Document:

Michael Rubin's Form of PRSU Agreement

 Exhibit 10.2 
 GSI Commerce, Inc. 
 2005 Equity Incentive Plan 
 Performance Restricted Stock Unit Award Agreement 
  

			
	PARTICIPANT:	 	MICHAEL G. RUBIN
		
	GRANT DATE:	 	August     , 2006
		
	 TARGET NUMBER OF PERFORMANCE
 RESTRICTED STOCK
UNITS:
	 	                                      
           units
		
	PERFORMANCE PERIOD:	 	July 31, 2006 - December 31, 2006

 THIS AGREEMENT, effective as of the Grant Date set forth above, is between GSI Commerce, Inc., a Delaware
corporation (the “Company”, “we”, “our” or “us”) and the Participant named above (“you” or “yours”), pursuant to the provisions of the Company’s 2005 Equity Incentive Plan (the
“Plan”) with respect to the award of the number of performance restricted stock units (“PRSUs”) specified above. Capitalized terms used and not defined in this Performance Restricted Stock Unit Award Agreement (this
“Agreement”) shall have the meanings given to them in the Plan. 
 By accepting this Agreement, you irrevocably agree, on your own behalf and on
behalf of your heirs and any other person claiming rights under this Agreement, to all of the terms and conditions of the PRSUs as set forth in or pursuant to this Agreement and the Plan (as such may be amended from time to time). You and the
Company agree as follows: 
  

			
	 1.      Application of Plan; Administration
	  	This Agreement and your rights under this Agreement are subject to all the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations
as the Board (or an appropriate committee thereof) may adopt. It is expressly understood that the Board (or an appropriate committee thereof) that administers the Plan is authorized to administer, construe and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon you to the extent permitted by the Plan.
		
	 2.      Performance Goal
	  	The number of PRSUs issued to you under this Agreement shall depend upon the extent to which the Company’s earnings before interest, taxes and depreciation and/or amortization equals,
exceeds or falls short of $[                    ] (“EBITDA Target”) for the Performance Period. If actual EBITDA for the Performance
Period does not equal or exceed the 90% EBITDA Target threshold, as set forth in the table below, the right to receive any PRSUs pursuant to this Agreement shall expire without consideration. Subject to the foregoing, and provided that you have
remained in Continuous Service with the Company from the Grant Date set forth above, the number of PRSUs issued to you following completion of the Performance Period (such PRSUs, the “Granted PRSUs”) shall be determined in accordance with
the following schedule:

					
	 Percentage
 EBITDA Target
	  	EBITDA
Required to
Achieve
Percentage
EBITDA Target	  	 Number of Granted
 PRSUs If Percentage EBITDA Goal Achieved

	90% EBITDA Target	  	$             	  	0.50 times Target Number of PRSUs
	95% EBITDA Target	  	$             	  	0.75 times Target Number of PRSUs
	100% EBITDA Target	  	$             	  	1 times Target Number of PRSUs
	105% EBITDA Target	  	$             	  	1.25 times Target Number of PRSUs
	110% EBITDA Target	  	$             	  	1.5 times Target Number of PRSUs

  

							
		
		 	In the event that the Company’s EBITDA for the Performance Period falls between two of the Percentage EBITDA Targets listed in the table above, the number of Granted PRSUs shall
be determined by linear interpolation. Notwithstanding anything herein to the contrary, in no event shall more than 1.5 times the Target Number of PRSUs be issued under this Agreement.
		
		 	Following the end of the Performance Period and the collection of relevant data necessary to determine the extent to which the EBITDA Target set forth in this Section 2 has been
satisfied, the Board (or an appropriate committee thereof) will determine: (a) the EBITDA achieved by the Company for the Performance Period and (b) the multiple of the Target Number of PRSUs to be issued as Granted PRSUs. The Board (or an
appropriate committee thereof) shall make these determinations in its sole discretion. The class and number of securities subject to or issued under this Agreement shall be subject to adjustment as provided for in Section 12(a) of the Plan. The
Board’s (or an appropriate committee thereof) determination pursuant to this paragraph shall be evidenced by a written certification.
		
	 3.      Vesting
	 	50% of the Granted PRSUs will vest (becoming “Vested Performance Units”) on the first anniversary of the issuance of such Granted PRSUs and the remaining Granted PRSUs will
vest on the second anniversary of the issuance of such Granted PRSUs (each such anniversary, a “Vesting Date”), provided that you have remained in Continuous Service with the Company from the Grant Date set forth above until the respective
Vesting Date, and provided further that in no case shall any Granted PRSUs vest before the date of the Board’s (or an appropriate committee thereof) written certification pursuant to Section 2 hereof. Notwithstanding the foregoing, the terms
and provisions of that certain Employment Agreement between you and the Company, effective as of July 1, 2006 (your “Employment Agreement”), may provide that any restrictions contained in this Section 3 will lapse in certain
circumstances.

			
	 4.      Termination of Continuous Service
	 	Except as otherwise provided in your Employment Agreement and Section 7 of this Agreement, your right to the issuance of PRSUs and your rights under any Granted PRSUs that have not become Vested
Performance Units will be forfeited without consideration as of the date of termination of your Continuous Service with the Company for any reason.
		
	 5.      Settlement of Vested Performance Units and Issuance of Shares
	 	 Subject to any deferral pursuant to this Section 5, each Vested Performance Unit will be settled by the delivery of one share of Common Stock
(subject to adjustment under Section 12(a) of the Plan, a “Share”) to you or, in the event of your death, to your designated beneficiary, promptly following the Vesting Date, subject to your satisfaction of any tax withholding obligations
as described in Section 9 of this Agreement.
  
 Notwithstanding any other provision
of this Agreement or the Plan, the Company will not be obligated to issue or deliver any Shares pursuant to this Agreement (i) until all conditions to this Agreement have been satisfied or removed, (ii) until, in the opinion of counsel to the
Company, all applicable Federal and state laws and regulations have been complied with, (iii) if the outstanding Common Stock is at the time listed on any stock exchange or included for quotation on an inter-dealer system, until the Shares have been
listed or included or authorized to be listed or included on such exchange or system upon official notice of issuance, (iv) until the issuance or delivery of the Shares would not cause the Company to issue or sell more shares of Common Stock than
the Company is then legally entitled to issue or sell, and (v) until all other legal matters in connection with the issuance and delivery of such Shares have been approved by counsel to the Company.
  
 You hereby authorize any brokerage service provider determined acceptable to the Company to open a
securities account for you to be used for the settlement of Vested Performance Units. The date on which Shares are issued may include a delay in order to provide the Company such time as it determines appropriate to address tax withholding and other
administrative matters.
  
 Subject to the satisfaction of all of the tax withholding
obligations described in Section 9 below, you may elect to defer the settlement of your Vested Performance Units and the receipt of any Shares issuable pursuant to such settlement by submitting to the Company a Deferral Election Form, which
form is attached hereto as Exhibit A (the “Deferral Election Form”), subject to such modifications as the Board (or an appropriate committee thereof) may deem necessary in order to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). In the event you intend to defer the receipt of any Shares, you must submit to the Company the Deferral Election Form within 30 days following the Grant Date. You hereby represent
that you understand the effect of any such deferral under relevant Federal, state and local tax laws.

		
	 6.      Rights as Stockholder
	 	Except as otherwise provided in this Agreement, you will not be entitled to any privileges of ownership of the shares of Common Stock underlying your PRSUs, including voting, receipt of
dividends or any other rights as a stockholder of the Company, unless and until shares of Common Stock are actually delivered to you under this Agreement.

					
	 7.      Change in Control
	  	Notwithstanding anything to the contrary in this Agreement, the Granted PRSUs shall be subject to such acceleration of vesting upon a Change in Control as may be provided for in your
Employment Agreement.
		
	 8.      Transferability
	  	Except as provided in Section 10(k) hereof, your right to receive PRSUs under this Agreement, your Granted PRSUs and any Vested Performance Units that you hold pursuant to this
Agreement are not transferable, whether voluntarily or involuntarily, by operation of law or otherwise, other than by will or the laws of descent and distribution. Any voluntary or involuntary assignment, pledge, transfer, or other disposition of,
or any attachment, execution, garnishment, or lien issued against or placed upon your right to receive PRSUs under this Agreement, your Granted PRSUs and any Vested Performance Units that you hold pursuant to this Agreement in violation of the terms
of this Agreement shall be void. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, will thereafter be entitled to
receive any distribution of Shares pursuant to this Agreement.
			
	 9.      Taxes
	  	(a)	  	General. You are ultimately liable and responsible for all taxes owed by you in connection with your PRSUs, regardless of any action the Company takes or any transaction pursuant to this
Section 9 with respect to any tax withholding obligations that arise in connection with the PRSUs. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting
or settlement of the PRSUs, the Granted PRSUs or the Vested Performance Units, and the subsequent sale of any of the Shares underlying the Granted PRSUs that may vest. Except as otherwise provided in the Employment Agreement, the Company does not
commit and is under no obligation to structure this Agreement to reduce or eliminate your tax liability.
			
		  	(b)	  	Withholding. On or before the date upon which your Granted PRSUs are issued, any Vesting Date, the date your Vested Performance Units are settled and Shares are issued to you pursuant to
the terms of Section 5, and any other date upon which tax withholding obligations of the Company may arise, or at any time thereafter as requested by the Company, you hereby authorize withholding from, at the Company’s election, the Shares,
payroll and any other amounts payable to you and you otherwise agree to make adequate provision for, as determined by the Company, any sums required to satisfy the Federal, state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with any of the above events or otherwise. Unless the tax withholding obligations of the Company or any Affiliate are satisfied, the Company will have no obligation to issue a certificate for
Shares.

					
	 10.    Miscellaneous
	  	(a)	  	YOU ACKNOWLEDGE AND AGREE THAT THE VESTING OF PRSUS PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY YOUR CONTINUOUS SERVICE WITH THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR ACQUIRING
GRANTED PRSUS HEREUNDER). YOU FURTHER ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE, DIRECTOR, OR CONSULTANT OF THE COMPANY FOR THE VESTING PERIOD, FOR THE PERFORMANCE PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH YOUR RIGHT OR THE COMPANY’S RIGHT TO TERMINATE YOUR RELATIONSHIP (I) AS AN EMPLOYEE AT
ANY TIME, FOR ANY REASON OR NO REASON, WITH OR WITHOUT CAUSE; (II) AS A CONSULTANT PURSUANT TO THE TERMS OF YOUR AGREEMENT WITH THE COMPANY OR AN AFFILIATE; OR (III) AS A DIRECTOR PURSUANT TO THE BYLAWS OF THE COMPANY AND ANY APPLICABLE PROVISIONS
OF THE CORPORATE LAW OF THE STATE OR OTHER JURISDICTION IN WHICH THE COMPANY IS DOMICILED, AS THE CASE MAY BE.
			
		  	(b)	  	Your PRSUs are unfunded and as a holder of Vested Performance Units you will be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to issue
Shares pursuant to this Agreement. Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company. Nothing contained in this Agreement, and no action taken pursuant to its provisions, will create or be construed to
create a trust of any kind or a fiduciary relationship between you and the Company or any other person.
			
