger, consolidation, sale of all or
substantially all of the Corporation’s assets, liquidation,
dissolution or winding up.

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

9

 

     Section 2. Appointment of Rights Agent. The Corporation hereby appoints
the Rights Agent to act as the agent for the Corporation and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Corporation may from time to time appoint such Co-Rights Agents as it may
deem necessary or desirable, upon 10 days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.

     Section 3. Issuance of Right Certificates.

		
	 	     (a) On the Record Date (or as soon as practical thereafter), the
Corporation or the Rights Agent shall send a copy of a Summary of Rights,
in substantially the form attached hereto as Exhibit A (the “Summary of
Rights”), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Record Date, at the address of such holder
shown on the records of the Corporation.

		
	 	     (b) Until the Close of Business on the day which is the earlier of
(i) the tenth Business Day after the Stock Acquisition Date and (ii) the
tenth Business Day (or such later date as may be determined by action of
the Board of Directors of the Corporation prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement
(within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act) by any Person (other than an Exempt Person) of a
tender or exchange offer upon the successful consummation of which such
Person, or any Affiliate or Associate of such Person, would be an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the “Distribution Date”), (x) the
Rights shall be evidenced by the certificates for Common Stock (or in the
case of uncertificated shares of Common Stock, by the book-entry account
that evidences record ownership for such shares) registered in the names
of the holders of Common Stock (together with, in the case of
certificates for Common Stock outstanding as of the Record Date, the
Summary of Rights) and not by separate Right certificates and the record
holders of such certificates (or such book-entry accounts) for Common
Stock shall be the record holders of the Rights represented thereby and
(y) each Right shall be transferable only simultaneously and together
with the transfer of a share of Common Stock (subject to adjustment as
hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date or Final Expiration Date), the surrender for transfer of
any certificate for Common Stock (or the effectuation of a book-entry
transfer of shares of Common Stock) shall constitute the surrender for
transfer of the Right or Rights associated with the Common Stock
evidenced thereby, whether or not accompanied by a copy of the Summary of
Rights.

10

 

		
	 	     (c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earliest
of the Distribution Date, the Expiration Date or the Final Expiration
Date. Certificates for Common Stock (including, without limitation,
certificates issued upon original issuance, disposition from the
Corporation’s treasury or transfer or exchange of Common Stock) after the
Record Date but prior to the earliest of the Distribution Date, the
Expiration Date or the Final Expiration Date shall have impressed,
printed, written or stamped thereon or otherwise affixed thereto the
following legend:

		
	 	     This certificate also evidences and entitles the holder
hereof to the same number of Rights (subject to adjustment)
as the number of shares of Common Stock represented by this
certificate, such Rights being on the terms provided under
the Rights Agreement by and between Novavax, Inc. (the
“Corporation”) and EquiServe Trust Company, N.A. (the
“Rights Agent”), dated as of August 8, 2002, as it may be
amended from time to time (the “Agreement”), the terms of
which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of the
Corporation. Under certain circumstances, as set forth in
the Agreement, such Rights shall be evidenced by separate
certificates and shall no longer be evidenced by this
certificate. The Corporation shall mail to the registered
holder of this certificate a copy of the Agreement without
charge within five days after receipt of a written request
therefore. Under certain circumstances set forth in the
Agreement, Rights issued to or Beneficially Owned by any
Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder of such Rights, may
become null and void.

		
	 	With respect to such certificates containing the foregoing legend, until
the earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date, the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone, and
the surrender for transfer of any such certificate, except as otherwise
provided herein, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. In the event that
the Corporation purchases or otherwise acquires any Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated
with such Common Stock shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights associated with
the Common Stock which are no longer outstanding. Notwithstanding this
paragraph (c), the omission of a legend shall not affect the
enforceability of any part of this Agreement or the rights of any holder
of the Rights.

		
	 	     (d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign,
and the Corporation will send or cause to be sent (and the Rights Agent
will, if requested, send), by first class mail, postage prepaid, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Corporation, at the
address of

11

 

		
	 	such holder shown on such records, a certificate in the form
provided by Section 4 hereof (a “Right Certificate”), evidencing one
Right (subject to adjustment as provided herein) for each share of Common
Stock so held. As of and after the Distribution Date, the Rights shall
be evidenced solely by Right Certificates and may be transferred by the
transfer of the Right Certificate as permitted hereby, separately and
apart from any transfer of one or more shares of Common Stock.

                    Section 4. Form of Right Certificates.

		
	 	     (a) The Right Certificates (and the forms of election to purchase
shares, certificate and assignment to be printed on the reverse thereof),
when, as and if issued shall be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which the Common Stock or the Rights may from time to time be listed or
as the Corporation may deem appropriate to conform to usage or otherwise
and as are not inconsistent with the provisions of this Agreement.
Subject to the provisions of Section 22 hereof, Right Certificates
evidencing Rights whenever issued, (i) shall be dated as of the date of
issuance of the Rights they represent and (ii) subject to adjustment from
time to time as provided herein, on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share
(including fractional shares which are integral multiples of
one-thousandth of a share) of Preferred Stock as shall be set forth
thereon at the price per one one-thousandth of a share of Preferred Stock
payable upon exercise of a Right provided by Section 7(b) hereof, as the
same may from time to time be adjusted as provided herein (the “Exercise
Price”).

		
	 	     (b) Any Right Certificate issued pursuant to Section 3(a), Section
11(f) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or an Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) 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 to holders of equity interests in such Acquiring Person
or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board has determined is part of a plan,
arrangement or understanding which has a primary purpose or effect
avoidance of Section 7(e) hereof, and any Right Certificate issued
pursuant to Section 6 or Section 11 hereof 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 Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become
null and void in the circumstances specified in Section 7(e)
of the Agreement.

12

 

     Section 5. Countersignature and Registration.

		
	 	     (a) Each Right Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice
President, either manually or by facsimile signature, and have affixed
thereto the Corporation’s seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. Each Right Certificate 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 Corporation who shall have signed any Right
Certificate shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Corporation, such Right Certificate, nevertheless, may
be countersigned by the Rights Agent and issued and delivered with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation. Any
Right Certificate may be signed on behalf of the Corporation by any
person who, on the date of the execution of such Right Certificate, shall
be a proper officer of the Corporation to sign such Right Certificate,
although at the date of the execution of this 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 its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, and in such other locations as may be required
by law, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates 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 Sections 4(b), 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the earlier of the Expiration
Date or the Final Expiration Date, any Right Certificate, may be (i)
transferred or (ii) split up, combined or exchanged for one or more other
Right Certificates, entitling the registered holder (or former holder in
the case of a transfer) to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate shall surrender the Right Certificate at the office of
the Rights Agent designated for the surrender of Right Certificates with
the form of certificate and assignment on the reverse side thereof duly
endorsed (or enclose with such Right Certificate a written instrument of
transfer in form satisfactory to the Corporation and the
Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly
guaranteed, 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 Corporation shall reasonably
request. Any registered holder desiring to split up, combine or exchange
any Right Certificate shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right Certificate to be split up,
combined or exchanged at the office of the Rights Agent designated
therefore. Thereupon, the Rights Agent shall, subject to Sections 4(b),
7(e), 7(f), 14 and 27 hereof, countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Corporation may require payment of a sum
sufficient to cover any Transfer Tax that may be imposed in connection
with any transfer, split up, combination or exchange of any Right
Certificates.

13

 

		
	 	     (b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Distribution Date and prior to the Expiration Date,
upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them
and, if requested by the Corporation, reimbursement to the Corporation
and the Rights Agent of all reasonable expenses incidental thereto, or
upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Corporation shall cause a new Right
Certificate of like tenor to be issued and delivered to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

     Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights
Invalidation of Certain Rights.

		
	 	     (a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set
forth in Sections 7(c), 7(e), 23(a) and 27(b) hereof). Except as
otherwise provided herein, the Rights may be exercised in whole or in
part, at any time commencing with the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase and
certificate on the reverse side thereof duly executed (with signatures
duly guaranteed), to the Rights Agent at the designated office of the
Rights Agent in New York, together with payment of the Exercise Price for
each Right exercised (as the same may have been adjusted as hereinafter
provided), at or prior to the Close of Business on the earlier of (i)
August 7, 2012 (the “Final Expiration Date”) or (ii) the date on which
the Rights are redeemed as provided in Section 23 hereof or the date on
which the Rights are exchanged as provided in Section 27 hereof (such
earlier date being herein referred to as the “Expiration Date”).

		
	 	     (b) The Exercise Price shall initially be $40.00 for each one
one-thousandth (1/1,000th) of a share of Preferred Stock issued pursuant
to the exercise of a Right. The Exercise Price and the number of one
one-thousandths of a share of Preferred Stock or other securities or
property to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the
United States of America, in accordance with paragraph (c) below.

