Document:

EXHIBIT 10.7

                              CONSULTING AGREEMENT

           This consulting agreement (the "Agreement") is made this day of
August, 2001 between Accufacts Pre-Employment Screening, Inc., with offices
located at 6 Greene Street, New York, NY 10013 (the "Company")and James E.
Patterson residing at _____________ (the "Consultant").

                     WHEREAS, Consultant is agreeable to perform services for
                     the Company;

                     WHEREAS, the Company is desirous of retaining Consultant;
                     and

                     WHEREIN, the parties are desirous of expressing their
rights and responsibilities.

                     NOW THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements herein, each of the parties hereto, intending to
be legally bound, agrees as follows:

1- TERM: This Agreement shall be in effect from the date of execution shown
above for a period to twelve (12) months unless sooner terminated in accordance
with the provisions of this Agreement. The term may be extended beyond that time
subject to acceptance by both parties and established as a formal written
modification to the agreement. Any other revisions to the term of this agreement
shall be in accordance with Section 11.

2 - SCOPE: Consultant agrees to provide consulting services to Company across a
broad spectrum of areas. Consulting services are to include, but are not to be
limited to: investor relations; spearheading the Company's new marketing/program
development efforts; assisting in refining/improving operations of the Company;
providing guidance for new initiatives; and generally advising senior management
across the full spectrum of Company efforts, as appropriate. In the conduct of
this effort, Consultant may prepare written reports/documents at the request of
the Company. In such cases, all reports shall be submitted to Mr. Philip Luizzo,
Chairman and President of the Company with copies provided as directed.

3 - CONSIDERATION: As consideration for the work performed, the Company agrees
to pay Consultant a fixed monthly retainer of three thousand eight hundred
dollars ($3,800.00) over the term of the agreement. Any expenses and
disbursements must be approved in writing by an executive officer of the Company
prior to same being incurred by Consultant.

4 - APPLICABLE BONUS PROVISION: In addition to the consideration cited in
Section 3 above, Consultant will be eligible for bonus consideration at the end
of the Company's 2001 fiscal year and again at the mid-point of the 2002 fiscal
year, provided that the Company must have at least $220,000 in operating income
for the aggregate fiscal year 2001 as computed pursuant to Company's auditor
review for fiscal year 2001. It is further expressly understood and agreed that
Company must derive a minimum of $240,000 in operating income for the first half
of fiscal year 2002 within the same definition as above. Consultant recognizes
that if the foregoing operating income benchmarks are obtained, a bonus
consideration is at the Company's sole discretion. The Company's assessment of
Consultant's efforts, performance and results will be determinative with respect
to any bonus compensation paid to Consultant.

5 - STOCK OPTION PROVISION: Company agrees to grant Consultant certain stock
options. Specifically, options for 140,000 shares of the Company's common stock
at an exercise/"strike" price of $.35 (thirty-five cents) per share. Consultant
will also be granted options to purchase an additional 140,000 shares of the
Company's common stock at an exercise/"strike" price of $.50 (fifty cents) per
share. All options will be granted and vest on a quarterly basis over the
duration of the agreement (i.e. 35,000 options at a strike price of $.35 and
35,000 options at a strike price of $.50 to be granted each quarter). Said
options will include a provision that allows for Consultant to employ a
"cashless exercise" of these options. The term of the options will be for one
and one-half (1 1/2) years from the date of this agreement with the condition
that the options must be exercised within seventy-five (75) days following the
termination without cause of the consulting relationship between the parties.
However, the expiration of the term of this Agreement on the anniversary date
will not affect the original term of the options. Not withstanding the
foregoing, in the event the consulting agreement is terminated for cause, all
options will terminate at the time of termination. Consultant understands that
he is bound by appropriate insider trading regulations in buying and selling
stock of the Company. Additionally, Company agrees to provide cost free
"piggy-back" registration rights for the option shares.

6 - TERMINATION: This Agreement will automatically terminate pursuant to the
provision of Section 1 unless extended in writing by the parties. Furthermore,
either party may terminate the agreement during the term with thirty (30) days
written notice. In the event of any such termination, Consultant is still
eligible for consideration of the next bonus opportunity pursuant to Section 4,
unless such termination is for cause. If termination is for cause, Consultant's
options will lapse immediately at said termination and Consultant will not be
entitled to any further consideration of potential bonus payments if the bonus
period has not ended. Additionally, the parties understand that termination will
affect certain terms and conditions of the stock option agreement as stipulated
herein. Should termination be effected between the parties other than "for
cause," the full provisions of Section 5 shall apply.

7 - CONFIDENTIALITY: Consultant recognizes that certain extremely sensitive and
significant information concerning the Company and its business methods and
practices will become known. All such information is deemed to be proprietary
between parties. Therefore, Consultant agrees that at no time, either directly
or indirectly, will such information be divulged, disclosed, or relayed to any
other party without prior written consent from the executive officer of the
Company.

8 - ORGANIZATIONAL RELATIONSHIP: This agreement shall in no way constitute,
create, or imply a joint venture, partnership, or other formal business
organization. Consultant cannot commit or bind the client in any way without
written consent and approval of an executive officer of the Company.