		  	(c)	  	This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges as may be required. The Company may impose
such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by you or other subsequent transfers by you of any Shares issued as a result of or under this Agreement, including without
limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the absence of an effective registration statement under the Securities Act of 1933, as amended, covering the PRSUs and (iii)
restrictions as to the use of a specified brokerage firm or other agent for such resales or other transfers. Any sale of Shares issued pursuant to this Agreement must also comply with other applicable laws and regulations governing the sale of such
Shares.
			
		  	(d)	  	Notwithstanding anything in the Plan or this Agreement to the contrary, the Board (or an appropriate committee thereof) may, without your consent, amend this Agreement to comply with all of the
requirements of Section 409A of the Code and any corresponding guidance and regulations issued under Section 409A of the Code to the extent it is determined, in the sole discretion of the Board (or an appropriate committee thereof), that such
amendment is necessary to comply with the requirements of Section 409A of the Code.
			
		  	(e)	  	The interpretation, performance and enforcement of this Agreement will be governed by the law of the state of Delaware without regard to such state’s conflicts of laws
rules.

					
		  	(f)	  	Any question concerning the interpretation of this Agreement or the Plan, any adjustments required to be made under the Plan and any controversy that may arise under the Plan or this Agreement
shall be determined by the Board (or an appropriate committee thereof) (including any person(s) to whom the Board has delegated its authority) in its sole and absolute discretion. Such decision by the Board (or an appropriate committee thereof)
shall be final and binding.
			
		  	(g)	  	This Agreement, the Plan and the Employment Agreement represent the entire agreement between the parties with respect to the PRSUs. In the event of a conflict between the terms and conditions of
the Plan and the terms and conditions of this Agreement or the Employment Agreement, the terms and conditions of the Plan shall prevail. In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of
the Employment Agreement, the terms and conditions of the Employment Agreement shall prevail.
			
		  	(h)	  	If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of
this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner which will give effect to the terms of
such Section or part of such Section to the fullest extent possible while remaining lawful and valid.
			
		  	(i)	  	Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, nor prevent that party from thereafter enforcing any
other provision of this Agreement. The rights granted both parties hereunder are cumulative and shall not constitute a waiver of either party’s right to assert any other legal remedy available to it.
			
		  	(j)	  	This Agreement may be amended only by a writing executed by you and the Company which specifically states that it is amending this Agreement. Notwithstanding the foregoing and subject to
Section 13(e) of the Plan, this Agreement may be amended solely by the Board (or an appropriate committee thereof) by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to
you. Without limiting the foregoing, the Board (or an appropriate committee thereof) reserves the right to change, by written notice to you, the provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of
the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling or judicial decision, provided that any such change will be applicable only to rights relating to that portion of the PRSUs which are then
subject to restrictions as provided herein.
			
		  	(k)	  	The rights and obligations of the Company under this Agreement will be transferable by the Company to any one or more persons or entities, and all covenants and agreements hereunder will inure
to the benefit of, and be enforceable by the Company’s successors and assigns. You may not assign, transfer or pledge the PRSUs, the Granted PRSUs, the Vested Performance Units or any right or interest therein or thereunder to anyone other than
by will or the laws of descent and distribution except with the prior written consent of the Company. The Company may cancel your rights hereunder if you attempt to assign or transfer them in a manner inconsistent with this
Agreement.

					
		  	(l)	  	All notices with respect to this Agreement shall be in writing and shall be hand delivered or sent by first class mail or reputable overnight delivery service, expenses prepaid. Notice may also
be given by electronic mail or facsimile and shall be effective on the date transmitted if confirmed within 24 hours thereafter by a signed original sent in a manner provided in the preceding sentence. Notices to the Company or the Board (or an
appropriate committee thereof) shall be delivered or sent to the Company’s headquarters, 935 First Avenue, King of Prussia, PA 19406, to the attention of its Chief Financial Officer and its General Counsel. Notices to the Participant or holder
of Shares issued pursuant to this Agreement shall be sufficient if delivered or sent to such person’s address as it appears in the regular records of the Company or its transfer agent.
			
		  	(m)	  	The headings of the Sections in this Agreement are inserted for convenience only and will not be deemed to constitute a part of this Agreement or to affect the meaning of this
Agreement.
			
		  	(n)	  	You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of this
Agreement.

 [Remainder of page intentionally left blank] 

 By the signatures below, you and the authorized representative of the Company acknowledge your agreement to this
Performance Restricted Stock Unit Award Agreement as of the Grant Date specified above. 
  

					
	  
	 		 	  

	Michael G. Rubin	 		 	Date
			
	Accepted by:	 		 	
			
	GSI COMMERCE, INC.	 		 	
			
	  
	 		 	  

	By	 		 	Date
	  
	 		 	
	Name	 		 	
	  
	 		 	
	Title	 		 	

 EXHIBIT A 
 GSI Commerce, Inc. 
 Deferral Election Form 
 Effective as of                     , the
undersigned hereby irrevocably elects (the “Election”) to defer receipt of certain shares of common stock (the “Shares”) of GSI Commerce, Inc., (the “Company”) related to the performance restricted stock units (the
“PRSUs”) awarded under and pursuant to the Performance Restricted Stock Unit Award Agreement (the “Award Agreement”) dated
                         , 2006 and the Company’s 2005 Equity Incentive Plan (the “Plan”), each as
amended from time to time. This deferral shall be made in accordance with the terms and provisions outlined in this Election in the manner and amount set forth below. 
 In making this election, the following rules apply: 
  

	 	•	 	You may elect to defer the settlement of all or a portion of your PRSUs. Your deferral must be expressed as a percentage of the PRSUs. 

  

	 	•	 	If you elect to defer the settlement of all or a portion of your PRSUs, you will receive the Shares subject to your Vested Performance Units (as such term is defined in the Award
Agreement) upon the termination of your Continuous Service (as such term is defined in the Plan) with the Company for any reason. 

  

	 	•	 	If you elect to defer the settlement of all or a portion of your PRSUs, you may also elect to receive the Shares subject to your Vested Performance Units on a date specified in this
Election, if such date occurs prior to the termination of your Continuous Service with the Company. 

 Manner of Transfer

 In general, all deferrals pursuant to this election will be paid out in Shares. Subject to the terms and conditions of the Award Agreement and the
Plan and additional delays described in Paragraph 3 of the Terms and Conditions set forth below, all of the Shares you are entitled to receive on the Settlement Date (as defined below) in this Election will be transferred to you on such
Settlement Date. 
 Amount of the Deferral 
  

	 ̈	I hereby irrevocably elect to defer settlement of     % of the performance restricted stock units subject to the PRSUs. [Note: Deferrals may only be
made in 10% increments.] 

 Duration of the Deferral 
 Settlement of that portion of the PRSUs specified above shall be deferred until the date (the “Settlement Date”) indicated below: 
  

	 ̈	                    , 20    
[enter any date on or following the fourth anniversary of the date the PRSUs were granted], but in no event later than the termination of my Continuous Service with the Company 

  

	 ̈	termination of my Continuous Service with the Company 

 Terms and
Conditions 
 By signing this form, you acknowledge your understanding and acceptance of the following: 
  

	 	1.	Submission of Election to the Company. You understand that this Deferral Election Form must be submitted to the Company within 30 days following the date the PRSUs were
granted. 

	 	2.	Tax Withholding Obligation. No Shares will be issued to you unless on the Settlement Date the tax withholding obligations set forth in Section 9(b) of the Award
Agreement are satisfied. 

  

	 	3.	Automatic Delay for Specified Employees. If the Company determines that as of the Settlement Date you are a “specified employee” (as such term is defined under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)), any Shares to be issued to you on a Settlement Date that occurs by reason of your termination of Continuous Service with the Company other than by reason of
your death or disability (as such term is defined under Section 409A of the Code) will not be issued to you until the date that is six months following the Settlement Date (or such earlier time permitted under Section 409A of the Code
without the imposition of any accelerated or additional taxes under Section 409A). 

  

	 	4.	ERISA Status. This Election comprises a portion of a plan that is intended to be an unfunded plan that is maintained primarily to provide deferred compensation to a select
group of “management or highly compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and therefore to be exempt from the provisions
of Parts 2, 3, and 4 of Title I of ERISA. 

  

	 	5.	Administration. This Election is administered and interpreted by the Board (or an appropriate committee thereof). The Board (or an appropriate committee thereof) has full and
exclusive discretion to interpret and administer this Election. All actions, interpretations and decisions of the Board (or an appropriate committee thereof) are conclusive and binding on all persons, and will be given the maximum possible deference
allowed by law. 

  

					
	Submitted by:	  		 	
			
	  
	  		 	  

	Michael G. Rubin	  		 	Date
			
	Accepted by:	  		 	
			
	GSI COMMERCE, INC.	  		 	
			
	  
	  		 	  

	By	  		 	Date
	  
	  		 	
	Name	  		 	
	  
	  		 	
	TitleRights Agreement

 Exhibit 4.1 
 PDL BIOPHARMA, INC. 
 AND 
 MELLON INVESTOR SERVICES, LLC 
 as Rights Agent 
 RIGHTS AGREEMENT 
 Dated as of August 25, 2006 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	1.	  	Certain Definitions	  	1
			
	2.	  	Appointment of Rights Agent	  	6
			
	3.	  	Issuance of Right Certificates	  	6
			
	4.	  	Form of Right Certificates	  	8
			
	5.	  	Countersignature and Registration	  	9
			
	6.	  	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates	  	9
			
	7.	  	Exercise of Rights; Purchase Price; Expiration Date of Rights	  	10
			
	8.	  	Cancellation and Destruction of Right Certificates	  	11
			
	9.	  	Reservation and Availability of Shares of Preferred Stock	  	11
			
	10.	  	Preferred Stock Record Date	  	13
			
	11.	  	Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price	  	13
			
	12.	  	Certification of Adjustments	  	22
			
	13.	  	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	  	22
			
	14.	  	Fractional Rights and Fractional Shares	  	25
			
	15.	  	Rights of Action	  	27
			
	16.	  	Agreement of Right Holders	  	27
			
	17.	  	Right Certificate Holder Not Deemed a Stockholder	  	28
			
	18.	  	Concerning the Rights Agent	  	28
			
	19.	  	Merger or Consolidation or Changed Name of Rights Agent	  	29
			
	20.	  	Duties of Rights Agent	  	29
			
	21.	  	Change of Rights Agent	  	31
			
	22.	  	Issuance of New Right Certificates	  	32
			
	23.	  	Redemption	  	33
			
	24.	  	Exchange of Rights for Common Stock	  	33
			
	25.	  	Notice of Proposed Actions	  	35
			
	26.	  	Notices	  	35
			
	27.	  	Supplements and Amendments	  	36
			
	28.	  	Successors	  	37
			
	29.	  	Benefits of this Rights Agreement	  	37
			
	30.	  	Determinations and Actions by the Board of Directors	  	37

  

 i 

 TABLE OF CONTENTS 
 (continued) 
  