14

 

		
	 	     (c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by
certified check, cashier’s check, bank draft or money order payable to
the Corporation or the Rights Agent of the Exercise Price for the shares
of Preferred Stock to be purchased and an amount equal to any applicable
Transfer Tax required to be paid by the holder of the Right Certificate
in accordance with Section 9(e) hereof, the Rights Agent shall thereupon
promptly (i) requisition from any transfer agent of the Preferred Stock
of the Corporation (or make available, if the Rights Agent is the
transfer agent for such shares) one or more certificates representing the
number of shares of Preferred Stock to be so purchased, and the
Corporation hereby authorizes and directs such transfer agent to comply
with all such requests, (ii) as provided in Section 14(b) hereof, at the
election of the Corporation, cause depositary receipts to be issued in
lieu of fractional shares of Preferred Stock, (iii) if the election
provided for in the immediately preceding clause (ii) has not been made,
requisition from the Corporation the amount of cash to be paid in lieu of
the issuance of fractional shares (other than fractions that are integral
multiples of one one-thousandth of a share) in accordance with Section
14(b) hereof, (iv) after receipt of such Preferred Stock certificates
and, if applicable, depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and
(v) when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate;
provided, however, that in the case of a purchase of securities other
than Preferred Stock, pursuant to Section 13 hereof, the Rights Agent
shall promptly take the appropriate actions corresponding in such case to
that referred to in the foregoing clauses (i) through (v) of this Section
7(c). Notwithstanding the foregoing provisions of this Section 7(c), the
Corporation may suspend the issuance of shares of Preferred Stock and
other securities upon exercise of a Right for a reasonable period, not in
excess of 90 days, during which the Corporation seeks to register under
the Securities Act, and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock or other securities to be
issued pursuant to the Rights; provided, however, that nothing contained
in this Section 7(c) shall relieve the Corporation of its obligations
under Section 9(d) hereof. Upon any such suspension, the Corporation
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.

		
	 	     (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 to the Registered holder
of such Right Certificate or his assign, subject to the provisions of
Section 14(b) hereof. The Corporation reserves the right to require
prior to the occurrence of an event described in Sections 11(a)(ii) or
13(a), that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Preferred Stock would be issued.

15

 

		
	 	     (e) Notwithstanding any provision of this Agreement to the contrary,
from and after the time when any Person first becomes an Acquiring
Person (the “invalidation time”), any Rights that are Beneficially Owned
by (x) such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (y) a transferee of such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after the invalidation
time or (z) a transferee of such Acquiring Person (or any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the
invalidation time pursuant to either (I) a transfer from the Acquiring
Person (or any such Associate or Affiliate) to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors of the Corporation has determined
is part of a plan, arrangement or understanding which has the purpose or
effect of avoiding the provisions of this Section 7(e), and subsequent
transferees of such Persons referred to in clause (y) and (z) above,
shall be null and void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement or otherwise. The
Corporation shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but
it shall have no liability to any holder of Right Certificates or any
other Person as a result of its failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.

		
	 	     (f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate following the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof
and such other information as the Corporation or the Rights Agent shall
reasonably request.

             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 Corporation 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 Corporation shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall cancel and retire, any Right Certificate purchased or acquired by
the Corporation otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Right Certificates to the Corporation, or shall, at
the written request of the Corporation, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Corporation.

		
	 	       Section 9. Reservation and Availability of Shares of Preferred
Stock.

16

 

		
	 	     (a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of the authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will
from time to time be sufficient to permit the exercise in full of all
outstanding Rights.

		
	 	     (b) The Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance in accordance with this Agreement
to be listed, upon official notice of issuance, upon the principal
national securities exchange, if any, upon which the Common Stock is
listed or, if the principal market for the Common Stock is not on any
national securities exchange, to be eligible for quotation in the
National Association of Securities Dealers’ Automated Quotation System or
any successor thereto or other comparable quotation system.

		
	 	     (c) The Corporation covenants and agrees that it will take all such
action as may be necessary to endure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and dully
paid and nonassessable shares.

		
	 	     (d) The Corporation shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities
Act, with respect to the shares of Preferred Stock purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (a) the date as of which the Rights
are no longer exercisable for Preferred Stock and (b) the earlier of the
Expiration Date and the Final Expiration Date. The Corporation may
temporarily suspend, for a period of time not to exceed 90 days, the
issuance of shares of Preferred Stock upon exercise of a Right in order
to prepare and file a registration statement under the Securities Act and
permit it to become effective. The Corporation 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 in connection with the
exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and such exercise shall be permitted under
applicable law, and until a registration statement under the Securities
Act (if required) shall have been declared effective.

		
	 	     (e) The Corporation covenants and agrees that, except as set forth
in Section 6(a) hereof or in this Section 9(e), it will pay when due and
payable any and all United States federal and state Transfer Taxes which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock issued or delivered

17

 

		
	 	upon the exercise of Rights. The Corporation shall not, however, be
required to pay any Transfer Tax which may be payable in respect of any
transfer or delivery of a Right Certificate to a Person other than, or
the issuance or delivery of certificates for Preferred Stock upon
exercise of Rights in a name other than that of, the registered holder of
the Right Certificate, and the Corporation shall not be required to issue
or deliver a Right Certificate or certificate for Preferred Stock to a
Person other than such registered holder until any such Transfer Tax
shall have been paid (any such Transfer Tax being payable by the holder
of such Right Certificate at the time of surrender) or until it has been
established to the Corporation’s satisfaction that no such Transfer Tax
is due.

		
	 	     (f) The requirements of this Section 9 shall apply to shares of
Common Stock of the Corporation if the Corporation has elected in
accordance with Section 11(a)(iii) hereof to substitute shares of Common
Stock for shares of Preferred Stock that otherwise may be purchased upon
the exercise of Rights.

            Section 10.  Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated as
of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the
Corporation are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated as of, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Corporation are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Corporation 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
Corporation, except as provided herein.

            Section 11.  Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to time
as provided in this Section 11.

		
	 	     (a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare or pay any dividend on
Common Stock payable in shares of Common Stock, (B) subdivide or
split the outstanding shares of Common Stock into a greater number
of shares, (C) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares or effect a reverse
split of the outstanding shares of Common Stock, or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, then and in each such event
the number of one one-thousandths of a share of Preferred Stock
issuable

18

 

		
	 	upon the exercise of a Right after the record date for such
event (if one shall have been established or, if not, after the
date of such event) or the effective date of such subdivision,
combination or reclassification, shall be the number of one
one-thousandths of a share of Preferred Stock issuable immediately
prior to such event multiplied by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such
event, and the Exercise Price to be in effect after the record date
for such event (if one shall have been established or, if not,
after the date of such event) or the effective date of such
subdivision, combination or reclassification, shall be determined
by multiplying the Exercise Price in effect prior to such event by
such fraction. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to any adjustment required
pursuant to Section 11(a)(ii).

		
	 	     (ii) Subject to Section 27 hereof, in the event that any
Person shall become an Acquiring Person, then, subject to the last
sentence of Section 23(a) hereof and except as otherwise provided
in this Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive
upon exercise of such Right in accordance with the terms of this
Agreement and payment of the Exercise Price, such number of one
one-thousandths of a share of Preferred Stock as shall equal the
result obtained by (1) multiplying the then current Exercise Price
by the number of one one-thousandths of a share of Preferred Stock
for which a Right would, absent adjustment pursuant to this Section
11(a)(ii), be then exercisable and dividing the product by (2) 50%
of the proportionate Fair Market Value of one one-thousandth of a
share of the Preferred Stock (determined pursuant to Section 11(b)
hereof) on the Stock Acquisition Date in respect of such event;
provided, however, if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions
of Section 13 hereof, then only the provisions of Section 13 hereof
shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii).

		
	 	     (iii) In the event that the Corporation does not have
available sufficient authorized but unissued Preferred Stock to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Corporation shall take all such
action as may be necessary to authorize and reserve for issuance
such number of additional shares of Preferred Stock as may from
time to time be required to be issued upon the exercise in full of
all Rights from time to time outstanding and, if necessary, shall
use its best efforts to obtain stockholder approval thereof. In
lieu of issuing shares of Preferred Stock in accordance with the
foregoing subparagraph (ii), the Corporation may, if the Board of
Directors of the Corporation determines that such action is
necessary or appropriate, elect to issue or pay, upon the exercise
of the Rights, cash, property, shares of Preferred Stock or Common
Stock, or any combination thereof, having an aggregate Fair Market
Value equal to the Fair Market Value of the shares of Preferred
Stock

19

 

		
	 	which otherwise would have been issuable pursuant to Section
11(a)(ii) hereof as of the date the Board of Directors of the
Corporation makes such election (which Fair Market Value shall be
determined as provided by Section 11(b) hereof). Subject to Section
23 hereof, any such election by the Board of Directors of the
Corporation must be made and publicly announced within thirty (30)
days after the date on which the event described in Section
11(a)(ii) occurs and shall be applicable with respect to all Rights
exercised after such public announcement. Notice of such election
shall promptly be given to the Rights Agent.