9 - GOVERNING LAW: This agreement and performance hereunder shall, in all
respects, be governed by the laws of the State of New York.

10 - LIMITATION OF LIABILITY: Neither party hereto shall be liable to the other
for indirect, incidental, consequential, or special damages whatsoever arising
from or related to this agreement except in the case of gross negligence or a
willful violation of the terms stated in this Agreement.

11 - AGREEMENT/MODIFICATIONS: This document constitutes the entire agreement
between parties. Consultant has been afforded the opportunity to have his own
counsel and advisors review this Agreement. Company has been afforded an
opportunity to review this Agreement. No modifications to any provisions of the
agreement shall be binding upon either party hereto unless such modifications
are agreed to in writing, signed by the respective parties.

           The parties hereto hereby execute this agreement, as evidenced by the
signatures below:

          /s/ JAMES E. PATTERSON
BY:        _______________________________     DATE:______________________
                     James E. Patterson

ACCUFACTS PRE-EMPLOYMENT SCREENING, INC.

           /S/ PHILIP LUIZZO
BY:        _______________________________     DATE:______________________
                     Philip LuizzoQuickLinks
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Exhibit 4.1    
  

 
 

RIGHTS AGREEMENT    
  

        RIGHTS AGREEMENT, dated as of September 6, 2002 (the "Agreement"), between PHARMACOPEIA, INC., a Delaware corporation (the "Company"), and AMERICAN
STOCK TRANSFER & TRUST COMPANY, a New York corporation (the "Rights Agent"). 

W I T N E S S E T H 

        WHEREAS,
on September 4, 2002 (the "Rights Dividend Declaration Date"), the Board of Directors of the Company (the "Board of Directors") authorized and declared a dividend
distribution of one right (each, a "Right") for each share of Common Stock, par value $.0001 per share, of the Company (the "Common Stock") outstanding at the Close of Business (as hereinafter
defined) on September 17, 2002 (the "Record Date"), and has authorized (i) the issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p)) for each share of Common Stock of the Company issued between the Record Date (whether originally issued or delivered from the Company's treasury) and the earliest of the
Distribution Date (as defined in Section 3), the Redemption Date and the Final Expiration Date (as such terms are defined in Section 7) and (ii) in certain circumstances as
provided in Section 22, the issuance of one Right with respect to each share of Common Stock that shall become outstanding between the Distribution Date and the earlier of the Redemption Date
and the Final Expiration Date, each Right initially representing the right to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company
(the "Preferred Stock") having the rights, powers and preferences set forth in the form of Certificate of Designation, Preferences and Rights attached as  Exhibit A, upon the terms and subject to
the conditions hereinafter set forth; 

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

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

        (a)  "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of fifteen percent (15%) or more of the shares of the Common Stock then outstanding. Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of
an acquisition of Beneficial Ownership of Common Stock by the Company that, by reducing the number of shares of Common Stock (or securities convertible into or exchangeable for Common Stock)
outstanding, increases the percentage of Common Stock beneficially owned by such Person (together with all Affiliates and Associates of such Person) to fifteen percent (15%) or more of the shares of
Common Stock then outstanding; provided, however, that if any Person shall become the Beneficial Owner of fifteen percent (15%) or more of the shares of
Common Stock then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be an Acquiring Person. Notwithstanding the foregoing, if the Board of Directors determines in good faith that a Person who would otherwise be an Acquiring Person has become
such inadvertently, and such Person divests as promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an Acquiring Person, then such Person shall
not, solely as a result of such inadvertent acquisition, be deemed to be an Acquiring Person for any purpose of this Agreement. 

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

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

 

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

        (i)    that
such Person or any of such Person's Affiliates or Associates, directly or indirectly, owns or has 

        (A)  the
right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether
or not in writing), or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to beneficially own (1) securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (2) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (3) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event, if such Rights were acquired by
such Person or such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 or pursuant to Section 11(a)(i) in connection
with an adjustment made with respect to any of the Rights heretofore specified in this clause (3); or 

        (B)  has
the right to vote or otherwise has "Beneficial Ownership" (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, pursuant to this subparagraph (B), any security as a result of any agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or 

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

provided, however, that nothing in this subsection (d) shall cause a Person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the
date of such acquisition. 

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

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

2

 

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

        (h)  "Common Stock" when used with reference to the Company shall mean the Common Stock, par value $.0001 per share, of the
Company, and when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such Person or, if such Person is a
Subsidiary of another Person, the Person or Persons that ultimately control such first-mentioned Person. 

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

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

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

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

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

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

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

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

        (q)  "Final Expiration Date" shall have the meaning set forth in Section 7(a). 

        (r)  "NASDAQ" shall have the meaning set forth in Section 11(d)(i). 

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

        (t)    "Preferred Stock" shall mean shares of Series A Junior Participating Preferred Stock, par value $.0001 per share,
of the Company, and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any
other series of preferred stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating Preferred Stock. 

        (u)  "Principal Party" shall have the meaning set forth in Section 13(b). 

        (v)  "Purchase Price" shall have the meaning set forth in Section 4(a). 

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

        (x)  "Redemption Date" shall have the meaning set forth in Section 7(a). 