					
	  	  	 	  	Page
	31.	  	Three Year Independent Director Evaluation	  	37
			
	32.	  	Governing Law	  	38
			
	33.	  	Counterparts	  	38
			
	34.	  	Descriptive Headings	  	38
			
	35.	  	Severability	  	38

  

 ii 

 RIGHTS AGREEMENT 
 This Rights Agreement (“Rights Agreement”), is dated as of August 25, 2006, between PDL BioPharma, Inc. a Delaware corporation (the “Company”), and Mellon Investor Services, LLC, a New Jersey
limited liability company as rights agent (the “Rights Agent”). 
 W I T N E S S E T H: 
 WHEREAS, the Board of Directors of the Company (i) authorized the issuance and declared a dividend of one right (“Right”) for each share
of the common stock, par value $0.01 per share, of the Company outstanding as of the Close of Business (as such term is hereinafter defined) on September 6, 2006 (the “Record Date”), each Right representing the right to purchase one
one-thousandth of a share of Series A Preferred Stock of the Company having the rights, powers and preferences set forth in the form of Certificate of Designation attached hereto as Exhibit A upon the terms and subject to the conditions hereinafter
set forth, and (ii) further authorized and directed the issuance of one Right with respect to each share of Common Stock of the Company that shall become outstanding between the Record Date, and the Distribution Date (as such term is
hereinafter defined); 
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties agree as
follows: 
 1. Certain Definitions. For purposes of this Rights Agreement the following terms shall have the meanings indicated:

 (a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person shall be the Beneficial Owner (as such term is hereinafter defined) of fifteen percent (15%) or more of the outstanding Common Stock of the
Company, without the prior approval of the Board of Directors; provided, however, that in no event shall a Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of less than 15% of the
Company’s outstanding Common Stock, become an Acquiring Person solely as a result of a reduction of the number of shares of outstanding Common Stock, including repurchases of outstanding shares of Common Stock by the Company, which reduction
increases the percentage of outstanding shares of Common Stock beneficially owned by such Person, provided, further, that if a Person shall become the Beneficial Owner of 15% or more of the Company’s outstanding Common Stock then outstanding
solely by reason of a reduction of the number of shares of outstanding Common Stock, and shall thereafter become the Beneficial Owner of any additional shares of Common Stock of the Company, then such Person shall be deemed to be an Acquiring Person
unless upon the consummation of the acquisition of such additional shares of Common Stock such person does not own 15% or more of the shares of Common Stock then outstanding. An Acquiring Person shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, if (i) either (X) the Board of Directors determines in good faith that a Person who would otherwise be an Acquiring Person, as defined pursuant to the foregoing 
  

 -1- 

 provisions of this paragraph (a), has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common Stock that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the extent of its Beneficial Ownership but had no actual knowledge of
the consequences of such Beneficial Ownership under this Rights Agreement) and without any intention of changing or influencing control of the Company, or (Y) within two Business Days of being requested by the Company to advise the Company
regarding same, such Person certifies in writing that such Person acquired Beneficial Ownership of 15% or more of the Company’s outstanding Common Stock inadvertently or without knowledge of the terms of the Rights, and (ii) such Person
divests as promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall
not be deemed to be or to have become an “Acquiring Person” for any purposes of this Rights Agreement. 
 (b) “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Rights Agreement. 
 (c) A Person shall be deemed the “Beneficial Owner” of any securities 
 (i) which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly; 
 (ii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public
offering of securities), whether or not in writing, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to “beneficially own,” securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange;
or (B) the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or any comparable or successor rule), including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to “beneficially own”, any securities if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 
 (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting except as described in the proviso to clause (B) of subparagraph (ii) of 
  

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 this Section 1(c) or disposing of any securities of the Company; provided, however, that no Person who is an
officer, director or employee of an Exempt Person shall be deemed, solely by reason of such Person’s status or authority as such, to be the Beneficial Owner of, to have “beneficial ownership” of or to “beneficially own” any
securities that are “beneficially owned” (as defined in this Section 1(c)), including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director or employee of an Exempt Person.

 For all purposes of this Rights Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time,
including any calculation for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect on the date hereof. 
 (d) “Board of Directors” shall mean the
Company’s Board of Directors. 
 (e) “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which the
New York Stock Exchange or banking institutions in the State of New Jersey or the State of California 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., Pacific time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York time, on the next
succeeding Business Day. 
 (g) “Common Stock” when used with reference to the Company shall mean the common stock, par value $0.01
per share, of the Company. “Common Stock” when used with reference to any Person other than the Company which shall be organized in corporate form shall mean the capital stock or other equity security with the greatest per share voting
power of such Person or, if such Person is a Subsidiary of or is controlled by another Person, the Person which ultimately controls such first-mentioned Person. “Common Stock” when used with reference to any Person other than the Company
which shall not be organized in corporate form shall mean units of beneficial interest which shall represent the right to participate in profits, losses, deductions and credits of such Person and which shall be entitled to exercise the greatest
voting power per unit of such Person. 
 (h) “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
hereof. 
 (i) “Company” shall have the meaning set forth in the preamble hereto. 
 (j) “Current Market Price” shall have the meaning set forth in Section 11(d) hereof. 
 (k) “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof. 
 (l) “Distribution Date” shall have the meaning set forth in Section 3(a) hereof. 
  

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 (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
 (n) “Exempt Person” shall mean the Company or any Subsidiary of the Company, including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee or director stock plan of the Company or of any Subsidiary of the Company, or any Person, organized, appointed, established or holding Common Stock for or pursuant to the terms of any such plan or any Person funding
other employee benefits for employees of the Company or any Subsidiary of the Company. 
 (o) “Expiration Date” shall have the
meaning set forth in Section 7(a) hereof. 
 (p) “Final Expiration Date” shall have the meaning set forth in Section 7(a)
hereof. 
 (q) “Flip-In Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.

 (r) “Flip-In Exercise Payment” shall have the meaning set forth in Section 11(a)(ii) hereof. 
 (s) “Flip-In Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof. 
 (t) “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a) hereof. 
 (u) “Flip-Over Exercise Payment” shall have the meaning set forth in Section 13(a) hereof. 
 (v) “NASDAQ” shall have the meaning set forth in Section 9(b) hereof. 
 (w) “Person” shall mean any individual, firm, corporation, partnership, trust, limited liability company or other entity, and shall include any
successor (by merger or otherwise) thereof or thereto. 
 (x) “Preferred Stock” shall mean the Series A Preferred Stock, $0.01 par
value, of the Company having the rights, powers and preferences set forth in Exhibit A hereto, and, to the extent that there is not a sufficient number of shares of Series A Preferred Stock authorized to permit the full exercise of the Rights, any
other series of Preferred Stock, $0.01 par value, of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Preferred Stock. 
 (y) “Preferred Stock Equivalent” shall have the meaning set forth in Section 11(b) hereof. 
 (z) “Principal Party” shall have the meaning set forth in Section 13(b) hereof. 
  

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

(bb) “Record Date” shall have the meaning set forth in the Recitals within this Rights Agreement. 
 (cc) “Redemption Date” shall have the meaning set forth in Section 7(a) hereof. 
 (dd) “Redemption Price” shall have the meaning set forth in Section 23(a) hereof. 
 (ee) “Right Certificate” shall have the meaning set forth in Section 3(a) hereof. 
 (ff) “Securities Act” shall mean the Securities Act of 1933, as amended. 
 (gg) “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof. 
 (hh) “Stock Acquisition Date” shall mean the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person
has become such or such earlier date as a majority of the directors shall become aware of the existence of an Acquiring Person. 
 (ii)
“Substitution Period” shall have the meaning set forth in Section 11(a)(iii) hereof. 
 (jj) “Subsidiary” of a
Person shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the board of directors or other persons performing similar functions are beneficially
owned, directly or indirectly, by such Person and any corporation or other entity that is otherwise controlled by such Person. 
 (kk)
“Summary of Rights” shall have the meaning set forth in Section 3(b) hereof. 
 (ll) “Trading Day” shall mean a day
on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. 
 (mm) “Triggering Event” shall mean any event described in Section 11(a)(ii)(A),
11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof. 
 (nn) “Voting Power” shall mean the voting power of all securities of the
Company then outstanding and generally entitled to vote for the election of directors of the Company. 
  

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 Any determination required by the definitions contained in this Section 1 shall be made by the Board
of Directors in its good faith judgment, which determination shall be binding on the Rights Agent and the holders of the Rights. 
 2.
Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint a co rights agent as it may deem necessary or desirable. In the event the Company appoints one or more co-rights agents, the respective duties of the Rights Agents and any co-rights agents shall be as the Company shall determine, and
the Company will notify, in writing, the Rights Agent and any co-rights agents of any such respective duties. The Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions of any such co-right agent.

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

 -6- 

 (b) On the Record Date, or as soon as practicable thereafter, the Company will send a copy of a Summary
of Rights to Purchase Preferred Stock, substantially in the form attached hereto as Exhibit C (a “Summary of Rights”), by first-class, postage prepaid mail, to each record holder of Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. 
 (c) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company’s treasury) after the Record Date prior to the earlier of the Distribution Date or the Expiration Date. With respect to certificates representing such shares of Common
Stock, the Rights will be evidenced by such certificates for Common Stock registered in the names of the holders thereof together with the Summary of Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date (with or without a copy of the Summary of Rights attached thereto), shall also constitute the surrender for transfer of the Rights associated with the Common Stock
represented thereby. 
 (d) Certificates issued for Common Stock (including, without limitation, certificates issued upon transfer or
exchange of Common Stock) after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them a legend in substantially the following form:

 This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between PDL
BioPharma, Inc. and Mellon Investor Services, LLC, as Rights Agent, dated as of August 25, 2006, as the same may be amended or supplemented from time to time (the “Rights Agreement”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive office of PDL BioPharma, Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights (as defined in the Rights Agreement) will be evidenced by separate
certificates and will no longer be evidenced by this certificate. PDL BioPharma, Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to, beneficially owned by or transferred to any Person who is or becomes an Acquiring Person (as such terms are defined in the Rights Agreement) or an Associate or Affiliate (as such
terms are defined in the Rights Agreement) thereof and certain transferees thereof will be null and void and will no longer be transferable. 
 With respect
to such certificates containing the foregoing legend, the Rights associated with the Common Stock represented by such certificates shall, until the Distribution Date, be evidenced by such certificates alone, and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender for transfer of any such certificate shall also constitute the surrender for transfer of the Rights associated with the Common Stock represented thereby. In the event
that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the earlier of the Distribution Date, the Redemption Date or the 
  

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 Expiration Date, any Rights associated with such shares of Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the shares of Common Stock no longer outstanding. 
 Notwithstanding
this subsection (d), the omission of a legend shall not affect the enforceability of any part of this Rights Agreement or the rights of any holder of the Rights. 
 4. Form of Right Certificates. 
 (a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and if issued, shall be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties or responsibilities of the Rights Agent) and as are not inconsistent with the provisions of this Rights Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Sections 11, 13
and 22 hereof, the Right Certificates evidencing the Rights issued on the Record Date whenever such certificates are issued, shall be dated as of the Record Date and the Right Certificates evidencing Rights to holders of record of Common Stock
issued after the Record Date shall be dated as of the Record Date but shall also be dated to reflect the date of issuance of such Right Certificate. On their face, Right Certificates shall entitle the holders thereof to purchase, for each Right, one
one-thousandth of a share of Preferred Stock, or other securities or property as provided herein, as the same may from time to time be adjusted as provided herein, at the price per one one-thousandth of a share of Preferred Stock of $150.00, as the
same may from time to time be adjusted as provided herein (the “Purchase Price”). 
 (b) Notwithstanding any other provision of
this Rights Agreement, any Right Certificate that represents Rights that are or were at any time on or after the earlier of the Stock Acquisition Date or the Distribution Date beneficially owned by an Acquiring Person or any Affiliate or Associate
thereof (or any transferee of such Rights) shall have impressed on, printed on, written on or otherwise affixed to it (if the Company or the Rights Agent has knowledge that such Person is an Acquiring Person or an Associate or Affiliate thereof or
transferee of such Persons or a nominee of any of the foregoing) a legend in substantially the following form: 
 The beneficial owner of the
Rights represented by this Right Certificate is an Acquiring Person or an Affiliate or Associate (as such terms are defined in the Rights Agreement) of an Acquiring Person or a subsequent holder of such Right Certificates beneficially owned by such
Persons. Accordingly, this Right Certificate and the Rights represented hereby are null and void and will no longer be transferable as provided in the Rights Agreement. 
 The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement shall be operative whether or not the foregoing legend is contained on any such Right Certificates. 
  