		
	 	        (b) For the purpose of this Agreement, the “Fair Market Value” of
any share of “Preferred Stock”, Common Stock, or any other stock or Right
or other security or any other property on any date shall be determined
as provided in this Section 11(b). In the case of a publicly traded (as
such term is hereinafter defined) stock or other security, the Fair
Market Value thereof on any date shall be deemed to be the average of the
daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to but not including such date; provided,
however, that in the event that the Fair Market Value of any share of
Common Stock is to be determined as of a date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on the
Common Stock payable in shares of Common Stock or securities convertible
into shares of Common Stock or (ii) the effective date of any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of the Common Stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Corporation to take into account such dividend,
distribution, subdivision, split, combination, consolidation, reverse
stock split or reclassification. The closing price 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 applicable transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange), or, if the securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to securities listed
on the principal national securities exchange (which, if approved by the
Board of Directors of the Corporation, may be a securities exchange of a
country other than the United States of America) on which such security
is listed or admitted to trading; or, if not listed or admitted to
trading on any such national securities exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices)
in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) or such
other quotation reporting system then in use in the United States of
America; or, if no bids for such security are so quoted, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in such security selected by the Board of Directors
of the Corporation. The term “Trading Day” shall mean a day on which the
principal national securities exchange on which such security is listed
or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national
securities exchange, a Business Day. For purposes of this Section 11(b),
a stock or other security shall be considered “publicly traded” only (i)
if registered under Section 12 of the Exchange Act

20

 

		
	 	or exempt from such registration pursuant to Section 12(g)(2)(B),
(C) or (G) of the Exchange Act or (ii) if traded on a national securities
exchange of a country other than the United States of America approved by
the Board of Directors of the Corporation or (iii) if, in the judgment of
the Board of Directors of the Corporation, there is sufficient active
trading in such stock or other security that reported trading
transactions therein fairly reflect the fair market value thereof. If a
security is not publicly traded, “Fair Market Value” shall mean the fair
value per share of stock or per other unit of such other security, as
determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of Directors
of the Corporation, or, if no such investment banking firm is, in the
good faith judgment of the Board of Directors of the Corporation,
available to make such determination, as determined in good faith by the
Board of Directors of the Corporation; provided, however, that for
purposes of making the adjustment provided for by Section 11(a)(ii)
hereof, the Fair Market Value of a share of Preferred Stock, unless the
Preferred Stock shall at the time be publicly traded (in which case its
Fair Market Value shall be determined pursuant to the foregoing
provisions of this Section 11(b)), shall be 100% of the product of the
Fair Market Value of a share of Common Stock multiplied by the higher of
the then Dividend Multiple or Vote Multiple applicable to the Preferred
Stock (as defined in the certificate of designations of the Corporation
relating to the Preferred Stock); provided, however, that the Board of
Directors of the Corporation may, by resolution, determine that the Fair
Market Value of a share of Preferred Stock shall be more than such amount
but not more than 110% of the product of the then Fair Market Value of a
share of Common Stock multiplied by the higher of the then Dividend
Multiple or Vote Multiple applicable to the Preferred Stock. In the case
of property other than securities, the “Fair Market Value” thereof shall
be determined in good faith by the Board of Directors of the Corporation
based upon such appraisals or valuation reports of such independent
experts as the Board of Directors of the Corporation shall in good faith
determine to be appropriate in accordance with good business practices
and fair to the interests of the holders of Rights. Any determination
made by the Board of Directors of the Corporation as provided for by this
Section 11(b) shall be described in a statement filed by the Corporation
with the Rights Agent, shall be effective thereupon and only thereupon
and shall be binding upon the Rights Agent and, as provided by Section 34
hereof, all holders of Rights.

		
	 	     (c) In case the Corporation shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Stock or securities convertible
into Common Stock at a price per share (or having a conversion price per
share, if a security convertible into Common Stock) less than the then
current per share Fair Market Value of the Common Stock on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would

21

 

		
	 	purchase at such current Fair Market Value and the denominator of
which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed
with the Rights Agent. Shares of Common Stock owned by or held for the
account of the Corporation shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed and in the event that
such rights, options or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed.

		
	 	     (d) In case the Corporation shall fix a date for the making of a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which
the Corporation is the continuing or surviving corporation) of evidences
of indebtedness of the Corporation or any of its Subsidiaries, cash
(other than a regular quarterly cash dividend not in excess of 150% of
the previous regular quarterly cash dividend), other assets (other than a
dividend payable in shares of Common Stock) or options, rights or
warrants to subscribe for shares of the Corporation or any Subsidiary
(excluding those referred to in Section 11(c) hereof), the Exercise Price
to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Fair Market Value of the
shares of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the assets or evidences of
indebtedness or options, rights or warrants so to be distributed in
respect of one share of Common Stock, and the denominator of which shall
be such current Fair Market Value of the shares of Common Stock. Such
adjustment shall be made successively whenever such a record date is
fixed, and, in the event that such distribution is not so made
notwithstanding the setting of a record date therefore, the Exercise
Price shall again be adjusted to be the Exercise Price which would then
be in effect if such record date had not been fixed.

		
	 	     (e) Unless the Corporation shall have exercised its election as
provided in Section 11(f), upon each adjustment of the Exercise Price as
a result of the calculations made in Section 11(c) or (d), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise
Price, that number of one one-thousandths of a share of Preferred Stock
obtained by (i) multiplying (x) the number of one one-thousandths of a
share of Preferred Stock that could be purchased upon exercise of a Right
immediately prior to the adjustment pursuant to this Section 11(e) by (y)
the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment of the Exercise Price.

22

 

		
	 	     (f) The Corporation may elect, on or after the date of any
adjustment of the Exercise Price pursuant to Section 11(c) or 11(d), to
adjust the number of Rights in substitution for any adjustment pursuant
to Section 11(e) in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights obtained by dividing
the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after
adjustment of the Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount
of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If the Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(f), the Corporation shall, as promptly as practicable, cause
to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights, if any, to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Corporation, 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
Corporation, 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 shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.

		
	 	     (g) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
Exercise Price; provided, however, that any adjustments which by reason
of this Section 11(g) 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 one-thousandth of a share, as the case may be.
Notwithstanding the first sentence of this Section 11(g), any adjustment
required by this Section 11 shall be made no later than the earlier of
(i) three (3) years from date of the transaction which mandates such
adjustment, or (ii) Expiration Date.

		
	 	     (h) Irrespective of any adjustment or change in Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of shares to be
issued upon exercise of the Rights as in the initial Right Certificates
issued hereunder but, nevertheless, shall represent the Rights as so
adjusted.

23

 

		
	 	     (i) Before taking any action that would cause an adjustment reducing
the Exercise Price of the number of one one-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights below the then par
value, if any, of the shares of Preferred Stock, the Corporation shall
use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of such
Preferred Stock at such adjusted purchase price per share.

		
	 	     (j) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Corporation or any
recapitalization, reorganization or partial liquidation of the
Corporation or similar transaction, the Corporation shall be entitled to
make such further adjustments in the number of shares of Preferred Stock
which may be acquired upon exercise of the Rights, and such adjustments
in the Exercise Price therefore, in addition to those adjustments
expressly required by the other paragraphs of this Section 11, as the
Board of Directors of the Corporation shall determine to be necessary or
appropriate in order for the holders of the Rights in such event to be
treated equitably and in accordance with the purpose and intent of this
Agreement or in order that any such event shall not, but for such
adjustment, in the opinion of counsel to the Corporation, result in the
stockholders of the Corporation being subject to any United States
federal income tax liability by reason thereof.

		
	 	     (k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Corporation other
than the Preferred Stock, thereafter the Exercise Price and the number of
such other shares so receivable upon exercise of a Right shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), 11(c), 11(d), 11(e), 11(f) and 11(j)
hereof, as applicable, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.

            
 Section 12.  Certification of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, 13, 23(c) or 27
hereof, the Corporation shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25. Notwithstanding the
foregoing sentence, the failure of the Corporation to make such certification
or give such notice shall not affect the validity of or the force or effect of
the requirement for such adjustment. Any adjustment to be made pursuant to
Section 11, 13, 23(c) or 27 hereof shall be effective as of the date of the
event giving rise to such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.