        (y)  "Right" shall have the meaning set forth in the first recital clause at the beginning of this Agreement. 

        (z)  "Right Certificate" shall have the meaning set forth in Section 3(a). 

        (aa) "Rights Agent" shall have the meaning set forth in the introductory paragraph of this Agreement. 

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

        (cc) "Section 11(a)(ii) Event" shall have the meaning set forth in Section 11(a)(ii). 

3

 

        (dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii). 

        (ee) "Section 13 Event" shall have the meaning set forth in Section 13(a). 

        (ff)  "Securities Act' shall have the meaning set forth in Section 9(c). 

        (gg) "Spread" shall have the meaning set forth in Section 11(a)(iii). 

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

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

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

        (kk) "Surviving Corporation" shall have the meaning set forth in Section 11(q). 

        (ll)  "Trading Day" shall have the meaning set forth in Section 11(d)(i). 

        (mm)"Triggering Event" shall mean any Section 11(a)(ii) Event or Section 13 Event. 

        SECTION
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable
upon ten (10) days prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions
of any such co-Rights Agents. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agents
shall be as the Company shall determine. 

        SECTION
3. Issue of Right Certificates. (a) Until the earlier of (i) the Close of Business on the tenth calendar day after
the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), or (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person, and of which the Company will give the
Rights Agent prompt written notice) after the date that a tender or exchange offer by any Person (other than an Exempt Person) is first published or sent or given within the meaning of
Rule 14d-2 of the Exchange Act Regulations, the consummation of which would result in Beneficial Ownership by a Person (other than an Exempt Person) of fifteen percent (15%) or more
of the outstanding Common Stock (including any such date that is after the date of this Agreement and prior to the issuance of the Rights) (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the shares of
Common Stock registered in the names of the holders of the Common Stock thereof (which certificates for Common Stock shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the Rights Agent will send, by first-class mail, postage-prepaid, to each record holder of the shares of Common Stock as of the Close of
Business on the Distribution Date, or, with respect to Common Stock so issued on or after the Distribution Date (unless otherwise provided with respect thereto as aforesaid), to the record holder of
such Common Stock on the date of issuance, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form attached as 

4

 

 Exhibit B (the "Right Certificate"), evidencing one Right for each share of Common Stock so held, subject to adjustments as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(p), at the time of distribution of the Right Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)) so that Right Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights (calculated in accordance with Section 14(a)). As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates. 

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

        (c)  Rights
shall be issued in respect of all shares of Common Stock which are issued (whether originally issued or delivered from the Company's treasury) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, or in certain circumstances as
provided in Section 22, after the Distribution Date but prior to the Final Expiration Date. Certificates representing shares of Common Stock issued after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, or the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend: 

This
certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Pharmacopeia, Inc. (the "Company") and American Stock
Transfer & Trust Company (the "Rights Agent"), dated as of September 6, 2002 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge, promptly following
receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. 

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

        SECTION
4. Form of Right Certificates. (a) The Right Certificates (and the forms of election to purchase shares and of assignment
to be printed on the reverse thereof) shall be substantially in the 

5

 

form attached as Exhibit B, and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon
as the Company may deem appropriate but which do not affect the duties, rights or responsibilities of the Rights Agent and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed
or any securities association on whose interdealer quotation system the Rights may from time to time be authorized for quotation, or to conform to usage. Subject to the provisions of Section 11
and Section 22, the Right Certificates that are issued in respect of Common Stock that were issued and outstanding as of the Record Date shall be dated as of the Record Date, and all Right
Certificates that are issued in respect of other Common Stock shall be dated as of the respective dates of issuance of such Common Stock, and in either case on their faces shall entitle the holders
thereof to purchase such number of one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such purchase price per
one-hundredth
of a share the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. 

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

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

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

        SECTION
5. Countersignature and Registration. (a) The Right Certificates shall be executed on behalf of the Company by its
Chairman of the Board of Directors, its President or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof that shall
be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent, either manually or
by facsimile signature and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued
and delivered by the Company with the same force and effect as though 

6

 

the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date
of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. 

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

        SECTION
6. Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. (a) Subject to the provisions of Section 4(b), Section 7(e), Section 11 and Section 14, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one-hundredths of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Right Certificate or Certificates surrendered then entitles such holder to
purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and
shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged, with the form of assignment and certificate appropriately executed, at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company and the Rights Agent shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e), Section 11 and Section 14, countersign and deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. The Rights Agent shall have no duty or obligation under any Section of this Agreement requiring the payment of taxes or charges unless and until it is
satisfied that all such taxes and/or charges have been paid. 

        (b)  Upon
receipt by the Company and the Rights Agent of evidence satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 

        SECTION
7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e), the registered
holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a)), in whole or in part at any time after the Distribution Date, upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights 

7

 

Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one-hundredths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i) the Close of Business on the tenth anniversary
hereof, or such later date as may be established by the Board of Directors prior to the expiration of the Rights (such date, as it may be extended by the Board of Directors, the ("Final Expiration
Date")), (ii) the time at which the Rights are redeemed as provided in Section 23 (the "Redemption Date"), or (iii) the time at which such Rights are exchanged as provided in
Section 24. 