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 5. Countersignature and Registration. 
 (a) The Right Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its President or any Vice President, either manually
or by facsimile signature, and have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates
shall be countersigned, either manually or by facsimile, by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, 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 Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. 
 (b) Following the Distribution Date and receipt by the Rights Agent of notice and all other relevant information, the Rights Agent will keep or cause to
be kept, at its office designated for such purpose, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the date of each of the Right Certificates and the certificate numbers for each of the Right Certificates. 
 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. 
 (a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time after the Close of Business on the Distribution Date and at or prior to the Close of Business on the Expiration Date, and following
receipt in writing by the Rights Agent of notice to that effect, any Right Certificate or Certificates (other than Right Certificates representing Rights that have become null and void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be (i) transferred or (ii) split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of shares of
Preferred Stock or other securities as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer any Right Certificate shall surrender the Right Certificate at the
office of the Rights Agent designated for such purposes with the form of assignment on the reverse side thereof duly endorsed (or enclose with such Right Certificate a written instrument of transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly authorized in writing, and with such signature guaranteed by a member of a securities approved medallion program. Any registered holder desiring to split up, combine or
exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be split up, combined or exchanged at the office of the Rights Agent designated for
such purposes. The 
  

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 Right Certificates are transferable only on the registry books of the Rights Agent. Thereupon the Rights Agent shall,
subject to Sections 4(b), 7(e), 11 and 14 hereof, countersign (by manual or facsimile signature) and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require
payment from the holder of a Right Certificate of a sum sufficient to cover any tax or charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. The Rights Agent shall have no duty or
obligation to take any action under any section of this Rights Agreement which requires the payment by a Rights holder of applicable taxes or charges unless and until the Rights Agent is satisfied that all such taxes and/or charges have been
paid. 
 (b) Subject to the provisions of Section 11(a)(ii) hereof, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and, if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make, execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 
 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. 
 (a) Subject to
Section 11(a)(ii) hereof, the Rights shall become exercisable, and may be exercised to purchase Preferred Stock, except as otherwise provided herein, in whole or in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof duly executed (with such signature duly guaranteed), to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the
Purchase Price with respect to each Right exercised, subject to adjustment as hereinafter provided, at or prior to the Close of Business on the earlier of (i) August 25, 2016 (the “Final Expiration Date”), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (such date being herein referred to as the “Redemption Date”) or (iii) the time at which all such Rights are exchanged as provided in Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the “Expiration Date”). 
 (b) The Purchase Price and the
number of shares of Preferred Stock or other securities or consideration to be acquired upon exercise of a Right shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof. The Purchase Price shall be payable in lawful
money of the United States of America, in accordance with Section 7(c) hereof. 
 (c) Except as provided in Section 11(a)(ii)
hereof, upon receipt of a Right Certificate with the form of election to purchase duly executed, accompanied by payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof) or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable tax or charge, by cash, certified check or official bank check payable to the order of the Company or the Rights Agent, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) requisition from any transfer agent of the Preferred Stock certificates for the number of shares of Preferred Stock so elected to be purchased and the Company will comply and hereby authorizes

  

 -10- 

 and directs such transfer agent to comply with all such requests, (ii) requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14(b) hereof, and (iii) promptly after receipt of such Preferred Stock certificates cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be designated by such holder, and, when appropriate, after receipt of the cash requisitioned from the Company promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate. In the event of a purchase of securities, other than Preferred Stock, pursuant to Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the appropriate actions corresponding to the
foregoing clauses (i) through (iii). In the event that the Company is obligated to issue other securities of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate. 
 (d) Except as otherwise provided herein, in case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Sections 6 and 14 hereof. 
 (e) Notwithstanding anything in this Rights Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request. 
 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of exercise. transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 
 9. Reservation and Availability of Shares of Preferred Stock. 
 (a) The Company covenants and agrees that at all times it will cause to be reserved and kept available, out of and to the extent of its authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other securities) or held in its treasury, the number of shares of Preferred Stock (and, 
  

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 following the occurrence of a Triggering Event, other securities) that, as provided in this Rights Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights; provided, however, that the Company shall be required to reserve and keep available shares of Preferred Stock or other securities sufficient
to permit the exercise in full of all outstanding Rights pursuant to the adjustments set forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof only if, and to the extent that, the Rights become exercisable pursuant to
such adjustments. 
 (b) The Company shall (i) use its best efforts to cause, from and after such time as the Rights become exercisable,
the Rights and all shares of Preferred Stock (and following the occurrence of a Triggering Event, other securities) issued or reserved for issuance upon exercise thereof to be reported by the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”) or such other system then in use, and if the Preferred Stock shall become listed on any national securities exchange, to cause, from and after such time as the Rights become exercisable, the Rights and
all shares of Preferred Stock (and, following the occurrence of a Triggering Event, other securities) issued or reserved for issuance upon exercise thereof to be listed on such exchange upon official notice of issuance upon such exercise and
(ii) if then necessary, to permit the offer and issuance of such shares of Preferred Stock (and, following the occurrence of a Triggering Event, other securities), register and qualify such share of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) under the Securities Act and any applicable state securities or “blue sky” laws (to the extent exemptions therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and keep such registration and qualifications effective until the Expiration Date of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days, the exercisability of the Rights in order to prepare and file a registration statement under the Securities Act and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Rights Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained and until a registration statement under the Securities Act (if required) shall have been declared effective. 
 (c) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Preferred Stock (and following
the occurrence of a Triggering Event, other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price in respect thereof), be duly and validly
authorized and issued and fully paid and nonassessable shares in accordance with applicable law. 
 (d) The Company further covenants and
agrees that it will pay when due and payable any and all taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any shares of Preferred Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates for
Preferred Stock 
  

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 (or other securities, as the case may be) upon exercise of Rights in a name other than that of, the registered holder of
the Right Certificate, and the Company shall not be required to issue or deliver a Right Certificate or certificate for Preferred Stock (or other securities, as the case may be) to a Person other than such registered holder until any such tax and
charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax or charge is due. 
 10. Preferred Stock Record Date. Each Person in whose name any certificate for shares of Preferred Stock (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares of Preferred Stock (or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable taxes or charges) was made. Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a stockholder of the Company with respect to the shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, if any, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 
 11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price. The number and kind of shares subject to purchase upon the exercise of each Right, the number of Rights outstanding and the
Purchase Price are subject to adjustment from time to time as follows: 
 (a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Preferred Stock payable in shares of Preferred Stock, (B) subdivide or split the outstanding shares of Preferred Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Preferred Stock into a smaller number of shares or effect a reverse split of the outstanding shares of Preferred Stock, or (D) issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of capital stock or other securities, which,
if such Right had been exercised immediately prior to such date, the holder thereof would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii). 
 (i) Subject to Section 24, in the event 
  

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

 -14- 

 convertible into equity securities of the Company or any of its Subsidiaries, which is directly or indirectly
beneficially owned by any Acquiring Person or any Affiliate or Associate of any Acquiring Person (any of (A), (B) or (C) being referred to herein as a “Flip-In Event”); 
 then upon the first occurrence of such Flip-In Event (i) the Purchase Price shall be adjusted to be the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one one-thousandth of a share of Preferred Stock for which a Right was exercisable immediately prior to such Flip-In Event, whether or not such Right was then exercisable, and (ii) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase Price (as so adjusted), in accordance with the terms
of this Rights Agreement and in lieu of shares of Preferred Stock, such number of shares of Common Stock as shall equal the result obtained by dividing the Purchase Price (as so adjusted) by 50% of the Current Market Price per share of the Common
Stock (determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event; provided, however, that the Purchase Price (as so adjusted) and the number of shares of Common Stock so receivable upon the exercise of a Right shall,
following the Flip-In Event, be subject to further adjustment as appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in this Rights Agreement to the contrary, however, from and after the Flip-In Event, any Rights that
are beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the Flip-In Event or
(z) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the Flip-In Event pursuant to either (I) a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement, arrangement or understanding, whether written or otherwise, regarding the transferred Rights or (II) a transfer which the Board of Directors has determined is part of a plan,
agreement, arrangement or understanding, whether written or otherwise, which has the purpose or effect of avoiding the provisions of this paragraph, and subsequent transferees of such Persons, shall be null and void without any further action and
any holder of such Rights shall thereafter have no rights whatsoever with respect to such Rights under any provision of this Rights Agreement. The Company shall use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. From
and after the Flip-In Event, no Right Certificate shall be issued pursuant to Section 3 or Section 6 hereof that represents Rights that are or have become null and void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or have become null and void pursuant to the provisions of this paragraph shall be cancelled. 
 (ii) The Company may at its option substitute for a share of Common Stock issuable upon the exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market Price of a share of Common Stock. In the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Board of Directors shall, to the extent permitted by applicable law and any material agreements then in effect to which the Company is a party (A) determine
the excess 
  

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

 -16- 

 (b) In case the Company shall fix a record date for the issuance of rights (other than the Rights),
options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase Preferred Stock (for a period expiring within 45 calendar days after such record date), shares having the same rights, privileges and preferences as
the Preferred Stock (a “Preferred Stock Equivalent”) or securities convertible into Preferred Stock or Preferred Stock Equivalent at a price per share of Preferred Stock or Preferred Stock Equivalent (or having a conversion price per
share, if a security convertible into Preferred Stock or Preferred Stock Equivalent) less than the Current Market Price per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred Stock and/or Preferred Stock Equivalent (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or Preferred Stock Equivalent to be offered for subscription or
purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which is in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not been fixed. 
 (c) In case the Company shall fix a record date
for a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such Current Market Price per share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed. 
  