24

 

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

		
	 	     (a) In the event that, at any time after the Stock Acquisition Date,
(x) the Corporation shall, directly or indirectly, consolidate with, or
merge with and into, any other Person or Persons (other than an Exempt
Person) and the Corporation shall not be surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons
(other than an Exempt Person) shall, directly or indirectly, consolidate
with, or merge with and into, the Corporation, and the Corporation shall
be the continuing of surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part
of the outstanding shares of Common Stock shall be changed or converted
into or exchanged for stock or other securities of any other Person
(other than an Exempt Person) or of the Corporation or cash or any other
property, or (z) the Corporation or one or more of its Subsidiaries
shall, directly or indirectly, sell or otherwise transfer to any other
Person (other than an Exempt Person) in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning power
of the Corporation and its Subsidiaries (taken as a whole), then, on the
first occurrence of any such event, proper provision shall be made so
that: (i) each holder of record of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Exercise Price
multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of shares of Preferred Stock, such number
of shares of validly issued, fully paid, non-assessable and freely
tradeable Common Stock of the Principal Party (as defined in Section
13(b) hereof), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by
(1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable immediately prior to the first occurrence of an event
described in this Section 13 (or, if an event described in Section
11(a)(ii) has occurred prior to the first occurrence of an event
described in this Section 13, multiplying the number of such one
one-thousands of a share for which a Right was exercisable immediately
prior to the first occurrence of an event described in Section 11(a)(ii)
by the Exercise Price in effect immediately prior to such first
occurrence), and dividing that product by (2) 50% of the then per share
Fair Market Value of the Common Stock of the Principal Party on the date
of the consummation of such consolidation, merger, sale or transfer;
provided, however, that the Exercise Price (as adjusted) and the number
of shares of Common Stock of such Principal Party so receivable upon
exercise of a Right shall be subject to further adjustment as appropriate
in accordance with Section 11 hereof to reflect any events occurring in
respect of the Common Stock of such Principal Party after the occurrence
of such consolidation, merger, sale or transfer; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties
of the Corporation pursuant to this Agreement; (iii) the term
“Corporation” for all purposes of this Agreement shall thereafter be
deemed to refer to such Principal Party; (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with the
provisions of Section 9 hereof applicable to

25

 

		
	 	the reservation of Preferred Stock) in connection with such
consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; provided, however, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all
of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such
Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Exercise Price, such
cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction,
owned the shares of Common Stock of the Principal Party purchasable upon
the exercise of a Right, and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property; and (v) the provisions of Section 11(a)(ii) hereof shall be of
no effect following the occurrence of any event described in clause (x),
(y) or (z) above of this Section 13(a).

		
	 	     (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) hereof: (A) the Person
that is the issuer of the securities into which shares of Common
Stock of the Corporation are changed or otherwise exchanged,
converted in such merger or consolidation, or, if there is more
than one such issuer, the issuer of the Common Stock of which has
the greatest market value or (B) if no securities are issued, (I)
the Person that is the other party to the merger or consolidation
and that survives such merger or consolidation or, if there is more
than one such Person, the Person the Common Stock of which has the
greatest market value or (II) if the Person that is the other party
to the merger or consolidation, the Person that does survive the
merger or consolidation (including the Corporation if it survives);
and

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

		
	 	provided, however, that in any such case, if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, then (1) if such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
the term “Principal Party” shall refer to such other Person, or (2) if
such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of all of

26

 

		
	 	which are and have been so registered, the term “Principal Party” shall
refer to whichever of such Persons is the issuer of the Common Stock
having the greatest market value of shares outstanding, or (3) if such
Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person
owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its
interest in such Person bears to the total of such interests.

		
	 	     (c) The Corporation shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section
13(a) unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit exercise in full of all Rights in
accordance with this Section 13 and unless prior thereto the Corporation
and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the Principal
Party shall, upon consummation of such consolidation, merger or sale or
transfer of assets or earning power, assume this Agreement in accordance
with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of
the Principal Party upon exercise of outstanding Rights have been waived
and that such transaction shall not result in a default by the Principal
Party under this Agreement, and further providing that, as soon as
practicable after the date of any consolidation, merger or sale or
transfer of assets or earning power referred to in Section 13(a) hereof,
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, use
its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;

		
	 	     (ii) take all such other action as may be necessary to enable
the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to using its best
efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for
quotation on NASDAQ;

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

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

27

 

		
	 	The provisions of Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that any of
the transactions described in Section 13 hereof shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall,
subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13.

		
	 	     (d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws
or other instrument governing its affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with,
or as a consequence of, the consummation of a transaction referred to in
this Section 13, shares of Common Stock of such Principal Party at less
than the then Fair Market Value per share (determined pursuant to Section
11(b) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Fair Market Value
(other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special tax or similar payment in connection with the
issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the
Corporation shall not consummate any such transaction unless prior
thereto the Corporation 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 canceled,
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 Corporation covenants and agrees that it shall not, at any
time after any Person becomes an Acquiring Person, enter into any
transaction of the type described in clauses (x) through (z) of the first
sentence of Section 13(a) hereof if (i) at the time of or immediately
after such consolidation, merger, sale, transfer or other transaction
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,
(ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13(a) hereof shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of
the Principal Party would preclude or limit the exercisability of the
Rights.

             Section 14. Fractional Rights and Fractional Shares.

		
	 	     (a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights (i.e., Rights to acquire less than one one-thousandth of a share
of Preferred Stock), unless such fractional Rights result from a
transaction referred to in Section 11(a)(i) or 11(f) hereof. If the
Corporation

28

 

		
	 	shall determine not to issue such fractional Rights, then, in lieu
of such fractional Rights, there shall be paid to the holders of record
of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction
of the Fair Market Value of a whole Right.

		
	 	     (b) The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral
multiples of one one-thousandth of a share) upon exercise of the Rights
or to distribute certificates which evidence fractional shares (other
than fractions that are integral multiples of one one-thousandth of a
share). In lieu of issuing fractions of shares of Preferred Stock, the
Corporation may, at its election, issue depositary receipts evidencing
fractions of shares pursuant to an appropriate agreement between the
Corporation and a depositary selected by it, provided that such agreement
shall provide that the holders of such depositary receipts shall have all
of the rights, privileges and preferences to which they would be entitled
as owners of the Preferred Stock. With respect to fractional shares that
are not integral multiples of one one-thousandth of a share, if the
Corporation does not issue such fractional shares or depositary receipts
in lieu thereof, there shall be paid to the holders of record of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the Fair Market
Value of a share of Preferred Stock.

		
	 	     (c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
of Preferred Stock (other than fractions which are multiples of one
one-thousandth of a share) upon exercise of a Right.

             Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock), and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation 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 will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

             Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:

		
	 	     (a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock (or in the case of uncertificated
shares of Common Stock, by the

29

 

		
	 	book-entry account that evidences record ownership of such shares)
registered in the name of the holders of Common Stock (together, as
applicable, with the Summary of Rights), which certificates for Common
Stock (or book-entry account) shall also constitute certificates for
Rights, and not by separate Right Certificates, and each Right shall be
transferable only simultaneously and together, with the transfer of
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 executed;

		
	 	     (c) the Corporation 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 or, in the case of
uncertificated shares of Common Stock, the book-entry account evidencing
record ownership of such shares) 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
Corporation or the Rights Agent) for all purposes whatsoever, and neither
the Corporation nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to
the contrary; and

		
	 	     (d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation 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 of other order, decree 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 Corporation must use its reasonable
efforts to have any such order, decree 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 Preferred Stock or any
other securities which 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 or other security holder of the
Corporation or of a security holder of any other Person 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
security holder action, or to receive notice of meetings or other actions
affecting stockholders or security holders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or otherwise, except
in any such case the rights, if any, in respect thereof provided by this
Agreement, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof for such stock or
other security.

30

 

             Section 18. Concerning the Rights Agent.

		
	 	     (a) The Corporation 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 and execution
of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent,
its directors, officers, employees, and agents for, and to hold each of
them harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights Agent
or such other indemnified party in connection with the acceptance and
administration of this Agreement or the performance of the Rights Agent’s
duties hereunder, including the cost and expenses of defending against
any claim of liability relating to the Rights or this Agreement.

		
	 	     (b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by
it in connection with its administration of this Agreement or the
performance of the Rights Agent’s duties hereunder in reliance upon any
Right Certificate or certificate for Preferred Stock or for other
securities of the Corporation, 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.

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

             Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.

		
	 	     (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or stock transfer 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 corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name
of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such
cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.

31

 

		
	 	     (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; 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; 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 the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Corporation 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 an
employee of or outside legal counsel for the Corporation or the Rights
Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
advice or opinion.

		
	 	     (b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Corporation prior to taking or
suffering 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 certificate signed
by the Chairman of the Board, the President or any Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Corporation and delivered to the Rights Agent.
Any such certificate shall be full authorization to the Rights Agent for
any action taken or suffered 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 Corporation only.

		
	 	     (e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Corporation of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
adjustment required under the

32

 

		
	 	provisions of Section 11, 13 or 27 hereof 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 of a certificate describing any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock
or other security to be delivered pursuant to the exercise of any Right
or as to whether any shares of Preferred Stock or other security will,
when issued, be validly authorized and issued, fully paid and
nonassessable.

		
	 	     (f) The Corporation 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 the Agreement.

		
	 	     (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the
Secretary or the Treasurer of the Corporation, 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 or suffered to be taken by it in
good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by
the Rights Agent for written instructions from the Corporation may, at
the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent under this Agreement and the
date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than three Business Days after
the date any officer of the Corporation actually receives such
application unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the
action to be taken or omitted.

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

		
	 	     (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 Corporation resulting from any such act, default, neglect or
misconduct, provided, however, reasonable care was exercised by the
Rights Agent in the selection and continued employment thereof.

33

 

		
	 	     (j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to certify
the holder is not an Acquiring Person (or an Affiliate or Associate
thereof), a Rights Agent shall not take any further action with respect
to such requested exercise or transfer without first consulting with the
Corporation.

		
	 	     (k) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or
obligations shall be read into this Agreement against the Rights Agent.

		
	 	     (l) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not
limited to lost profits).