        (b)  The
Purchase Price for each one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $60.00, and shall be subject
to adjustment from time to time as provided in Sections 11 and 13(a) and shall be payable in lawful money of the United States of America, subject to paragraph (c) below. 

        (c)  Upon
receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate on the reverse side thereof duly executed,
accompanied by payment of the Purchase Price per one-hundredth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax or charge required to be paid by the holder of such Right Certificate in accordance with Section 9(e) (as determined by the Rights Agent), the Rights
Agent shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts representing such number of one-hundredths of a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to
comply with such request, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional interests in shares in accordance with
Section 14, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or, upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Right
Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash or by certified or bank check or money order payable to the
order of the Company. In the event the Company is obligated to issue other securities (including shares of Common Stock) of the Company, or distribute other property pursuant to Section 11(a),
the Company will make all arrangements necessary so that such other securities or other property are available for distribution by the Rights Agent, if and when necessary to comply with this
Agreement. The Company reserves the right to require, prior to the occurrence of a Triggering Event, that upon any exercise of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock would be issued. 

        (d)  In
case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the order of the registered holder of such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 6 and Section 14. 

        (e)  Notwithstanding
anything to the contrary in this Agreement, from and after the first occurrence of any Triggering Event, any Rights beneficially owned by (i) any
Acquiring Person (or 

8

 

any Associate or Affiliate of an Acquiring Person), (ii) a transferee of an Acquiring Person (or any Associate or Affiliate of an Acquiring Person) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or any Associate or Affiliate of an Acquiring Person) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) to holders of equity interests in such Acquiring Person (or of such Associate or Affiliate) or to any Person with whom the Acquiring Person has any agreement, arrangement or
understanding (whether or not in writing) regarding the transferred Rights, or (B) a transfer which the Board of Directors has determined is part of a plan, arrangement or understanding
(whether or not in writing) which has as a primary purpose or effect the avoidance of this Section 7(e), shall be null and void without any further action, and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but shall have no liability to any holder of Rights or any other Person as a result of its failure to make any determination under this
Section 7(e) or such Section 4(b) with respect to any Acquiring Person or its Affiliates, Associates or transferees. 

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

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

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

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

9

 

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

        (c)  The
Company shall use its best efforts to (i) file, as soon as is practicable following the earliest date after the first occurrence of a Triggering Event in
which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(ii) (or Sections 11(a)(iii) and 13), or as
soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities that may be acquired upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which
the Rights are no longer exercisable for such securities, or (B) the earlier of the Redemption Date or the Final Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the various states and other appropriate jurisdictions in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit it to become effective and to take such actions under such other securities or blue sky laws and permit them to become
effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, each time with prompt notice thereof to the Rights Agent. In addition, if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend, with
prompt notice thereof to the Rights Agent, the exercisability of the Rights until such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been obtained or the exercise thereof shall not be permitted
under applicable law, or a registration statement shall not have been declared effective. 

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

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

10

 

one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any
Rights until any such transfer tax or charge shall have been paid (any such transfer tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such transfer tax or charge is due. 

        SECTION
10. Preferred Stock Record Date. Each Person in whose name any certificate for a number of one-hundredths of a share
of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of
such fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes or charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of
the Company are closed or a date on which the exercisability of the Rights is suspended pursuant to Section 9(c), such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, as applicable, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the
Company are open or the next succeeding Business Day on which such suspension is no longer in effect. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate, as such,
shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 

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

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

        (ii)  Subject
to Section 23 hereof and prior to the Final Expiration Date, in the event any Person, at any time after the date of this Agreement is or becomes an
Acquiring Person, then, promptly following the occurrence of such event (a "Section 11(a)(ii) Event"), proper 

11

 

provision shall be made so that each holder of a Right, except as provided below and in Section 7(e), shall thereafter have a right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one-hundredths of a share of Preferred Stock for which a Right was theretofore exercisable, such
number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of the Section 11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence shall thereafter be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by fifty percent (50%) of the Current Per Share Market Price (determined
pursuant to Section 11(d)) of the Common Stock on the date of the occurrence of the Section 11(a)(ii) Event (such number of shares is herein called the "Adjustment Shares");  provided, however, that the Purchase Price and number of Adjustment Shares shall be further adjusted as provided in this Agreement to reflect any event
occurring after the date of such first occurrence. 

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

12

 

subject to Section 7(e), 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 such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect, each time with prompt notice thereof to the Rights Agent. For purposes of this Section 11(a)(iii), the value of each Adjustment Share shall be the
Current Per Share Market Price of the Common Stock on the Distribution Date or the Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent shall
be deemed to equal the Current Per Share Market Price of the Common Stock on such date. 

        (b)  In
case the Company shall fix a record date for the issuance of rights (other than Rights), options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the Preferred Stock ("Equivalent Preferred Stock")) or securities convertible into Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or per share of Equivalent Preferred Stock (or having a conversion price per share, if a security convertible into Preferred Stock or Equivalent Preferred Stock) less than the Current
Per Share Market Price (as determined pursuant to Section 11(d)) of the Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date,
plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such subscription price may be paid in consideration part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed. 