 -17- 

 (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of the Common Stock for the 30 consecutive Trading Days immediately
prior to, but not including such date, and for purpose of computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share of the Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of the Common Stock for the 10 consecutive Trading Days immediately following but not including such date; provided, however, that in the event that the Current Market Price per share of the Common Stock is determined during
a period following the announcement by the issuer of the Common Stock of (i) any dividend or distribution on the Common Stock (other than a regular quarterly cash dividend and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set forth above, after the ex-dividend date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification occurs, then, and in each such case, the Current Market Price shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the
NASDAQ or, if the shares of Common Stock are not listed or admitted to trading on the NASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the NASDAQ or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors shall be used and shall be binding on the Rights Agent. If the Common Stock is not publicly held or not so listed or traded, “Current Market Price” per share shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 
 (i) For the purpose of any computation hereunder, the “Current Market Price” per share (or one one-thousandth of a share) of Preferred Stock
shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the Current Market Price per share (or one one-thousandth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the “Current Market Price” per share
of Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the
date of this Rights Agreement) multiplied by the Current Market Price per share of the Common Stock and the “Current Market Price” per one one-thousandth 
  

 -18- 

 of a share of Preferred Stock shall, be equal to the Current Market Price per share of the Common Stock (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, “Current Market Price” shall mean the fair value per share as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 
 (e) Anything herein to the
contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or one-hundred-thousandth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date. 
 (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the shares of Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares. 
 (g) All Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of shares of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein. 
 (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandth of a share of Preferred Stock (calculated to the nearest one-hundred-thousandth) obtained by (i) multiplying (x) the number of one one-thousandth of a share of Preferred Stock covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 (i) The Company may elect on or after the date of any adjustment of the Purchase Price or any adjustment to the number of shares of
Preferred Stock for which a Right may be exercised made pursuant to Sections 11(a)(i), 11(b) or 11(c), to adjust the number of Rights in lieu of any adjustment in the number of shares of Preferred Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights 
  

 -19- 

 shall be exercisable for the number of shares of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one hundred-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made. The Company shall notify the Rights Agent whenever it makes a public announcement pursuant to this Section 11(i), and shall promptly give the Rights Agent a copy of
such announcement. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date specified in the public announcement. 
 (j) Irrespective of
any adjustment or change in the Purchase Price or the number of shares of Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the
number of shares which were expressed in the initial Right Certificate issued hereunder. 
 (k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the shares of Common Stock, Preferred Stock or other capital stock issuable upon exercise of the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required stockholder approvals, which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock, Preferred Stock or other
capital stock at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is to receive a combination of Common Stock and Common Stock Equivalents, a portion of the consideration paid upon such exercise, equal to at least the then
par value of a share of Common Stock of the Company, shall be allocated as the payment for each share of Common Stock of the Company so received. 
 (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer (with prompt written notice of such election to
the Rights Agent) until the occurrence of such event the issuance to the holder of any Right exercised after such record date 
  

 -20- 

 the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise
over and above the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares of Preferred Stock and other capital stock or securities upon the occurrence of the event requiring such
adjustment. 
 (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly permitted or required by this Section 11, as and to the extent that in their good faith judgment the Board of Directors shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance for cash of any shares of Preferred Stock at less than the Current Market Price, (iii) issuance for cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders. 
 (n) The Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person, (ii) merge with or into any other Person, or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons, if (x) at the time of or immediately after such consolidation, merger or
sale there are any charter or by-law provisions or any rights, warrants or other instruments or securities outstanding or agreements in effect which substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the stockholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. The Company shall not consummate any such consolidation, merger or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this subsection. 
 (o) The Company covenants
and agrees that, after the Distribution Date, it will not, except as permitted by Section 23, Section 24 or Section 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or eliminate the benefits intended to be afforded by the Rights. 
 (p) Anything in
this Rights Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Record Date and prior to the Distribution Date (i) declare or pay any dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, 
  

 -21- 

 shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock
following any such event equals the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction, the numerator or which shall be the number of shares of Common Stock
outstanding immediately prior to the occurrence of such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately following the occurrence of such event. 
 12. Certification of Adjustments or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof, or any event
affecting the Rights or their exercisability (including, without limitation, an event which cases the Rights to become null and void) the Company shall (a) promptly prepare a certificate signed by its Chief Executive Officer, its President or
any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company setting forth such adjustment and a brief, reasonably detailed statement of the facts, computations and methodology
accounting for such adjustment or describing such event, (b) promptly file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or the force or effect of or the requirement for such adjustment. The Rights Agent shall be fully protected in relying on any certificate prepared by the Company pursuant to Sections 11
and 13 and on any adjustment therein contained and shall have no duty with respect to and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate. Any adjustment to be made pursuant to
Sections 11 and 13 of this Rights Agreement shall be effective as of the date of the event giving rise to such adjustment. 
 13.
Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 
 (a) In the event that following the first occurrence of a
Flip-In Event, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person or Persons and the Company, as the case may be, shall not be the surviving or continuing Person of such consolidation or
merger, or (y) any Person or Persons shall consolidate with, or merge with and into, the Company, and the Company shall be the continuing or surviving Person of such consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or of the Company or cash or any other property other than, in the case of the transactions described in
subparagraphs (x) or (y), a merger or consolidation which would result in all of the Voting Power represented by the securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into securities of the surviving entity) all of the Voting Power represented by the securities of the Company or such surviving entity outstanding immediately after such merger or consolidation and the holders of such securities not
having changed as a result of such transactions), or (z) the Company or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer to any other Person or any Affiliate or Associate of such Person, in one transaction, or a series
of related transactions, assets or earning power aggregating more than 
  

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 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event (a “Flip-Over Event”), proper provision shall be made so that (i) each holder of a Right (other than Rights which have become null and void pursuant to Section 11(a)(ii) hereof) shall thereafter have the right
to receive, upon the exercise thereof at the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the terms of this Rights Agreement and in lieu of shares of Preferred Stock or Common Stock of
the Company, such number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by dividing the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer; provided, however, that the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such Principal Party so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 11(f) hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after the occurrence of such consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
Flip-Over Event, all the obligations and duties of the Company pursuant to this Rights Agreement; (iii) the term “Company” for all purposes of this Rights Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only apply to such Principal Party following the first occurrence of a Flip-Over Event; and (iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Common Stock in accordance with Section 9 hereof) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; provided, however, that, upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all assets, recapitalization, reclassification of shares, reorganization or other extraordinary transaction in respect of such Principal Party, each holder of a Right shall thereupon be entitled to receive, upon exercise of a Right,
such cash, shares, rights, warrants and other property which such holder would have been entitled to receive had he, at the time of such transaction, owned the shares of Common Stock of the Principal Party purchasable upon the exercise of a Right,
and such Principal Party shall take such steps (including, but not limited to, reservation of shares of stock) as may necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights,
warrants and other property. 
 (b) “Principal Party” shall mean 
 (i) in the case of any transaction described in (x) or (y) of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer the Common Stock of which has the greatest aggregate market value or
(B) if no securities are so issued, (x) the Person that is the other party to the merger or consolidation and that survives said merger or consolidation, or, if there is more than one such Person, the Person the Common Stock of which has
the greatest market value or 
  

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 (y) if the Person that is the other party to the merger or consolidation does not survive the merger or consolidation,
the Person that does survive the merger or consolidation (including the Company if it survives); and 
 (ii) in the case of any transaction
described in (z) of the first sentence in Section 13(a) hereof, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is
a party to such transaction or transactions receives the same portion of the assets or earning power so transferred or if the Person receiving the greatest portion of the assets or earning power cannot be determined, whichever of such Persons that
is the issuer of Common Stock having the greatest aggregate market value of shares outstanding; 
 provided, however, that in any such case described in the
foregoing paragraphs (b)(i) or (b)(ii), (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, the term “Principal Party” shall refer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of all of which are and have been so registered, the term “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the joint venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall bear the obligations set
forth in this Section 13 in the same ratio as its interest in such Person bears to the total of such interests. 
 (c) The Company shall
not consummate any consolidation, merger, sale or transfer referred to in Section 13(a) unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock that have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and the Principal Party involved therein shall have executed and delivered to the Rights Agent an agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be performed in accordance with their terms and that such consolidation, merger, sale or transfer of assets shall not result in a default by the Principal Party under this Rights
Agreement as the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and further providing that, as soon as practicable after executing such agreement pursuant to this Section 13, the Principal
Party at its own expense shall: 
 (i) prepare and file a registration statement under the Securities Act, if necessary, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the date of expiration of the Rights, and similarly comply with applicable state securities laws; 
  

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 (ii) use its best efforts, if the Common Stock of the Principal Party shall become listed on a national
securities exchange, to list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on such securities exchange and, if the Common Stock of the Principal Party shall not be listed on a national securities
exchange, to cause the Rights and the securities purchased upon exercise of the Rights to be reported by the NASDAQ or such other system then in use; 
 (iii) deliver to holders of the Rights historical financial statements for the Principal Party which comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange
Act; and 
 (iv) obtain waivers of any rights of first refusal or preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding Rights. 
 In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised shall thereafter be exercisable in the manner described in Section 13(a). 

(d) Furthermore, in case the Principal Party which is to be a party to a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws or other instrument governing its corporate affairs, which provision would have the effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 13, shares of Common Stock of such Principal Party at less than the then Current Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal Party at less than such then current market price (other than to holders of Rights pursuant to this Section 13) or (ii) providing for any special payment, tax
or similar provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to the provisions of Section 13; then, in such event, the Company hereby agrees with each holder of Rights that it shall not consummate
any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been cancelled,
waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction. 
 14. Fractional Rights and Fractional Shares. 
 (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the holders of record of the Right
Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the then current market value of a whole Right. For the purposes of this Section 14(a), the then current
market value of a Right shall be determined in the same manner as the Current Market Price of a share of Common Stock shall be determined pursuant to Section 11(d) hereof. 
  

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 (b) The Company shall not be required to issue fractions of shares of Preferred Stock or Preferred Stock
Equivalent (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock Equivalent (other than
fractions which are integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as beneficial owners of the shares of Preferred Stock or Preferred Stock Equivalent represented by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent, the Company may pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent. For purposes of this Section 14(b), the current market value of one one-thousandth of a share of
Preferred Stock or Preferred Stock Equivalent shall be the Current Market Price of a share of Common Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise. 
 (c) Following the occurrence of a Flip-In Event, the Company shall not be required to issue fractions of shares or units of Common Stock or Common Stock
Equivalents or other securities upon exercise of the Rights or to distribute certificates which evidence fractional shares of such Common Stock or Common Stock Equivalents or other securities. In lieu of fractional shares or units of such Common
Stock or Common Stock Equivalents or other securities, the Company may pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the Current Market
Value of a share or unit of such Common Stock or Common Stock Equivalent or other securities. For purposes of this Section 14(c), the Current Market Value shall be determined in the manner set forth in Section 11(d) hereof for the Trading
Day immediately prior to the date of such exercise and, if such Common Stock Equivalent is not traded, each such Common Stock Equivalent shall have the value of one one-thousandth of a share of Preferred Stock. 
 (d) The holder of a Right by the acceptance of a Right expressly waives his right to receive any fractional Right or any fractional shares upon exercise
of a Right. 
 (e) Whenever a payment for fractional Rights or fractional shares or other securities of the Company is to be made by the
Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payment and the prices and/or formulas utilized in calculating such payments, and
(ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be
deemed to have knowledge or any payment for the fractional Rights or fractional shares or other securities of the Company under any Section of this Rights Agreement relating to the payment of fractional Rights or fractional shares or other
securities of the Company unless and until the Rights Agent shall have received such a certificate and sufficient monies. 
  