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 30
days’ notice in writing mailed to the Corporation and to each transfer agent of
the Common Stock and the Preferred Stock by registered or certified mail, and,
if such resignation occurs after the Distribution Date, to the registered
holders of the Rights Certificates by first-class mail. In the event the
Registrar, Transfer Agency and Service Agreement between the Corporation and
State Street Bank and Trust Company (predecessor to EquiServe Trust Company,
N.A.) dated February 5, 1996 terminates, the Rights Agent will be deemed to
resign automatically on the effective date of such termination; and any
required notice will be sent by the Corporation. The Corporation may remove
the Rights Agent or any successor Rights Agent (with or without cause) upon 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 the
Preferred Stock by registered or certified mail, and, if such resignation
occurs after the Distribution Date, to the registered holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Corporation shall
appoint a successor to the Rights Agent. If the Corporation shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the
Corporation), then the incumbent Rights Agent or the holder of record of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Corporation or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any
state thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination in the conduct of its corporate trust or stock transfer business
by federal or state authorities and which has at the time of its appointment as
Rights

34

 

Agent a combined capital and surplus of at least $50,000,000, (b) an Affiliate
controlled by or under common control with one or more corporations described
in clause (a) of this sentence or (c) the transfer agent for the Common Stock
or Preferred Stock of the Corporation. 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
Corporation shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and Preferred Stock, and mail
a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Corporation shall have the authority to act as the Rights Agent
until a successor Rights Agent shall have assumed the duties of the Rights
Agent hereunder.

             Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Voting Stock following
the Distribution Date and prior to the Expiration Date, the Corporation may
with respect to shares of Voting Stock so issued or sold pursuant to (i) the
exercise of stock options, (ii) under any employee plan or arrangement, (iii)
upon the exercise, conversion or exchange of securities, notes or debentures
issued by the Corporation or (iv) a contractual obligation of the Corporation,
in each case existing prior to the Distribution Date, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale.

             Section 23. Redemption.

		
	 	     (a) The Corporation may, at its option, but only by the vote of a
majority of its Board of Directors, redeem all but not less than all of
the then outstanding Rights at any time prior to the earlier of (i) the
Close of Business on the tenth Business Day following the Stock
Acquisition Date (subject to extension by the Corporation as provided in
Section 26 hereof) or (ii) the Final Expiration Date, at a redemption
price of $.001 per Right, subject to adjustment as provided in Section
23(c) hereof (the “Redemption Price”). The redemption of the Rights by
the Board of Directors of the Corporation may be made effective at such
time after the Board’s action to redeem the Rights on such basis and
subject to such conditions, as the Board of Directors of the Corporation
in its sole and absolute discretion may establish. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall
not be exercisable after the first occurrence of an event as described in
Section 11(a)(ii) until such time as the Corporation’s right of
redemption hereunder has expired. The Corporation may, at its
option, pay the Redemption Price in cash, shares of Common Stock of the
Corporation (based on the Fair Market Value of the Common Stock of the
Corporation at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.

35

 

		
	 	     (b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by
action of the Board of Directors of the Corporation ordering the
redemption of the Rights, evidence of which shall have been filed with
the Rights Agent, and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Within 10 days after the
effective time of the action of the Board of Directors of the Corporation
ordering the redemption of the Rights, the Corporation 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 Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives
the notice. Each notice of redemption will state the method by which the
payment of the Redemption Price will be made. At the option of the Board
of Directors of the Corporation, the Redemption Price may be paid in cash
to each Rights holder or by the issuance of shares (and, at the
Corporation’s election pursuant to Section 14(b) hereof, cash or
depositary receipts in lieu of fractions of shares other than fractions
which are integral multiples of one one-thousandth of a share) of
Preferred Stock or Common Stock having a Fair Market Value equal to such
cash payment.

		
	 	     (c) In the event the Corporation shall at any time after the date of
this Agreement but before the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or such extension thereof by the
Corporation as provided in Section 26 hereof) (A) pay any dividend on
Common Stock in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares or (C)
combine or consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock and as a consequence thereof the number of Rights
outstanding shall change, then, and in each such event, the Redemption
Price may, by action of the Board of Directors of the Corporation in its
discretion, be appropriately adjusted in respect of such transaction so
as to maintain the aggregate Redemption Price of all Rights after such
transaction at the same amount, insofar as practicable, as before the
transaction.

             Section 24. Notice of Proposed Actions.

		
	 	     (a) In case the Corporation, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section
11(a)(i) hereof or to pay any dividend to the holders of record of its
shares of Common Stock payable in shares of capital stock of any class or
to make any other distribution to the holders of record of its Common
Stock (other than a regular periodic cash dividend at a rate not in
excess of 150% of the rate of the last cash dividend theretofore paid),
or (ii) to offer to the holders of record of its

36

 

		
	 	Common Stock options, warrants, or other rights to subscribe for or
to purchase shares of Common Stock (including any security convertible
into or exchangeable for Common Stock) or shares of stock of any class or
any other securities, options, warrants, convertible or exchangeable
securities or other rights, or (iii) to effect any reclassification of
its Preferred Stock or Common Stock or any recapitalization or
reorganization of the Corporation, or (iv) to effect any consolidation or
merger with or into, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Corporation and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case,
the Corporation shall give to each holder of record of a Right
Certificate, to the extent feasible and in accordance with Section 25
hereof, notice of such proposed action, which shall specify the record
date for the purposes of such transaction referred to in Section 11(a)(i)
or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding
up is to take place and the record date for determining participation
therein by the holders of record of Common Stock or 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 20 days
prior to the record date for determining holders of record of the
Preferred Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
record of Common Stock or Preferred Stock, whichever shall be the
earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action
taken by the Corporation or the vote upon any such action.

		
	 	     (b) In case the event referred to in Section 11(a)(ii) hereof shall
occur, then the Corporation shall as soon as practicable thereafter, in
accordance with Section 25 hereof, give to each holder of a Right notice
of the occurrence of such an event, which notice shall describe the event
and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.

             Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Corporation shall be in writing and shall be
considered given upon receipt or seven Business Days after being sent by
first-class mail, postage prepaid, in any case addressed (until another address
is filed in writing with the Rights Agent) as follows:

Novavax, Inc.

8320 Guilford Road

Columbia, Maryland 21046

Attention: Secretary

Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Corporation or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be in
writing and shall be considered given upon receipt or seven
Business Days after being sent by first-class mail, postage prepaid, in any
case addressed (until another address is filed in writing with the Corporation)
as follows:

EquiServe Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention: Deborah Dougherty

37

 

Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of record of any Right
Certificate or Right shall be in writing and shall be considered given upon
receipt or seven Business Days after being sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown in the
registry books of the Corporation.

             Section 26. Supplements and Amendments. For as long as the Rights are
then redeemable and except as provided in the penultimate sentence of this
Section 26, the Corporation may, in its sole and absolute discretion, and the
Rights Agent shall if the Corporation so directs, supplement or amend any
provision of this Agreement without the approval of any holders of the Rights.
At any time when the Rights are not then redeemable and except as provided in
the last sentence of this Section 26, the Corporation may, and the Rights Agent
shall if the Corporation so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein or (iii) to change
or supplement the provisions hereunder in any manner which the Corporation may
deem necessary or desirable, provided that no such supplement or amendment
pursuant to this clause (iii) shall materially adversely affect the interest of
the holders of Right Certificates (other than an Acquiring Person or any other
Person in whose hands Rights are null and void under the provisions of Section
7(e) hereof). Upon the delivery of a certificate from an appropriate officer
of the Corporation which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, 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 which
changes the Redemption Price; it being understood that an adjustment of the
Redemption Price in accordance with Section 23 shall not be considered a
supplement or amendment of this Agreement. In addition, notwithstanding
anything in this Agreement to the contrary, no supplement or amendment that
materially changes the rights, duties or liabilities of the Rights Agent under
this Agreement shall be effective without the consent of the Rights Agent.

             Section 27. Exchange.

		
	 	     (a) The Board of Directors of the Corporation may, at its option at
any time after any Person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to the provisions
of Section 7(e) hereof) by exchanging for each such Right a number of
shares of Preferred Stock having an aggregate Fair Market Value on the
date such Person became an Acquiring Person equal to the Spread,
appropriately adjusted to

38

 

		
	 	reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such number of shares of Preferred Stock
per Right being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors of the Corporation
shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Voting Stock then outstanding. From and after the occurrence of an
event specified in Section 13(a) hereof, any Rights that theretofore have
not been exchanged pursuant to this Section 27(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged
pursuant to this Section 27(a).

		
	 	     (b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to paragraph (a)
of this Section 27 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of
shares of Preferred Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Corporation 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
Preferred 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) hereof) held by each holder of Rights.

		
	 	     (c) In the event that there shall not be sufficient shares of
Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 27, the Corporation shall substitute to the extent of such
insufficiency, for each share of Preferred Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Common Stock or
fractions thereof having an aggregate Fair Market Value equal to the Fair
Market Value of one share of Preferrred Stock as of the date any Person
becomes an Acquiring Person.