        (c)  In
case the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the Current Per Share Market Price (as determined pursuant to Section 11(d)) of the Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors, whose determination shall be described in 

13

 

a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Preferred Stock, and the denominator of which shall be such Current Per Share Market Price (as determined pursuant to
Section 11(d)) of the Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed. 

        (d)  (i)
For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii), the Current Per Share Market Price of the shares of
Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the twenty (20) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii), the Current Per Share
Market Price of the shares of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the event that the Current Per Share Market Price of the shares of Common Stock is
determined during a period following the announcement by the issuer of such shares of Common Stock of (A) a dividend or distribution on such shares of Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such shares of Common Stock, and
prior to the expiration of twenty (20) Trading Days, or ten (10) Trading Days, as set forth above, after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each such case, the Current Per Share Market Price shall be appropriately adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal
United States national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any United
States national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the United States over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock
are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a United States professional market maker making a market in the shares of Common Stock
selected by the Board of Directors. If on any such date no such market maker is making a market in the shares of Common Stock, the fair value of such shares on such date as determined in good faith by
the Board of Directors shall be used. The term "Trading Day" shall mean a day on which the principal United States national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any United States national securities exchange, a Business Day.
If the shares of Common Stock are not publicly held or not so listed or traded, "Current Per Share Market Price" shall mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 

14

 

        (ii)  For
the purpose of any computation hereunder, the Current Per Share Market Price of the shares of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the Current Per Share Market Price of the shares of Preferred Stock cannot be
determined in the manner provided above or if the shares of Preferred Stock are not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the
Current Per Share Market Price of the shares of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the shares of Common Stock occurring after the date of this Agreement) multiplied by the Current Per Share Market Price of the shares of Common
Stock. If neither the shares of Common Stock nor the shares of Preferred Stock are publicly held or so listed or traded, Current Per Share Market Price of the shares of Preferred Stock shall mean the
fair value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 

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

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

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

        (h)  Unless
the Company shall have exercised its election as provided in Section 11(i), 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-hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one-hundredths of
a share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. 

        (i)    The
Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of
one-hundredths 

15

 

of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of
one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a public announcement, with prompt notice thereof to the Rights Agent of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights on such record date
Right Certificates evidencing, subject to Section 14, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement. 

        (j)    Irrespective
of any adjustment or change in the Purchase Price or the number of one-hundredths of a share of Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per one-hundredth of a share and the number of one-hundredths of
a share which were expressed in the initial Right Certificates issued hereunder. 

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

16

  

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

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

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

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

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

17

 

each share of Common Stock immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. 

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

        SECTION
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 or
Section 13, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement, reasonably detailed, of the facts and computations accounting for
such adjustment and (b) promptly file with the Rights Agent, and with each transfer agent for the shares of Preferred Stock and the Common Stock, a copy of such certificate. The Rights Agent
shall be fully protected in relying on such certificate and on any adjustment contained therein and shall have no duty with respect to and shall not be deemed to have knowledge of any adjustment
unless and until it shall have received such a certificate. 

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

        (i)    each
holder of a Right, except as provided in Section 7(e), shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, 

18

 

non-assessable and freely tradable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of call, rights of
first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence), and (2) dividing that product (which product, following the first occurrence
of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by fifty percent (50%) of the Current Per Share Market Price
(determined pursuant to Section 11(d)(i)) of the shares of Common Stock of such Principal Party on the date of consummation of such Section 13 Event; 

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

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

        (iv)  such
Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and 

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

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

        (b)  "Principal
Party" shall mean: 

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

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

provided, however, that in any such case, (1) if the shares of Common Stock of such Person are
not at such time and have not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the shares of Common Stock of which are and have been so registered, "Principal Party" shall 

19

 

refer to such other Person; (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above shall apply to each
of the chains of ownership having an interest in such
joint venture as if such party were a "Subsidiary" of both or all of such joint ventures and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the total of such interests. 

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

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

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

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

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

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

20

 

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

        (b)  The
Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the Current Per
Share Market Price of a share of Preferred Stock on the day of exercise, determined in accordance with Section 11(d). 

        (c)  Following
the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon the exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised, as herein provided, an amount an amount in cash equal to the same fraction of the current market value of one share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of
Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section 11(d)) for the Trading Day immediately prior to the date of such exercise. 

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

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

21

 

        SECTION
15. Rights of Action. All rights of action in respect of this Agreement, other than rights of action vested in the Rights Agent
under Section 18 of this Agreement, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the shares of
Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the shares of Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the shares of Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder
of any Person subject to this Agreement. 

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

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

        (b)  after
the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully completed and executed; 

        (c)  subject
to Section 6(a) and Section 7(f), the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to
the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be affected by any notice to the contrary; and 

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

        SECTION
17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of one-hundredths of a share of Preferred Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or 

22

 

otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. 

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

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

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

        SECTION
19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or
any Person succeeding to the corporate trust, stock transfer or stockholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Right Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement. 

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

23

 

        SECTION
20. Duties of Rights Agent. The Rights Agent undertakes only the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: 

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

        (b)  Whenever
in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of Current Per Share Market Price) be proved or established by the Company prior to taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization and protection to the Rights Agent for any action taken, suffered or omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate. 