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 15. Rights of Action. As of the Record Date, all rights of action in respect of this Right
Agreement, other than any rights of action vested in the Rights Agent pursuant to Sections 18 and 20 hereunder, are vested in the respective holders of record of the Right Certificates (and, prior to the Distribution Date, the holders of record
of the Common Stock); and any holder of record of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Rights Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any breach of this Rights Agreement and, accordingly, that they will be entitled to specific performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights Agreement. Holders of Rights shall be entitled to recover from the Company the reasonable costs and expenses, including attorneys’ fees, incurred by them in any
action to enforce the provisions of this Rights Agreement. 
 16. Agreement of Right Holders. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: 
 (a) prior to the Distribution
Date, the Rights will not be evidenced by a Right Certificate and will be transferable only in connection with the transfer of Common Stock; 
 (b) after the Distribution Date, the Right Certificates will be transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer with all required certificates completed; 
 (c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent or the transfer agent of the Common Stock) for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; and 
 (d) notwithstanding anything in this Rights Agreement to the contrary, neither the Company
nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Rights Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or 
  

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 commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided, however, that the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. 
 17. Right Certificate Holder Not Deemed a Stockholder. No holder of a Right, as such, shall be entitled to vote, receive dividends in respect of
or be deemed for any purpose to be the holder of Common Stock or any other securities of the Company which may at any time be issuable upon the exercise of the Rights, nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote in the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights in respect of any such stock or securities, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. 
 18. Concerning the Rights Agent. 
 (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the preparation, negotiation, delivery, administration, amendment and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel) incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under this Rights Agreement, including, without limitation, the costs and expenses of defending against any claim of liability arising therefrom,
directly or indirectly. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. The provisions of this Section 18 and Section 20 below shall survive the termination of this Rights Agreement
and the exercise, resignation, replacement or removal of the Rights Agreement 
 (b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its acceptance and administration of this Rights Agreement and the exercise and performance of its duties hereunder in reliance upon any
Right Certificate, certificate for Common Stock or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where necessary, guaranteed, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof. The Rights
Agent shall not be deemed to have knowledge of any event of which is was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith
unless and until it has received such notice in writing. 
  

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 19. Merger or Consolidation or Changed Name of Rights Agent. 
 (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock transfer business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions
of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Rights Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement. 
 (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificate shall have the full force provided in the Right Certificates and in this
Rights Agreement. 
 20. Duties of Rights Agent. The Rights Agent undertakes to perform only the duties and obligations expressly
imposed by this Rights Agreement (and no implied duties) upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: 
 (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company or an employee of the Rights Agent), and the advice or
opinion of such counsel shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in accordance with such advice or
opinion. 
 (b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by certificate signed by the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it under the provisions of this Rights Agreement in reliance upon such certificate. 
  

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 (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful
misconduct (each as determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Notwithstanding anything in this Rights Agreement to the contrary, in no event shall the Rights Agent be liable for
special, indirect, incidental, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss damage and regardless of the form of
action. Any liabilities of the Rights Agent under this Rights Agreement will be limited to $100,000. 
 (d) The Rights Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained in this Rights Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only. 
 (e) The Rights Agent shall not have any liability for or be under any
responsibility in respect of the validity of this Rights Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Rights Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the
Rights (including the Rights becoming null and void pursuant to Section 11(a)(ii) hereof) or any adjustment required under the provisions of Sections 11, 13, 23 or 24 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 furnished pursuant to Section 12 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 Common Stock to be issued pursuant to this Rights Agreement or any Right Certificate or as
to whether any shares of Common Stock will, when issued, be validly authorized and issued, fully paid and nonassessable. 
 (f) The Company
agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this Rights Agreement. 
 (g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the Chief Executive Officer, the President or any Vice President or the Secretary or any Assistant Secretary or the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such instruction shall be full authorization and protection to the Rights Agent and the Rights Agent shall not be
liable for or in respect of any action taken, suffered or omitted by it in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. The Rights Agent shall be 
  

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 fully authorized and protected in relying upon the most recent instructions received by any such officer. Any application
by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or suffered or such omission shall be effective. The Rights Agent shall not be liable for any action taken or suffered by, or omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall not be less than five Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or
omitted. 
 (h) The Rights Agent and any shareholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though the
Rights Agent were not the Rights Agent under this Rights Agreement. Nothing herein shall preclude the Rights Agent (or any such shareholder, affiliate, director, officer or employee) from acting in any other capacity for the Company or for any other
Person. 
 (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder
either itself (through its directors, officers and employees) or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company or to any holders of Rights or to any other Person resulting from any such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct in the selection and continued employment thereof (each
as determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). 
 (j) No provision of this
Rights Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. 
 (k) If,
with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company. 
 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days’ notice in writing, or such earlier period as shall be agreed to in writing, mailed to the Company and to each transfer agent of the Common Stock by registered or certified mail, and to the holders of the 
  

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 Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days’ notice in writing, or such earlier period as shall be agreed to in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the incumbent Rights Agent or the holder of record of any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person organized and doing business under the laws of the United States or any State thereof, in good standing,
which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate controlled by a Person described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation,
replacement or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 
 22. Issuance of New
Right Certificates. Notwithstanding any of the provisions of this Rights Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind or class of shares of stock or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, in each case existing prior to the Distribution Date,
issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued, if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 
  

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 23. Redemption. 
 (a) The Board of Directors may, at its option, at any time prior to the earlier of (x) the first occurrence of a Flip-In Event or (y) the Close of Business on the Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the “Redemption Price”). 
 (b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights (or at such later time as the Board of Directors may establish for the effectiveness of such redemption), and without any further action and without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within 10 days after such action of the Board of Directors ordering the redemption of the Rights (or such later time as the Board of Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock (with prompt written notice thereof to 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 redemption shall
state the method by which the payment of the Redemption Price will be made. The failure to give notice required by this Section 23(b) or any defect therein shall not affect the legality or validity of the action taken by the Company.

 (c) In the case of a redemption permitted under Section 23(a) hereof, the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing the manner of redemption of the Rights and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at their last addresses as
they appear on the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent of the Common Stock, and upon such action, all outstanding Right Certificates shall be null and void without any
further action by the Company. 
 24. Exchange of Rights for Common Stock. 
 (a) The Board of Directors may, at its option, at any time after the occurrence of a Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which (i) shall not include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) and (ii) shall include, without limitation, any Rights issued after the Distribution Date in
accordance with Section 22 hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof
(the “Exchange Ratio”). Notwithstanding the foregoing the Board of Directors shall not be empowered to effect such exchange at any time after any Person (other than an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of shares of Common Stock 
  

 -33- 

 aggregating 50% or more of the shares of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this
Section 24(a). 
 (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice (with prompt written notice of such exchange to the Rights Agent) of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights. 
 (c) In
any exchange pursuant to this Section 24, the Company, at its option, may substitute, and, in the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall substitute to the extent of such insufficiency, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares of
Preferred Stock or Preferred Stock Equivalent or fractions thereof having an aggregate current per share market price (determined pursuant to Section 11(d) hereof) equal to the current per share market price of one share of Common Stock
(determined pursuant to Section 11(d) hereof) as of the date of the Flip-In Event. 
 (d) In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights. 
 (e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For the purposes of this paragraph (d), the current market value of a whole
share of Common Stock shall be the Current Market Price of a share of Common Stock (as defined in Section 11(d) hereof for the purposes of computations made other than pursuant to Section 11(a)(iii)) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24. 
  

 -34- 

 25. Notice of Proposed Actions. 
 (a) In case the Company, after the Distribution Date, shall propose (i) to effect any of the transactions referred to in Section 11(a)(i) or to
pay any dividend to the holders of record of its Preferred Stock payable in stock of any class or to make any other distribution to the holders of record of its Preferred Stock (other than a regular periodic cash dividend), or (ii) to offer to
the holders of record of its Preferred Stock or options, warrants, or other rights to subscribe for or to purchase shares of Preferred Stock (including any security convertible into or exchangeable for Preferred Stock) or shares of stock of any
other class or any other securities, options, warrants, convertible or exchangeable securities or other rights, or (iii) to effect any reclassification of its Preferred Stock or any recapitalization or reorganization of the Company, or
(iv) to effect any consolidation or merger with or into, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 26 hereof, notice of such proposed action, which shall specify the record date for the purposes of such transaction referred to in Section 11(a)(i), or such dividend or
distribution, or the date on which such reclassification, recapitalization, reorganization, consolidation, merger, sale or transfer of assets, liquidation, dissolution or winding up is to take place and the record date for determining participation
therein by the holders of record of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining
holders of record of the Preferred Stock for purposes of such action, and in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of record of
Preferred Stock, whichever shall be the earlier. 
 (b) In case any of the transactions referred to in Section 11(a)(ii) or
Section 13 of this Rights Agreement are proposed, then, in any such case, the Company shall give to each holder of Rights, in accordance with Section 26 hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and the consequences of the event to holders of Rights under Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon consummating such transaction,
shall similarly give notice thereof to each holder of Rights. 
 (c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by the Company or the vote upon any such action. 
 26.
Notices. Notices or demands authorized by this Rights Agreement to be given or made by the Rights Agent or by the holder of record of any Right Certificate or Right to or on behalf of the Company shall be sufficiently given or made if in
writing and sent by first-class 
  

 -35- 

 mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

  

			
		  	 PDL BioPharma, Inc.
 34801 Campus Drive
 Fremont, CA 94555
 Attention: Chief Financial Officer

		
	With a copy to:	  	 PDL BioPharma, Inc.
 34801 Campus Drive
 Fremont, CA 94555
 Attention: General Counsel

 Subject to the provisions of Section 20 hereof, any notice or demand authorized by this Rights Agreement to
be given or made by the Company or by the holder of record of any Right Certificate or Right to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows: 
  

			
		  	 Mellon Investor Services LLC
 480 Washington
Boulevard
 Jersey City, NJ 07310
 Attention: Client Relationship
Executive

		
	With a copy to:	  	 Mellon Investor Services LLC
 480 Washington
Boulevard
 Jersey City, NJ 07310
 Attention: General
Counsel

 Notices or demands authorized by this Rights Agreement to be given or made by the Company or the Rights Agent to
the holder of record of any Right Certificate or Right shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer Agent. 
 27. Supplements and Amendments. Except as
otherwise provided herein, for so long as the Rights are then redeemable, the Company may in its sole and absolute discretion, and the Rights Agent shall if the Company so directs, supplement or amend any provision of this Rights Agreement in any
respect without the approval of any holders of the Rights. Any such supplement or amendment shall be evidenced by a writing signed by the Company and the Rights Agent. At any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend this Rights Agreement without the approval of any holders of Right Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv) change or supplement the

  