		
	 	     (d) The Corporation shall not be required to issue fractions of
shares of Preferred Stock or to distribute certificates which evidence
fractional shares. In lieu of such fractional shares, the Corporation
shall pay to the registered holders of the Right Certificates with regard
to which such fractional shares of Preferred Stock would otherwise be
issuable an amount in cash equal to the same fraction of the Fair Market
Value of a whole share of Preferred Stock. For the purposes of this
paragraph (d), the Fair Market Value of a whole share of Preferred Stock
shall be the closing price of a share of Preferred Stock for the Trading
Day immediately prior to the date of exchange

39

 

		
	 	pursuant to this Section 27, or as otherwise determined in
accordance with Section 11(b) hereof.

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

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

             Section 30. 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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.

             Section 31. 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 32. 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.

             Section 33. 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
determines in its good faith judgment that severing the invalid language would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring a specific group of Directors of the
Corporation to act is held by any court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then
be made by the Board of Directors in accordance with applicable law and the
Corporation’s Certificate of Incorporation and By-laws.

40

 

             Section 34. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock of the Corporation outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding
shares of Common Stock of the Corporation of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Corporation shall have the exclusive power and
authority to administer, interpret and apply this Agreement and to exercise the
rights and powers specifically granted to the Board of Directors of the
Corporation or to the Corporation by this Agreement or by law and may take such
action as may be necessary or advisable in the administration of this Agreement
or to amend or supplement this Agreement in accordance with its terms,
including, without limitation, the right and power (i) to make all
determinations deemed necessary or advisable for the administration of this
Agreement, (ii) to decide to redeem the Rights and (iii) to decide to amend or
supplement this Agreement. All such actions, calculations, interpretations and
determinations (including any decision not to take any action) done or made by
the Board of Directors of the Corporation in good faith shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights, as such, and all other Persons and (y) not subject any member of the
Board of Directors of the Corporation to any liability to the holders of
Rights.

41

 

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

	 	NOVAVAX, INC.

	 	By:  /s/ John A. Spears                             

Name: John A. Spears

Title: President and Chief Executive Officer

	 	EQUISERVE TRUST COMPANY, N.A., as

Rights Agent

	 	By:  /s/ Michael Connor                             

Name: Michael Connor

Title: Managing Director

42

 

EXHIBIT A

AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED

TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED

BY ACQUIRING PERSONS OR THEIR AFFILIATES OR

ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE

RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF

SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT

BE EXERCISED OR TRANSFERRED TO ANY PERSON.

NOVAVAX, INC.

SUMMARY OF RIGHTS TO PURCHASE

SERIES D JUNIOR PARTICIPATING PREFERRED STOCK

     On August 7, 2002, the Board of Directors of Novavax, Inc., a Delaware
corporation (the “Corporation”), declared a dividend distribution of one
Preferred Stock Purchase Right for each outstanding share of common stock, par
value $.01 per share (the “Common Stock”), of the Corporation. The distribution
was made payable as of August 16, 2002 to stockholders of record on that date
(the “Record Date”). Each Right, once exercisable, entitles the registered
holder to purchase from the Corporation one one-thousandth (1/1,000th) of a
share of preferred stock of the Corporation, designated as Series D Junior
Participating Preferred Stock (the “Preferred Stock”), at a price of $40.00 per
one one-thousandth (1/1,000th) of a share (“Exercise Price”), subject to
certain adjustments. The description and terms of the Rights are set forth in a
Rights Agreement (the “Rights Agreement”) by and between the Corporation and
EquiServe Trust Company, N.A., as Rights Agent (the “Rights Agent”).

     As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.

     The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the “Distribution Date”)
which is the earlier of (i) the tenth business day following a public
announcement that a person or group of affiliated or associated persons, with
certain exceptions set forth below, has acquired beneficial ownership of 15% or
more of the outstanding voting stock of the Corporation (an “Acquiring Person”)
and (ii) the tenth business day (or such later date as may be determined by the
Board of Directors prior to such time as any person or group of affiliated or
associated persons becomes an Acquiring Person) after the date of the
commencement by any person of a tender or exchange offer, the consummation of
which would result in such person or group of affiliated or associated persons
becoming an Acquiring Person.

     An Acquiring Person does not include (A) the Corporation, (B) any
subsidiary of the Corporation, (C) any employee benefit plan or employee stock
plan of the Corporation or of any subsidiary of the Corporation, or any trust
or other entity organized, appointed, established or

 

 

holding voting stock for or pursuant to the terms of any such plan or (D) any
person or group of affiliated or associated persons whose ownership of 15% or
more of the shares of voting stock of the Corporation then outstanding results
solely from (i) any action or transaction or transactions approved by the Board
of Directors before such person or group became an Acquiring Person or (ii) a
reduction in the number of issued and outstanding shares of voting stock of the
Corporation pursuant to a transaction or transactions approved by the Board of
Directors (provided that any person or group that does not become an Acquiring
Person by reason of clause (i) or (ii) above shall become an Acquiring Person
upon acquisition of an additional 1% or more of the Corporation’s voting stock
unless such acquisition of additional voting stock would not result in such
person becoming an Acquiring Person by reason of clause (i) or (ii) above).

     Prior to the Distribution Date, the Rights will not be exercisable, will
not be represented by a separate certificate, and will not be transferable
apart from the Corporation’s Common Stock, but will instead be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights
attached thereto. Until the Distribution Date (or earlier redemption, exchange
or expiration of the Rights), new Common Stock certificates issued after the
Record Date will contain a legend incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any of the Common
Stock certificates outstanding as of the Record Date, with or without a copy of
this Summary of Rights attached thereto, will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution
Date, and such separate certificates alone will evidence the Rights from and
after the Distribution Date.

     The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on August 7, 2012, unless earlier redeemed
or exchanged by the Corporation as described below.

     Shares of Preferred Stock purchasable upon exercise of the Rights will be
non-redeemable and, unless otherwise provided in connection with the creation
of a subsequent series of preferred stock, will be subordinate to any other
series of the Corporation’s preferred stock. The Preferred Stock may not be
issued except upon exercise of Rights. Each share of Preferred Stock will be
entitled to receive when, as and if declared, a quarterly dividend in an amount
equal to the greater of $1.00 per share or 1,000 times the cash dividends
declared on the Corporation’s Common Stock. In addition, the holders of the
Preferred Stock are entitled to receive 1,000 times any non-cash dividends
(other than dividends payable in equity securities) declared on the Common
Stock, in like kind. In the event of the liquidation of the Corporation, the
holders of Preferred Stock will be entitled to receive, for each share of
Preferred Stock, a payment in an amount equal to the greater of $40,000 or
1,000 times the payment made per share of Common Stock. Each share of
Preferred Stock will have 1,000 votes, voting together with the Common Stock.
In the event of any merger, consolidation or other transaction in which Common
Stock is exchanged, each share of Preferred Stock will be entitled to receive
1,000
times the amount received per share of Common Stock. The rights of Preferred
Stock as to dividends, liquidation and voting are protected by anti-dilution
provisions.

2

 

     The Exercise Price of the Rights and the number of shares of Preferred
Stock issuable upon exercise of the Rights are subject to certain adjustments
from time to time in the event of a stock dividend on, or a subdivision or
combination of, the Common Stock. The Exercise Price for the Rights also is
subject to adjustment in the event of extraordinary distributions of cash or
other property to holders of Common Stock.

     Unless the Rights are earlier redeemed, in the event that a person or
group becomes an Acquiring Person, the Rights Agreement provides that proper
provisions will be made so that each holder of record of a Right (other than
Rights beneficially owned by an Acquiring Person and certain affiliates,
associates and transferees thereof, whose Rights will thereupon become null and
void), will thereafter have the right to receive, upon payment of the Exercise
Price, that number of shares of the Preferred Stock having a fair market value
determined in accordance with the Rights Agreement at the time of the
transaction equal to approximately two times the Exercise Price (such value to
be determined with reference to the fair market value of the Corporation’s
Common Stock as provided in the Rights Agreement).

     In addition, unless the Rights are earlier redeemed or exchanged, in the
event that, after the time that a person or group becomes an Acquiring Person,
the Corporation were to be acquired in a merger or other business combination
(in which any shares of Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earning power of the
Corporation and its subsidiaries (taken as a whole) were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right (other than Rights beneficially owned by an Acquiring Person and certain
affiliates, associates and transferees thereof, whose Rights will thereupon
become null and void) will from and after such date have the right to receive,
upon payment of the Exercise Price, that number of shares of common stock of
the acquiring company having a fair market value at the time of such
transaction determined in accordance with the Rights Agreement equal to
approximately two times the Exercise Price.

     At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Corporation may
exchange the Rights (other than Rights owned by such person or group which will
have become null and void), in whole or in part, for that number of shares of
the Corporation’s Preferred Stock having a fair market value on the date such
person or group became an Acquiring Person equal to the excess of (i) the fair
market value of Preferred Stock issuable upon the exercise of the Rights over
(ii) the Exercise Price of the Rights, in each case subject to anti-dilution
adjustments.

     Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share) may, at the election of
the Corporation, be evidenced by depositary receipts. The Corporation may also
issue cash in lieu of fractional shares which are not integral multiples of one
one-thousandth of a share.