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

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

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

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

        (g)  The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board of
Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions
in connection 

24

 

with its duties, and it shall not be liable for any action taken, suffered or omitted by it in good faith in accordance with instructions of any such officer or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent under this Agreement and the date on or after which such action shall be taken, suffered or such omission shall be effective. The Rights Agent shall not be liable for any
action taken by, suffered by or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be
less than five (5) Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application. 

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

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

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

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

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

25

 

otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after
giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate or certificate for Common Stock, as the case may be, for inspection by the Company), then the holder of record of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a Person organized and doing
business under the laws of the United States or any state of the United States and in good standing, shall be authorized to do business as a banking institution in the United States or any State,
shall be authorized under such laws to exercise the stockholder services business, exercise corporate trust, stock transfer or stockholder services powers, shall be subject to supervision or
examination by federal or state authorities and shall have at the time of its appointment as Rights Agent a combined capital and surplus of at least $100,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and
the Preferred Stock, and mail a notice thereof in writing to the holders of record of the Right Certificates (or certificates for Common Stock prior to the Distribution Date). Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be. 

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

        SECTION
23. Redemption and Termination. (a) The Company may, at its option, by action of a majority of the Board of Directors, at
any time prior to the earlier of (i) the Close of Business on the tenth calendar day following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the
Record Date, the Close of Business on the tenth calendar day following the Record Date), or (ii) the Close of Business on the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.0001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The Company may, at its option, by action of a majority of the Board of Directors, pay the Redemption Price either in shares of 

26

 

Common Stock (based on the Current Per Share Market Price of the Common Stock, determined in accordance with Section 11(d), at the time of redemption), cash (whether in United States dollars
or in such other currency or currencies as the Board of Directors may determine) or any other form of consideration deemed appropriate by the Board of Directors. Notwithstanding the foregoing, in the
event payment of the Redemption Price to a holder of Rights would result in the payment of an amount not equal to $.01 or an integral multiple of $.01, the amount to be paid shall be rounded upward to
the next $.01. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder has expired. 

        (b)  Immediately
upon the action of the Board of Directors ordering the redemption of the Rights pursuant to subsection (a) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so
held. Within ten (10) days after action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the shares of Common Stock. Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the Redemption Price will be made and in the event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7(e)) held by each holder of
Rights. 

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

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

27

 

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

        (d)  In
the event that there shall not be sufficient shares of Preferred Stock or Common Stock issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional shares of Preferred Stock or Common Stock for
issuance upon exchange of the Rights or shall take such other action specified in Section 11(a)(iii). 

        (e)  The
Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of
such fractional shares of Common Stock, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable,
an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For the purposes
of this subsection (e), the current market value of a whole share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to the second and third sentences of
Section 11(d)(i)) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. 

        SECTION
25. Notice of Certain Events. (a) In case the Company shall propose, at any time after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders of shares of Preferred Stock or to make any other distribution to the holders of shares of Preferred Stock (other than a
regular quarterly cash dividend), or (ii) to offer to the holders of shares of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its shares of Preferred Stock (other than a reclassification involving only
the subdivision of outstanding shares of Preferred Stock), or (iv) to effect any share exchange, consolidation or merger into or with any other Person (other than a Subsidiary of the Company in
a transaction that complies with Section 11(o)), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of fifty percent (50%) or more of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o)) or (v) to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right Certificate, to the extent feasible and in accordance with Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier, provided, however, that no such notice shall be required
pursuant to this Section 25 if any Subsidiary of the Company effects a consolidation or merger with or into, or effects a sale or transfer of assets or earning power to, any other Subsidiary of
the Company. 

        (b)  In
case a Triggering Event shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to the Rights Agent and to each
holder of a Right Certificate, 

28

 

to the extent feasible and in accordance with Section 26, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13, and (ii) all references in the preceding paragraph to shares of Preferred Stock shall be deemed thereafter to refer to shares of Common
Stock and/or, if appropriate, other securities. 

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

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

Pharmacopeia, Inc.

CN 5350

Princeton, NJ 08543-5350

Attention: General Counsel

Facsimile No.: (609) 452-3655 

with
a copy to: 

Dechert

Princeton Pike Corporate Center

P.O. Box 5218

Princeton, NJ 08543-5218

Attention:    James J. Marino, Esquire

Facsimile No.:  (609) 620-3259 

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

American
Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

Attention: Corporate Trust Department

Facsimile No.: (718) 236-4588 

copy
to: 

American
Stock Transfer & Trust Company

6201 15th Avenue, Third Floor

Brooklyn, New York 11219

Attention:    H.J. Lemmer, Esq.

Facsimile No.: (718) 331-1852 

Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Right Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage-prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company. 