 -36- 

 provisions hereunder in any manner which the Company may deem necessary or desirable; provided that no such supplement or
amendment shall adversely affect the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such amendment may cause the Rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this sentence. Notwithstanding anything contained in this Rights Agreement to the contrary, no supplement or amendment shall be made which changes the Redemption Price. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. The Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that effects the
Rights Agent’s own rights, duties, obligations or immunities under this Agreement. 
 28. Successors. All of the covenants and
provisions of this Rights Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 
 29. Benefits of this Rights Agreement. Nothing in this Rights Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this Rights Agreement; this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of record of the Right Certificates (and, prior to the Distribution Date, the Common Stock). 
 30. Determinations and Actions by the Board of Directors. The Board of Directors shall have the exclusive power and authority to administer this Rights Agreement and to exercise the rights and powers
specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Rights Agreement, including, without limitation, the right and power to (i) interpret the provisions of this
Rights Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Rights Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to amend or not amend this
Rights Agreement). All such actions, calculations, interpretations and determinations that are done or made by the Board of Directors in good faith, including, but not limited to those made under Sections 1 and 11, shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights, as such, and all other parties, and notwithstanding anything contained herein to the contrary, the Rights Agent is entitled always to assume that the Company’s Board of
Directors acted in good faith and shall be fully protected and incur no liability in reliance thereon. 
 31. Three Year Independent
Director Evaluation. A committee of the Company’s Board of Directors shall review this Agreement in order to consider whether the maintenance of this Agreement continues to be in the best interests of the Company and its stockholders. Such
committee shall conduct such review periodically when, as and in such manner as the committee deems appropriate, after giving due regard to all relevant circumstances; provided, however, that the committee shall take such action at least every three
years. Following each such review, such committee will report its conclusions to the full Board of Directors, including any recommendation in light thereof as to whether this Agreement should be modified or the Rights 
  

 -37- 

 should be redeemed. Such committee shall be comprised only of directors of the Company who shall have been determined by
the Company’s Board of Directors to be independent under NASDAQ listing standards, or, if the Common Shares are listed on a national exchange, such national exchange’s listing standards. Such committee is authorized to retain such legal
counsel, financial advisors and other advisors as the committee deems appropriate in order to assist the committee in carrying out its foregoing responsibilities under this Agreement. Such committee shall initially be the Nominating and Corporate
Governance Committee of the Company’s Board of Directors. 
 32. Governing Law. This Rights Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made solely by residents
of such state and performed entirely within such state; provided, however, that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performance entirely within such State. 
 33. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 
 34. Descriptive Headings. Descriptive headings of the several sections of this Rights Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof. 
 35. Severability. If any term, provision, covenant
or restriction of this Rights Agreement is held by a court of competent jurisdiction or other authority to be invalid, illegal or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Rights Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated. 
  

 -38- 

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

			
	PDL BIOPHARMA, INC.
		
	By:	 	 /s/ Andrew Guugenhime

	Name:	 	Andrew Guggenhime
	Title:	 	SVP & CFO
	
	MELLON INVESTOR SERVICES, LLC
		
	By:	 	 /s/ Joseph Campbell

	Name:	 	Joseph Campbell
	Title:	 	Vice President

  

 -39- 

 Exhibit A 
 PDL BIOPHARMA, INC. 
 CERTIFICATE 
 OF DESIGNATION, PREFERENCES AND RIGHTS 
 OF THE TERMS OF THE 
 SERIES A PREFERRED STOCK 
 Pursuant to
Section 151 of the General Corporation Law of the State of Delaware 
 We, the President and Chief Executive Officer and the Secretary,
respectively, of PDL BioPharma, Inc., organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: 
 That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the said Corporation, the said Board of
Directors effective August 14, 2006, adopted the following resolution creating a series of 250,000 shares of Preferred Stock designated as Series A Preferred Stock: 
 RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as follows: 
 1. Designation and Amount. The shares of such
series shall be designated as “Series A Preferred Stock” (the “Series A Preferred Stock”), $0.01 par value per share, and the number of shares constituting such series shall be 250,000. 
 2. Dividends and Distributions. 
 (a)
The dividend rate on the shares of Series A Preferred Stock shall be for each quarterly dividend (hereinafter referred to as a “quarterly dividend period”), which quarterly dividend periods shall commence on January 1,
April 1, July 1 and October 1 each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”) (or in the case of original issuance, from the date of original issuance) and shall end on and include
the day next preceding the first date of the next quarterly dividend period, at a rate per quarterly dividend period (rounded to the nearest cent) equal to the greater of (a) $3,750.00 or (b) subject to the provisions for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in cash, based upon the fair market value at the time the non-cash dividend or other
distribution is declared as determined in good faith by the Board of Directors) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared (but not 
  

 A-1 

 withdrawn) on the Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”) during the
immediately preceding quarterly dividend period, or, with respect to the first quarterly dividend period, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event this Company shall at any time
after September 6, 2006 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event. 
 (b) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 45 days prior to the date fixed for the payment thereof. 
 3. Voting Rights. The holders
of shares of Series A Preferred Stock shall have the following voting rights: 
 (a) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
 (b) Except as otherwise provided herein, in the Certificate of Incorporation or Bylaws, the holders of shares of Series A 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. 
  

 A-2 

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

4. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. 
 5.
Liquidation, Dissolution or Winding Up. 
 (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the holders of the Series A Preferred Stock shall be entitled to receive the greater of (a) $150,000.00 per share, plus accrued dividends to the date of distribution, whether or not earned or declared, or (b) an
amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of Common Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event pursuant to clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
 6. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. 
  

 A-3 

 7. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. 

8. Fractional Shares. Series A Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such
holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series A Preferred Stock. All payments made with respect to fractional shares
hereunder shall be rounded to the nearest whole cent. 
 9. Certain Restrictions. 
 (a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: 
 (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; 
 (ii) declare
or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; 
 (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or 
 (iv) purchase or
otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes
shall determine in good faith will result in fair and equitable treatment among the respective series or classes. 
 (b) The Corporation
shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 9, purchase or otherwise acquire
such shares at such time and in such manner. 
  

 A-4 

 10. Ranking. The Series A Preferred Stock shall be junior to all other Series of the
Corporation’s preferred stock as to the payment of dividends and the distribution of assets, unless the terms of any series shall provide otherwise. 
 11. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Preferred Stock voting together as a single class. 
 IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this
     day of August, 2006. 
  

	
	
	  
 Mark McDade

	Chief Executive Officer

  

	
	Attest:
	
	  
 Andrew Guggenhime

  

 A-5 

 Exhibit B 
 [Form of Right Certificate] 
  

			
	Certificate No. W-	  	             Rights

 NOT EXERCISABLE AFTER AUGUST 25, 2016, OR EARLIER IF REDEEMED OR EXCHANGED. AT THE OPTION OF THE
COMPANY, THE RIGHTS MAY BE REDEEMED AT $0.001 PER RIGHT OR EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR
CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE. 
 RIGHT CERTIFICATE 
 PDL BIOPHARMA, INC. 
 This certifies that
                            , or registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement dated as of August 25, 2006 (the “Rights Agreement”) between PDL BioPharma, Inc., a Delaware
corporation (“Company”), and Mellon Investor Services, LLC (“Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(Pacific time) on August 25, 2016 at the principal office of the Rights Agent, or its successors as Rights Agent, designated for such purposes, one one-hundredth of a fully paid and nonassessable share of Series A Preferred Stock of the Company
(“Preferred Stock”) at a purchase price of $150.00 per one one-thousandth of a share, as the same may from time to time be adjusted in accordance with the Rights Agreement (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Rights Agreement. 
 As provided in the Rights Agreement, the Purchase Price and the number of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events and, upon the happening of certain events, securities other than shares of Preferred Stock, or other property,
may be acquired upon exercise of the Rights evidenced by this Right Certificate, as provided by the Rights Agreement. 
 Upon the occurrence
of a Flip-In Event, if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any such Acquiring Person, Associate
or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a Person who, after such transfer, became an Acquiring Person, or any Affiliate or Associate of an Acquiring 
  

 B-1 

 Person, such Rights shall be null and void and will no longer be transferable and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Flip-In Events. 
 This Right Certificate is subject to all the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and conditions are incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent, the Company and the holders of record of the Right Certificates, which limitation of rights include the temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive office of the Company and are available upon written request to the Company. 
 This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, 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, at any time prior to the earlier of (i) the
occurrence of a Flip-In Event (as such term is defined in the Rights Agreement) or (ii) the Expiration Date (as such term is defined in the Rights Agreement), the Rights evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $0.001 per Right. Subject to the provisions of the Rights Agreement, the Company may, at its option, at any time after a Flip-In Event, exchange all or part of the Rights evidenced by this Certificate for shares of the
Company’s Common Stock or for Preferred Stock (or shares of a class or series of the Company’s preferred stock having the same rights, privileges and preferences as the Preferred Stock). 
 In the event (i) any Person or group becomes an Acquiring Person or (ii) any of the types of transactions, acquisitions or other events
described above as self-dealing transactions occur, and prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common Stock, the Board of Directors may require all or any portion of the outstanding Rights (other
than Rights owned by such Acquiring Person which have become null and void) to be exchanged for Common Stock on a pro rata basis, at an exchange ratio of one share of Common Stock or one one-thousandth of a share of Preferred Stock (or of a share of
a class or series of the Company’s Preferred Stock having equivalent rights, preferences and privileges), per Right (subject to adjustment). 
 No fractional shares of Preferred Stock shall be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the
option of the Company, be evidenced by depositary receipts), and no fractional shares of Common Stock will be issued upon the exchange 
  

 B-2 

 of any Right or Rights evidenced hereby, and in lieu thereof, as provided in the Rights Agreement, fractions of shares of
Preferred Stock or Common Stock shall receive an amount in cash equal to the same fraction of the then Current Market Price (as such term is defined in the Rights Agreement) of a share of Preferred Stock or Common Stock, as the case may be.

 No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of
Common Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote in the election of directors; or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings or other
actions affecting stockholders (other than certain actions specified in the Rights Agreement) or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised or
exchanged as provided in the Rights Agreement. 
 This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent. 
  

 B-3 

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

					
	ATTEST:	 	PDL BIOPHARMA, INC.
			
	  
	 	By:	 	  

	Secretary	 	Title:	 	  

		
	COUNTERSIGNED:	 	MELLON INVESTOR SERVICES, LLC
As Rights Agent
			
		 	By:	 	  

		 		 	Authorized Officer

  

 B-4 

 Form of Reverse Side of Right Certificate 
 FORM OF ASSIGNMENT 
 (To be executed by the registered holder if such holder

 desires to transfer any or all of the Rights 
 represented by this Right Certificate) 
 FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto 
 _________________________________________________________________________________________________________________________

 _________________________________________________________________________________________________________________________ 
 (Name, address and social security or other 
 identifying number of transferee) 
                                       
                                  
(                                ) of the Rights represented by this Right
Certificate, together with all right, title and interest in and to said Rights, and hereby irrevocably constitutes and appoints
                                        
         attorney to transfer said Rights on the books of the within-named Company with full power of substitution. 
  

			
	 Dated:                                ,
        
	 	  
 (Signature)

 Signature Guaranteed: 
 CERTIFICATE 
 The undersigned hereby certifies by checking the appropriate boxes
that: 
 12. the rights evidenced by this Right Certificate [    ] are [    ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring Person (as such capitalized terms are defined in the Rights Agreement); 
 13. after due inquiry and to the best knowledge of the undersigned, it [    ] did [    ] did not acquire the Rights evidenced by this Right Certificate from any Person who is or
was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons. 
  