3

 

     At any time prior to the close of business on the tenth business day after
there has been a public announcement that a person has become an Acquiring
Person or such earlier date as a majority of the Board of Directors of the
Corporation shall become aware of the existence of an Acquiring Person, the
Corporation may redeem the Rights in whole, but not in part, at a price of
$.001 per Right (the “Redemption Price”). Immediately upon the effective time
of the action of the Board of Directors of the Corporation authorizing
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.

     For as long as the Rights are then redeemable, the Corporation may, except
with respect to the Redemption Price, amend the Rights in any manner, including
an amendment to extend the time period in which the Rights may be redeemed. At
any time when the Rights are not then redeemable, the Corporation may amend the
Rights in any manner that does not materially adversely affect the interests of
holders of the Rights as such.

     Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Corporation, including, without limitation, the right to
vote or to receive dividends.

     A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission on August 9, 2002, as an Exhibit to the Corporation’s
Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Corporation. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement which is incorporated in this summary description herein by
reference.

4

 

EXHIBIT B

[Form of Right Certificate]

	 	 	 
	Certificate No. W -	 	
______Rights

NOT EXERCISABLE AFTER AUGUST 7, 2012 OR EARLIER IF EXCHANGED OR REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION AND UNDER
CERTAIN OTHER CIRCUMSTANCES, AT $.001 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE
TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW) RIGHTS ISSUED TO OR BENEFICIALLY OWNED
BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES OR TRANSFEREES THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE EXERCISED OR TRANSFERRED TO
ANY PERSON.

Right Certificate

     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 August 8, 2002 (the “Rights Agreement”) by and
between Novavax, Inc., a Delaware corporation (the “Corporation”), and
EquiServe Trust Company, N.A., as Rights Agent, or its successor in interest as Rights Agent (the
“Rights Agent”), to purchase from the Corporation at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (Eastern time) on August 7, 2012 at the office of the Rights Agent
designated in the Rights Agreement for such purpose, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of the Series D Junior
Participating Preferred Stock (the “Preferred Stock”) of the Corporation, or
other securities or property in lieu thereof as provided by the Rights
Agreement, at a purchase price of $40.00, as the same may from time to time be
adjusted in accordance with the Rights Agreement (the “Exercise Price”), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase attached hereto duly executed.

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

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

 

 

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

     Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Corporation at its option or under
certain other circumstances at a redemption price of $.001 per Right.

     No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth (1/1,000th) of a share) are required
to be issued upon the exercise of any Right or Rights evidenced hereby, and in
lieu thereof the Corporation may cause depositary receipts to be issued and/or
a cash payment may 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 Preferred Stock or
of any other securities of the Corporation which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to stockholders at 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.

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

2

 

     WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal. Dated as of ______, 20______.

	 	 	 
	ATTEST:	 	
NOVAVAX, INC.
	 
	[Assistant] Secretary	 	
By

     Title:
	 
	Countersigned:	 	 
	 
	By

     Authorized Signature	 	 

3

 

[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 Certificates.)

     FOR VALUE RECEIVED

hereby sells, assigns and transfers unto

(Please print name and address of transferee)

Rights evidenced by 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
Corporation, with full power of substitution.

Dated:______ ____, 20______

	 	Signature

Signature Guaranteed:

4

 

Certificate

         The undersigned hereby certifies by checking the appropriate boxes that:

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

     (2)  after due inquiry and to the best knowledge of the undersigned, it [  ]
did [  ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).

Dated:______ ___, 20______

	 	Signature

NOTICE

     The signature to 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.

5

 

FORM OF ELECTION TO PURCHASE

(To be executed if registered holder

desires to exercise the Right Certificate.)

TO :

     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 and requests that certificates for such
share(s) be issued in the following name:

Please insert social security

or other identifying number:

(Please print name and address)

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 insert social security

or other identifying number:

(Please print name and address)

Dated: ______ ___, 20______

	 	Signature

(Signature must conform in all respects to

name of holder as specified on the face of

this Right Certificate)

Signature Guaranteed:

6

 

EXHIBIT C

CERTIFICATE OF DESIGNATIONS

OF

SERIES D JUNIOR PARTICIPATING PREFERRED STOCK

OF

NOVAVAX, INC.

Pursuant to Section 151 of the Delaware

General Corporation Law

     The undersigned duly authorized officer of Novavax, Inc., a corporation
organized and existing under the Delaware General Corporation Law (the
“Corporation”), in accordance with the provisions of Section 151 of such law,
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation, the Board of Directors on August 7, 2002 adopted the following
resolution which creates a series of 50,000 shares of Preferred Stock
designated as Series D Junior Participating Preferred Stock as follows:

     RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law and the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, a series of Preferred Stock of the
Corporation be, and hereby is, created and the powers, designations,
preferences and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof, be, and hereby are, as follows:

 

 

     Section 1. Designation and Amount. The shares of such series shall be
designated as “Series D Junior Participating Preferred Stock” (the “Series D
Preferred Stock") and the number of shares constituting such series shall be
50,000.

     Section 2. Dividends and Distributions.

     (A)  Subject to the provisions for adjustment hereinafter set forth, and
subject to the rights of the holders of any shares of any series of Preferred
Stock of the Corporation ranking prior and superior to the Series D Preferred
Stock with respect to dividends, the holders of shares of Series D Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available for the purpose,
(i) cash dividends in an amount per share (rounded to the nearest cent) equal
to 1,000 times the aggregate per share amount of all cash dividends declared or
paid on the Common Stock, $.01 par value per share, of the Corporation (the
“Common Stock”) and (ii) a preferential cash dividend (the “Preferential
Dividends”), if any, in preference to the holders of Common Stock, on the first
business day of April, July, October and January, of each year (each 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 D Preferred Stock, payable in an amount (except in the case of the first
Quarterly Dividend Payment Date if the date of the first issuance of Series D
Preferred Stock is a date other than a Quarterly Dividend Payment Date, in
which case such payment shall be a prorated portion of such amount) equal to
$1.00 per share of Series D Preferred Stock less the per share amount of all
cash dividends declared on the Series D Preferred Stock pursuant to clause (i)
of this sentence 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 D Preferred Stock.
In the event the Corporation shall, at any time after the issuance of any
share or fraction of a share of Series D Preferred Stock, make any distribution
on the shares of Common Stock, whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Corporation or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the
Corporation or a distribution of options, rights or warrants to acquire any
such share, including any debt security convertible into or exchangeable for
any such share, at a price less than the Fair Market Value (as hereinafter
defined) of such share of Common Stock), then, and in each such event, the
Corporation shall simultaneously pay on each then outstanding share of Series D
Preferred Stock a distribution, in like kind, of times such distribution paid
on a share of Common Stock (subject to the provisions for adjustment
hereinafter set forth). The dividends and distributions on the Series D
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and pursuant to the second sentence of
this paragraph are hereinafter referred to as “Dividends” and the multiple of
such cash and non-cash dividends on the Common Stock applicable to the
determination of the Dividends, which shall be initially but shall be adjusted
from time to time as hereinafter provided, is hereinafter referred to as the
“Dividend Multiple.” In the event the Corporation shall at any time after
August 16, 2002 (the “Effective Date”) declare or pay any dividend or make any
distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of

2

 

the outstanding shares of Common Stock into a greater or lesser number of shares of
Common
Stock, then in each such case the Dividend Multiple thereafter applicable to
the determination of the amount of Dividends which holders of shares of Series
D Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied 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.

     (B)  The Corporation shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Dividend is
required to be paid shall be paid or set aside for payment on the Common Stock
unless a Dividend in respect of such dividend or distribution on the Common
Stock shall be simultaneously paid or set aside for payment (as the case may
be), on the Series D Preferred Stock.

     (C)  Preferential Dividends shall begin to accrue on outstanding shares of
Series D Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series D Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series D Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.

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

     (A)  Subject to the provisions for adjustment hereinafter set forth, each
share of Series D Preferred Stock shall entitle the holder thereof to votes on
all matters submitted to a vote of the holders of the Common Stock. The number
of votes which a holder of Series D Preferred Stock is entitled to cast, as the
same may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the “Vote Multiple.” In the event the Corporation shall at any
time after the Effective Date declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series D Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied 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.

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

3

 

     (C)  In the event that the Preferential Dividends accrued on the Series D
Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Corporation
of all series (including the Series D Preferred Stock), other than any series
in respect of which such right is expressly withheld by the Certificate of
Incorporation or the authorizing resolutions included in any certificate of
designations therefore, shall have the right, at the next meeting of
stockholders called for the election of directors, to elect two members to the
Board of Directors of the Corporation, which directors shall be in addition to
the number required prior to such event, to serve until the next annual meeting
and until their successors are elected and qualified or their earlier
resignation, removal or incapacity or until such earlier time as all accrued
and unpaid Preferential Dividends upon the outstanding shares of Series D
Preferred Stock shall have been paid (or irrevocably set aside for payment) in
full. The holders of shares of Series D Preferred Stock shall continue to have
the right to elect directors as provided by the immediately preceding sentence
until all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series D Preferred Stock shall have been paid (or set aside for payment) in
full. Such directors may be removed and replaced by such stockholders, and
vacancies in such directorships may be filled only by such stockholders (or by
the remaining director elected by such stockholders, if there be one) in the
manner permitted by law; provided, however, that any such action by
stockholders shall be taken at a meeting of stockholders and shall not be taken
by written consent thereto.