        SECTION
27. Supplements and Amendments. Prior to the earlier of (i) the Distribution Date or (ii) the occurrence of a
Triggering Event, and subject to the penultimate sentence of this Section 27, 

29

 

the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement (including supplements or amendments that may be deemed to affect the
interests of the holders of Right Certificates adversely) without the approval of any holders of certificates representing shares of Common Stock and associated Rights. From and after the earlier of
(i) the Distribution Date or (ii) the occurrence of a Triggering Event, and subject to the penultimate sentence, the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Right Certificates (x) in any manner that will not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of any such Acquiring Person), (y) to cure any ambiguity or to correct or supplement any provision contained herein which, in the
good faith determination of a majority of the Board of Directors, may be defective or inconsistent with the other provisions contained herein or (z) to shorten or lengthen any time period
hereunder; provided, however, that from and after the earlier of (i) the Distribution Date or
(ii) the occurrence of a Triggering Event, this Agreement shall not be supplemented or amended to (x) shorten the Final Expiration Date or (y) lengthen (1) a time period
relating to when the Rights may be redeemed, or to modify the ability (or inability) of the Board of Directors to redeem the Rights, in either case at such time as the Rights are not then redeemable
or (2) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or, the benefits to, the holders of Rights (other than an
Acquiring Person or any Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27 (and such supplement or amendment does not change or increase the Rights Agent's duties, liabilities, rights or obligations), the
Rights Agent shall execute such supplement or amendment. Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made that changes the
(i) Redemption Price, or (ii) the number of one-hundredths of a share of Preferred Stock for which a Right is exercisable, and no such supplement or amendment that changes
the rights, duties, liabilities or obligations of the Rights Agent under this Agreement shall be effective without the execution of such supplement or amendment by the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. 

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

        SECTION
29. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as in effect on the date hereof. Except as otherwise
specifically provided herein, the Board of Directors shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board
of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions
of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement and any determination as to whether actions of any Person shall be such as to cause such Person to beneficially own shares held by another Person). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board of Directors or any of the
directors on the Board of Directors to any liability to the holders of the Rights. 

30

 

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

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

        SECTION
32. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely
within such State; provided, however, that all provisions regarding the rights, duties and obligations
of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State. 

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

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

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

	 	 	PHARMACOPEIA, INC.
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:

Title:	 	 
	

 	
 	

AMERICAN STOCK TRANSFER & TRUST

COMPANY, as Rights Agent
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:

Title:

	 	 

31

  

 
 

Exhibit A    
  

 
  CERTIFICATE OF DESIGNATION, PREFERENCES
  AND RIGHTS OF SERIES A JUNIOR
  PARTICIPATING PREFERRED STOCK
  
  of
  
  PHARMACOPEIA, INC.    
  

Pursuant
to Section 151 of the General Corporation Law

of the State of Delaware 

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

        That
pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the Corporation (the "Restated Certificate of Incorporation"), the
Board of Directors of the Corporation on September 4, 2002 adopted the following resolution creating a series of 400,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock: 

        RESOLVED,
that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Restated Certificate of Incorporation, a series of
Preferred Stock of the Corporation, par value $.0001 per share, be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating,
optional and other
special rights of the shares of such series, and the qualifications, limitations or restrictions thereof, are as follows: 

        SECTION
1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock"
and the number of shares constituting such series shall be 400,000. Such number of shares may be increased or decreased by resolution of the Board prior to issuance; PROVIDED, that no decrease shall
reduce the number of shares of Series A Junior Participating Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Junior Participating Preferred
Stock. 

        SECTION
2. Dividends and Distributions.

        (A)  Subject
to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, if any, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock, par value $.0001 per share, of the Corporation (the "Common Stock") or a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of 

A-1

 

any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after September 4, 2002 (the "Rights Declaration Date")
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on the Series A Junior Participating Preferred Stock payable in shares of Series A Junior Participating Preferred Stock,
(ii) subdivide the outstanding Series A Junior Participating Preferred Stock, or (iii) combine the outstanding Series A Junior Participating Preferred Stock into a smaller
number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under
clause (b) of the first sentence of this Section 2(A) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares
of Series A Junior Participating Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Junior
Participating Preferred Stock outstanding immediately after such event. 

        (B)  The
Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. 

        (C)  Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior
to the date fixed for the payment thereof. 

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

        (A)  Subject
to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100
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 

A-2

 

into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any
dividend on the Series A Junior Participating Preferred Stock payable in shares of Series A Junior Participating Preferred Stock, (ii) subdivide the outstanding Series A
Junior Participating Preferred Stock, or (iii) combine the outstanding Series A Junior Participating Preferred Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Series A Junior Participating Preferred Stock that were outstanding immediately prior to such event and the denominator of which is
the number of shares of Series A Junior Participating Preferred Stock outstanding immediately after such event. 

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

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

        SECTION
4. Certain Restrictions.

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

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

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

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

        (iv)  purchase
or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and 

A-3

 

other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. 

        (B)  The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the
Corporation could, under Paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. 

        SECTION
5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon 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, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. 

        SECTION
6. Liquidation, Dissolution or Winding Up.

        (A)  Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of
Series A Junior Participating Preferred Stock shall have received an amount equal to $1 per share of Series A Participating Preferred Stock, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) one hundred (100) (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred
Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to
such Series A Junior Participating Preferred Stock and Common Stock, on a per share basis, respectively. 

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

        (C)  In
the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the 

A-4

 

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

        SECTION
7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event
the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare or pay any dividend on the Series A Junior Participating
Preferred Stock payable in shares of Series A Junior Participating Preferred Stock, (ii) subdivide the outstanding Series A Junior Participating Preferred Stock, or
(iii) combine the outstanding Series A Junior Participating Preferred Stock into a smaller number of shares, then in each such case the amount set forth in the first sentence of this
Section 7 with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Series A Junior Participating Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of
Series A Junior Participating Preferred Stock outstanding immediately after such event. 