			
	 Dated:                                ,
        
	 	  
 (Signature)

 Signature Guaranteed: 
  

 B-5 

 Form of Reverse Side of Right Certificate 
 (continued) 
 NOTICE 
 The signatures to the foregoing Assignment and the foregoing Certificate, if applicable, must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed by a participant in a Securities Transfer Association (“STA”) recognized signature program. 
 In the event that the foregoing Certificate is not duly executed, with signature guaranteed, the Company may deem the Rights represented by this Right Certificate to be
Beneficially Owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such capitalized terms are defined in the Rights Agreement), and not issue any Right Certificate or Right Certificates in exchange for this Right
Certificate. 
  

 B-6 

 Form of Reverse of Right Certificate 
 (continued) 
 FORM OF ELECTION TO PURCHASE 
 (To be executed by the registered holder if such holder 
 desires to exercise any or all of the Rights 
 represented by this Right Certificate) 
 To PDL BioPharma, Inc.: 
 The undersigned hereby irrevocably elects to
exercise                             
(                    ) of the Rights represented by this Right Certificate to purchase the shares of the Common Stock of the Company, or other
securities or property issuable upon the exercise of said number of Rights pursuant to the Rights Agreement. 
 The undersigned hereby requests that a
certificate for any such securities and any such property be issued in the name of and delivered to: 
 _________________________________________________________________________________________________________________________ 
 _________________________________________________________________________________________________________________________ 
 (Name,
address and social security or other 
 identifying number of issuee) 
 The undersigned hereby further requests that if said number of Rights shall not be all the Rights represented by this Right Certificate, a new Right Certificate for the remaining balance of such Rights be issued in
the name of and delivered to: 
 _________________________________________________________________________________________________________________________

 _________________________________________________________________________________________________________________________ 
 (Name, address and social security or other 
 identifying number of issuee) 
  

			
	 Dated:                                ,
        
	 	  
 (Signature)

 Signature Guaranteed: 
  

 B-7 

 Form of Reverse Side of Right Certificate 
 (continued) 
 CERTIFICATE 
 The undersigned hereby certifies by checking the appropriate boxes that: 
 (1) the Rights evidenced by this Right Certificate [    ] are [    ] are not being exercised by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); 
 14. after due inquiry and to the best knowledge of the undersigned, it [    ] did [    ] did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons. 
  

			
	 Dated:                                ,
        
	 	  
 (Signature)

 Signature Guaranteed: 
 NOTICE 
 The signature to the foregoing Election to Purchase and the foregoing Certificate, if applicable, must
correspond to the name as written upon the face of the this Right Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. 
 In the event that the foregoing Certificate is not executed, with signature guaranteed, the Company may deem the Rights represented by this Right Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such capitalized terms are defined in the Rights Agreement), and not issue any Right Certificate or Right Certificates in exchange for this Right Certificate. 
  

 B-8 

 Exhibit C 
 UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED AUGUST 25, 2006 (THE “RIGHTS AGREEMENT”) BETWEEN PDL BIOPHARMA, INC. AND MELLON INVESTOR SERVICES, LLC RIGHTS ISSUED TO, BENEFICIALLY
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL
NO LONGER BE TRANSFERABLE. 
 PDL BIOPHARMA, INC. 
 Summary of Terms of 
 Rights Agreement 
  

			
	Nature of Right:	 	When exercisable, each Right (a “Right”) will initially entitle the holder to purchase one one-thousandth of a share of Series A Preferred Stock (“Preferred Stock”) of PDL
BioPharma, Inc. (the “Company”).
		
	Means of Distribution:	 	The Rights will be distributed to holders of the Company’s outstanding Common Stock as a dividend of one Right for each share of Common Stock. The Rights will also be attached to all
future issuances of Common Stock prior to the Distribution Date (as defined below).
		
	Exercisability:	 	Rights become exercisable on the earlier of: (i) the date of public announcement by the Company or by any person or group (an “Acquiring Person”) that such person or group has
acquired beneficial ownership of 15% or more of the Company’s outstanding Common Stock, or (ii) the tenth business day (unless extended by the Board prior to the time a person becomes an Acquiring Person) following the commencement, or
announcement of an intention to commence, by any person or group of a tender or exchange offer which would result in such person owning 15% or more of the outstanding Common Stock of the Company (the earlier of such dates is referred to as the
“Distribution Date”), provided that an Acquiring Person does not include an Exempt Person (as such term is defined in the Rights Agreement). Rights will trade separately from the Common Stock once the Rights become
exercisable.
		
	Purchase Price:	 	$150 per share, which is the amount that in the judgment of the Board of Directors represents the long-term value of the Common Stock over the term of the Rights Agreement (the “Purchase
Price”).
		
	Term:	 	The Rights will expire upon the earlier of (i) ten years after the date of issuance, or August 25, 2016 or (ii) redemption or exchange by the Company as described
below.
		
	Redemption of Rights:	 	Rights are redeemable at a price of $0.001 per Right, by the vote of the Company’s Board of Directors, at any time until the occurrence of a Flip-In Event (defined
below).

  

 C-1 

			
	Preferred Stock:	 	The Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior to any other series of preferred stock the Company may issue (unless otherwise provided in the
terms of such other series). Each share of Preferred Stock will have a preferential cumulative quarterly dividend in an amount equal to the greater of (a) $3,750 or b) 1,000 times the dividend declared on each share of Common Stock. In the
event of liquidation, the holders of Preferred Stock will receive a preferred liquidation payment equal to the greater of (a) $150,000 per share, plus accrued dividends to the date of distribution whether or not earned or declared, or (b) an
amount per share equal to 1,000 times the aggregate payment to be distributed per share of Common Stock. Each share of Preferred Stock will have 1,000 votes, voting together with the shares of Common Stock. In the event of any merger, consolidation
or other transaction in which shares of Common Stock are exchanged for or changed into other securities, cash and/or other property, each share of Preferred Stock will be entitled to receive 1,000 times the amount and type of consideration received
per share of Common Stock. The rights of the Preferred Stock as to dividends, liquidation and voting, and in the event of mergers and consolidations, are protected by customary anti-dilution provisions. Fractional shares (in integral multiples of
one one-thousandth) of Preferred Stock will be issuable; however, the Company may elect to distribute depositary receipts in lieu of such fractional shares. In lieu of fractional shares other than fractions that are multiples of one one-thousandth
of a share, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the
value of one one-thousandth of a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock.
		
	Rights in Event of Self-Dealing Transaction or Acquisition of Substantial Amount of Common Stock:	 	In the event that an Acquiring Person engages in certain self-dealing transactions with the Company, or becomes a beneficial owner of 15% or more of the outstanding Common Stock
(“Flip-In Events”), a holder of a Right thereafter has the right to purchase, upon payment of the then current Purchase Price, in lieu of one one-thousandth of a share of Preferred Stock per outstanding Right, such number of shares of
Common Stock having a market value at the time of the transaction equal to the Purchase Price divided by one-half the Current Market Price (as defined in the Rights Agreement) of the Common Stock. Notwithstanding the foregoing, Rights held by the
Acquiring Person or any Associate or Affiliate thereof or certain transferees will be null and void and no longer be transferable.
		
		 	Self-dealing transactions are defined to include a consolidation, merger or other combination of an Acquiring Person with the Company in which the Company is the surviving corporation, the
transfer of assets to the Company in exchange for securities of the Company, the acquisition of securities of the Company (other than in a pro rata distribution to all stockholders), the sale, purchase, transfer, distribution, lease, mortgage,
pledge or acquisition of assets by the Acquiring Person to, from or with the Company on other than an arm’s length basis, compensation to an Acquiring Person for services (other than for employment as a regular or part-time employee or director
on a basis consistent with the Company’s past practice), a loan or provision of other financial assistance (except proportionately as a stockholder) to an Acquiring Person or the licensing, sale or other transfer of proprietary technology or
know-how from the Company to the Acquiring Person on terms not approved by the Board of Directors or a reclassification, recapitalization or other transaction with the effect of increasing by more than 1% the Acquiring Person’s proportionate
share of any class of securities of the Company.

  

 C-2 

			
	Rights in Event of
Business Combination:	 	If, following the occurrence of a Flip-In Event, the Company is acquired by any person in a merger or other business combination transaction in which the Common Stock is exchanged or
converted or in which the Company is not the surviving corporation, or 50% or more of its assets or earnings power are sold to any person (“Flip-Over Events”), each holder of a Right (other than an Acquiring Person, or Affiliates or
Associates thereof) shall thereafter have the right to purchase, upon payment of the then current Purchase Price, such number of shares of common stock of the acquiring company having a current market value equal to the Purchase Price divided by
one-half the Current Market Price of such common stock.
		
	Exchange Option:	 	In the event (i) any person or group becomes an Acquiring Person or (ii) any of the types of transactions, acquisitions or other events described above as self-dealing transactions
occur, and prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common Stock, the Board may require all or any portion of the outstanding Rights (other than Rights owned by such Acquiring Person which have
become void) to be exchanged for Common Stock on a pro rata basis, at an exchange ratio of one share of Common Stock or one one-thousandth of a share of Preferred Stock (or of a share of a class or series of the Company’s Preferred Stock having
equivalent rights, preferences and privileges), per Right (subject to adjustment).
		
	Fractional Shares:	 	No fractional shares of Common Stock will be issued upon exercise of the Rights and, in lieu thereof, a payment in cash will be made to the holder of such Rights equal to the same fraction of
the current market value of a share of Common Stock.
		
	Adjustment:	 	The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price of the Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of Rights associated with each share of Common Stock is also subject to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in Common Stock or subdivisions, consolidations or combinations of the Common Stock occurring, in any such case, prior to the Distribution Date.
		
	Rights as Stockholder:	 	The Rights themselves do not entitle the holder thereof to any rights as a stockholder, including, without limitation, voting rights or to receive dividends.
		
	Amendment of Rights:	 	Until the Rights become nonredeemable, the Company may, except with respect to the redemption price, amend the Agreement in any manner. After the Rights become nonredeemable, the Company may
amend the Agreement to cure any ambiguity, to correct or supplement any provision which may be defective or inconsistent with any other provisions, to shorten or lengthen any time period under the Rights Agreement, or to change or supplement
any

  

 C-3 

			
		 	provision in any manner the Company may deem necessary or desirable, provided that no such amendment may adversely affect the interests of the holders of the Rights (other than the Acquiring
Person or its Affiliates or Associates) or cause the Rights to again be redeemable or the Agreement to again be freely amendable.
		
	Independent Director Evaluation:	 	Following the adoption of the Rights Agreement, a committee comprised of independent members of the Company’s Board of Directors shall periodically, and at least every three years,
review the Rights Agreement to determine whether the maintenance of the Rights Agreement continues to be in the best interests of the Company and its stockholders.

 A copy of the Rights Agreement is available, free of charge, from the Company, 34801 Campus
Drive, Fremont, CA 94555, Attention: Secretary. This summary description of the Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, as amended from time to time, which is
incorporated in this summary description by reference. 
  

 C-4

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