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

     Section 4. Certain Restrictions.

     (A)  Whenever Preferential Dividends or Dividends are in arrears or the
Corporation shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series D Preferred Stock outstanding shall have been
paid or set irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series D Preferred Stock may
have in such circumstances, the Corporation shall not:

		
	 	        (i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock;
	 
	 	        (ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series D
Preferred Stock, unless dividends are paid ratably on the Series D
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon
were to be paid;

4

 

		
	 	        (iii) except as permitted by subparagraph (iv) of this Section 4(A),
redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series D Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (both as to dividends and upon
liquidation, dissolution or winding up) to the Series D Preferred Stock;
or
	 
	 	        (iv) purchase or otherwise acquire for consideration any shares of
Series D Preferred Stock, or any shares of stock ranking on a parity with
the Series D Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
made to all holders of such shares upon such terms as the Board of
Directors of the Corporation, 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 (as hereinafter
defined) 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. A “Subsidiary” of the Corporation shall mean any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of the board of
directors of such corporation or other entity or other persons performing
similar functions are beneficially owned, directly or indirectly, by the
Corporation or by any corporation or other entity that is otherwise controlled
by the Corporation.

     (C)  The Corporation shall not issue any shares of Series D Preferred Stock
except upon exercise of Rights issued pursuant to that certain Rights Agreement
dated as of August 8, 2002, by and between the Corporation and EquiServe Trust Company, N.A., as
Rights Agent, as it may be amended from time to time, a copy of which is on
file with the Secretary of the Corporation at its principal executive office
and shall be made available to stockholders of record without charge upon
written request therefore addressed to said Secretary. Notwithstanding the
foregoing sentence, nothing contained in the provisions of this Certificate of
Designations shall prohibit or restrict the Corporation from issuing for any
purpose any series of Preferred Stock with rights and privileges similar to,
different from, or greater than, those of the Series D Preferred Stock.

     Section 5. Reacquired Shares. Any shares of Series D 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 upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors of the Corporation.

5

 

     Section 6. Liquidation Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series D Preferred Stock unless the holders of shares of Series D Preferred
Stock shall have received for each share of Series D Preferred Stock, subject
to adjustment as hereinafter provided, (A) $40,000 plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment or, (B) if greater than the amount
specified in clause (i)(A) of this sentence, an amount equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, as the
same may be adjusted as hereinafter provided and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up with the Series
D Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series D Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series D Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series
D Preferred Stock may be entitled upon liquidation, dissolution or winding up
of the Corporation pursuant to clause (i)(B) of the foregoing sentence is
hereinafter referred to as the “Participating Liquidation Amount” and the
multiple of the amount to be distributed to holders of shares of Common Stock
upon the liquidation, dissolution or winding up of the Corporation applicable
pursuant to said clause to the determination of the Participating Liquidation
Amount, as said multiple may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the “Liquidation Multiple.” In the
event the Corporation shall at any time after the Effective Date declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then, in each such case, the Liquidation Multiple thereafter
applicable to the determination of the Participating Liquidation Amount to
which holders of Series D Preferred Stock shall be entitled after such event
shall be the Liquidation Multiple applicable immediately prior to such event
multiplied 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.

     Section 7. Certain Reclassifications and Other Events.

     (A)  In the event that holders of shares of Common Stock receive after the
Effective Date in respect of their shares of Common Stock any share of capital
stock of the Corporation (other than any share of Common Stock), whether by way
of reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise (a “Transaction”), then, and in each such event, the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Corporation of the shares of Series D Preferred Stock shall
be adjusted so that after such event the holders of Series D Preferred Stock
shall be entitled, in respect of each share of Series D Preferred Stock held,
in addition to such rights in respect thereof to which such

6

 

holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction
multiplied by the additional dividends which the holder of a share of Common
Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock, (ii) such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such Transaction multiplied by the additional voting rights which the holder
of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.

     (B)  In the event that holders of shares of Common Stock receive after the
Effective Date in respect of their shares of Common Stock any right or warrant
to purchase Common Stock (including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for Common Stock) at a
purchase price per share less than the Fair Market Value of a share of Common
Stock on the date of issuance of such right or warrant, then and in each such
event the dividend rights, voting rights and rights upon the liquidation,
dissolution or winding up of the Corporation of the shares of Series D
Preferred Stock shall each be adjusted so that after such event the Dividend
Multiple, the Vote Multiple and the Liquidation Multiple shall each be the
product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares
of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of
shares of Common Stock which could be purchased, at the Fair Market Value of
the Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.

     (C)  In the event that holders of shares of Common Stock receive after the
Effective Date in respect of their shares of Common Stock any right or warrant
to purchase capital stock of the Corporation (other than shares of Common
Stock), including as such a right, for all purposes of this paragraph, any
security convertible into or exchangeable for capital stock of the Corporation
(other than Common Stock), at a purchase price per share less than the Fair
Market Value of such shares of capital stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the
Corporation of the shares of Series D Preferred Stock shall each be adjusted so
that after such event each holder of a share of Series D Preferred Stock shall
be entitled, in respect of each share of Series D Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share
of Common Stock shall be entitled upon

7

 

exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction (as hereinafter defined) and (ii)
such additional voting rights as equal the Vote Multiple in effect immediately
prior to such event multiplied, first, by the additional voting rights to which
the holder of a share of Common Stock
shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise and multiplied again
by the Discount Fraction and (iii) such additional distributions upon
liquidation, dissolution or winding up of the Corporation as equal the
Liquidation Multiple in effect immediately prior to such event multiplied,
first, by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction. For purposes of this paragraph, the “Discount Fraction”
shall be a fraction the numerator of which shall be the difference between the
Fair Market Value of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Common Stock as contemplated by this
paragraph immediately after the distribution thereof and the purchase price per
share for such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of such capital
stock immediately after the distribution of such right or warrant.

     (D)  For purposes of this Certificate of Designations, the “Fair Market
Value” of a share of capital stock of the Corporation (including a share of
Common Stock) on any date shall be deemed to be the average of the daily
closing prices per share thereof of such stock over the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that, in the event that the Fair Market Value of any such
share of capital stock is to be determined as of a date that is within 30
Trading Days after (i) the ex-dividend date for a dividend or distribution on
stock payable in shares of such stock or securities convertible into shares of
such stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Corporation to take into account such dividend,
distribution, subdivision, split, combination, consolidation, reverse stock
split or reclassification. The closing price 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 applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange); or,
if the shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares are listed or admitted to trading; or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the high bid and low asked
prices) in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or such other quotation
reporting system then in use; or if no bids for such shares are so quoted, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors
of the Corporation. The term “Trading Day” shall mean a day on which the
principal national securities exchange on which the shares are listed or
admitted to trading is open for the

8

 

transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Corporation is open. If the
shares are not publicly held or not so listed or traded on any day within the
period of 30 Trading Days applicable to the determination of Fair Market Value
thereof as aforesaid, “Fair Market Value”
shall mean the fair market value thereof per share as determined in good faith
by the Board of Directors of the Corporation. In either case referred to in
the foregoing sentence, the determination of Fair Market Value shall be
described in a statement filed with the Secretary of the Corporation.

     Section 8. 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 each
outstanding share of Series D Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.

     Section 9. Effective Time of Adjustments.

     (A)  Adjustments to the Series D Preferred Stock required by the provisions
hereof shall be effective as of the time at which the event requiring such
adjustments occurs.

     (B)  The Corporation shall give prompt written notice to each holder of a
share of Series D Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up
of the Corporation of such shares required by the provisions of this
Certificate of Designations. Notwithstanding the foregoing sentence, the
failure of the Corporation to give such notice shall not affect the validity of
or the force or effect of or the requirement for such adjustment.

     Section 10. No Redemption. The shares of Series D Preferred Stock shall
not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire shares of Series D Preferred Stock in any other manner permitted by law
and the provisions hereof and the Certificate of Incorporation of the
Corporation.

     Section 11. Ranking. Unless otherwise provided in the Certificate of
Incorporation of the Corporation, or a certificate of designations relating to
a subsequent series of Preferred Stock of the Corporation, the Series D
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
on liquidation, dissolution or winding up and senior to the Common Stock.

     Section 12. Amendment. The provisions hereof and the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
adversely affect the rights,
privileges or powers of the Series D Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series D Preferred Stock, voting together as a single class.

     Section 13. Fractional Shares. Shares representing Series D Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and have the benefit of all other rights of holders of shares of
Series D Preferred Stock. Any reference in this Certificate of Designations to
shares of Series D Preferred Stock shall be deemed also to refer to fractions
of shares of Series D Preferred Stock.

9

 

     IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designations and do affirm the foregoing as true under the penalties of perjury
this 8th day of August, 2002.

 

	 	Name: John A. Spears
	 	Title: President and Chief Executive Officer

10

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