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

        SECTION
9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. 

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

        SECTION
11. Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders
of Series A Junior Participating Preferred Stock. 

        [Remainder of this page intentionally left blank] 

A-5

 

        IN
WITNESS WHEREOF, I have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 10th day of September, 2002. 

	 	 	PHARMACOPEIA, INC.
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:

Title:

	 	 

A-6

  

 
 

Exhibit B    
  

[Form
of Right Certificate] 

	Certificate No. R-	 	                         Rights

NOT EXERCISABLE AFTER SEPTEMBER 4, 2012 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]* 

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

Right
Certificate

PHARMACOPEIA, 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 September 6, 2002 (the "Rights Agreement"), between PHARMACOPEIA, INC., a Delaware
corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 PM (New York, New York time) on September 4, 2012, at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully-paid, nonassessable share of Series A Junior Participating Preferred Stock (the "Preferred Stock") of the Company, par value $.0001
per share, (or in certain circumstances, cash, property or other securities of the Company), at a purchase price of $60.00 per one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election to Purchase set forth on the reverse hereof and the Certificate contained therein duly executed. The Purchase Price shall
be paid in cash. 

        The
number of Rights evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of September 17, 2002, based on the Preferred Stock as constituted
at such date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Rights Agreement. 

        As
provided in the Rights Agreement, the Purchase Price and the number of shares of Preferred Stock or other securities that may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events (as such term is defined in the Rights Agreement). The Company
reserves the right to require, prior to the occurrence of a Triggering Event, that a number of Rights be exercised so that only whole shares of Preferred Stock will be issued. 

B-1

 

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

        This
Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which the Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Right Agreement. 

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

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

        Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may, but are not required to, be redeemed by the Company at a redemption price of $.0001 per
Right, payable in shares of Common Stock, cash or any other form of consideration deemed appropriate by the Board of Directors at any time prior to the earlier of (i) the Close of Business on
the tenth calendar day following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the Close of Business on the tenth calendar day following
the Record Date), or (ii) the Close of Business on the Final Expiration Date. In addition, the Rights may be exchanged at the Company's option, in whole or in part, for shares of Common Stock
in the manner provided in the Rights Agreement, or shares of preferred stock of the Company having substantially the same value and economic rights as such shares. Immediately upon the action of a
majority of the Board of Directors of the Company authorizing any such exchange, and without any further action or any notice, the Rights (other than Rights which are not subject to such exchange)
will terminate and the Rights will only enable holders to receive the shares issuable upon such exchange. 

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

        No
holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock or of any other
securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate 

B-2

 

action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. 

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

B-3

 

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

Dated
as of                        , 2002 

	 	 	PHARMACOPEIA, INC.
	

 	
 	

By	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:

Title:

	 	 

Countersigned:

AMERICAN
STOCK TRANSFER & TRUST COMPANY,

as Rights Agent 

	By:	 	 	 	 
	 	 	
 Authorized Signature	 	 

B-4

 

[Form of Reverse Side of Right Certificate] 

FORM OF ASSIGNMENT 

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.) 

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

	
 (Please print name and address of transferee)
	

 (Please insert social security or other

identifying number of the transferee)

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

	Dated:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 Signature

Signature Guaranteed: _____________________ 

        Signatures
must be guaranteed by a member firm of a registered United States 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. 

B-5

 
 
 

CERTIFICATE    
  

        The
undersigned hereby certifies by checking the appropriate boxes that: 

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

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

	Dated:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 Signature

Signature Guaranteed: _____________________ 

        Signatures
must be guaranteed by a member firm of a registered United States 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. 

 
 

NOTICE    
  

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

 
 

WARNING    
  

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

B-6

 
 
 

FORM OF ELECTION TO PURCHASE    
  

        (To be executed if the registered holder desires to

exercise the Right Certificate.) 

To:
PHARMACOPEIA, INC. 

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

	
 (Please print name and address)
	

 (Please insert social security or other

identifying number)

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

	
 (Please print name and address)
	

 (Please insert social security or other

identifying number)

	Dated:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 Signature

Signature Guaranteed: _____________________ 

        Signatures
must be guaranteed by a member firm of a registered United States 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. 

B-7

 
 
 

CERTIFICATE    
  

        The undersigned hereby certifies by checking the appropriate boxes that: 

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

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

	Dated:	 	 	 	 
	 	 	
	 	 
	

 	
 	

 	
 	

 Signature

Signature Guaranteed: _____________________ 

        Signatures
must be guaranteed by a member firm of a registered United States 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. 

 
 

NOTICE    
  

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

 
 

WARNING    
  

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

B-8

QuickLinks

Exhibit 4.1

RIGHTS AGREEMENT

Exhibit A

CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK of PHARMACOPEIA, INC.

Exhibit B

CERTIFICATE

NOTICE

WARNING

FORM OF ELECTION TO PURCHASE

CERTIFICATE

NOTICE

WARNING

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