Document:

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                                PMR CORPORATION

                                      AND

                           STOCKTRANS, INC., Trustee

                                      AND

                         FRED FURMAN, as Representative

                            CONTINGENT VALUE RIGHTS
                                   AGREEMENT

                           Dated as of August 2, 2002

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                               TABLE OF CONTENTS

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PARTIES...........................................................................................................1

RECITALS..........................................................................................................1

                           ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

   Section 101.         Definitions...............................................................................1
   Section 102.         Compliance Certificates and Opinions......................................................4
   Section 103.         Form of Documents Delivered to Trustee....................................................5
   Section 104.         Acts of Holders...........................................................................5
   Section 105.         Notices, etc., to Trustee and Company.....................................................6
   Section 106.         Notice to Holders; Waiver.................................................................6
   Section 107.         Effect of Headings and Table of Contents..................................................7
   Section 108.         Successors and Assigns....................................................................7
   Section 109.         Benefits of Agreement.....................................................................7
   Section 110.         Governing Law.............................................................................7
   Section 111.         Legal Holidays............................................................................7
   Section 112.         Separability Clause.......................................................................7

                                                      ARTICLE TWO CVR FORMS

   Section 201.         Forms Generally...........................................................................8
   Section 202.         Form of Face of CVR.......................................................................8
   Section 203.         Form of Reverse of CVR....................................................................9
   Section 204.         Form of Trustee's Certificate of Authentication..........................................11

                                                     ARTICLE THREE THE CVRs

   Section 301.         Title and Terms..........................................................................11
   Section 302.         Registrable Form.........................................................................14
   Section 303.         Execution, Authentication, Delivery and Dating...........................................14
   Section 304.         Temporary CVRs...........................................................................15
   Section 305.         Registration, Registration of Transfer and Exchange......................................15
   Section 306.         Mutilated, Destroyed, Lost and Stolen CVRs...............................................16
   Section 307.         Presentation of CVR Certificate..........................................................16
   Section 308.         Persons Deemed Owners....................................................................17
   Section 309.         Cancellation.............................................................................17

                                                    ARTICLE FOUR THE TRUSTEE

   Section 401.         Certain Duties and Responsibilities......................................................17
   Section 402.         Certain Rights of Trustee................................................................18
   Section 403.         Not Responsible for Recitals or Issuance of CVRs.........................................20
   Section 404.         May Hold CVRs............................................................................20
   Section 405.         Money Held in Trust......................................................................20
   Section 406.         Compensation, Reimbursement and Indemnification of the Trustee...........................20
   Section 407.         Resignation and Removal; Appointment of Successor........................................21
   Section 408.         Acceptance of Appointment by Successor...................................................22
   Section 409.         Merger, Conversion, Consolidation or Succession to Business..............................22
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Note:    This table of contents shall not, for any purpose, be deemed to be a
         part of this Agreement.

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<TABLE>
<S>                                                                                                              <C>
                                                ARTICLE FIVE THE REPRESENTATIVE

   Section 501.         Certain Duties and Responsibilities......................................................22
   Section 502.         Certain Rights of Representative.........................................................23
   Section 503.         Not Responsible for Recitals or Issuance of CVRs.........................................23
   Section 504.         Compensation, Reimbursement and Indemnification of the Representative....................24
   Section 505.         Resignation and Removal; Appointment of Successor........................................24
   Section 506.         Acceptance of Appointment by Successor...................................................25

                                ARTICLE SIX HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

   Section 601.         Company to Furnish Trustee Names and Addresses of Holders................................26
   Section 602.         Preservation of Information Communications to Holders....................................26
   Section 603.         Reports by Company.......................................................................27

                                                   ARTICLE SEVEN AMENDMENTS

   Section 701.         Amendments Without Consent of Holders....................................................28
   Section 702.         Amendments with Consent of Holders.......................................................28
   Section 703.         Execution of Amendments..................................................................29
   Section 704.         Effect of Amendments.....................................................................29
   Section 705.         Reference in CVRs to Amendments..........................................................29

                                                    ARTICLE EIGHT COVENANTS

   Section 801.         Payment of Amounts, if Any, to Holders...................................................30
   Section 802.         Maintenance of Office or Agency..........................................................30
   Section 803.         Money for CVR Payments to Be Held in Trust...............................................30
   Section 804.         Written Statement to Trustee.............................................................31

                             ARTICLE NINE REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT

   Section 901.         Event of Default Defined; Acceleration of Maturity; Waiver of Default....................31
   Section 902.         Collection of indebtedness by Trustee; Trustee may Prove Debt............................33
   Section 903.         Application of Proceeds..................................................................34
   Section 904.         Suits for Enforcement....................................................................35
   Section 905.         Restoration of Rights on Abandonment of Proceedings......................................35
   Section 906.         Limitations on Suits by Holders..........................................................35
   Section 907.         Unconditional Right of Holders to Institute Certain Suits................................36
   Section 908.         Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default..................36
   Section 909.         Control by Holders.......................................................................36
   Section 910.         Waiver of Past Defaults..................................................................37
   Section 911.         Trustee to Give Notice of Default, but May Withhold in Certain Circumstances.............37
   Section 912.         Right of Court to Require Filing of Undertaking to Pay Costs.............................37

                                      ARTICLE TEN CONSOLIDATION, MERGER, SALE OR CONVEYANCE

   Section 1001.        Company May Consolidate, Etc.............................................................38
   Section 1002.        Successor Substituted....................................................................38
   Section 1003.        Opinion of Counsel to Trustee............................................................39
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         CONTINGENT VALUE RIGHTS AGREEMENT, dated as of August 2, 2002 (this
"Agreement"), between PMR CORPORATION, a Delaware corporation (hereinafter
called the "Company"), StockTrans, Inc., trustee; hereinafter called the
"Trustee"), and Fred Furman (hereinafter called the "Representative").

                            RECITALS OF THE COMPANY

         WHEREAS, the Company has duly authorized the creation of an issue of
contingent value rights (hereinafter called the "CVRs"), of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Agreement;

         WHEREAS, the Company has entered into an Agreement and Plan of Merger
dated as of May 6, 2002, as amended (the "Merger Agreement"), among the
Company, PMR Acquisition Corporation, a Delaware corporation (the "Merger
Sub"), and Psychiatric Solutions, Inc., a Delaware corporation ("Target");

         WHEREAS, the Merger Agreement permits the Company to issue the CVRs to
the holders of the Company's common stock, par value $0.01 per share (the
"Company Common Stock"), prior to the effective time of the merger of Merger
Sub with and into Target (the "Effective Time"); and

         WHEREAS, all things necessary have been done to make the CVRs, when
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company and to make this Agreement a valid agreement of the
Company, in accordance with their and its terms.

         NOW, THEREFORE, for and in consideration of the premises and the
consummation of the transactions referred to above, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the CVRs,
as follows:

                                  ARTICLE ONE

            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

         Section 101.      Definitions.

         (a)      For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

                  (i)      the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as
         the singular;

                  (ii)     all accounting terms used herein and not expressly
         defined shall have the meanings assigned to such terms in accordance
         with generally accepted accounting principles, and the term "generally
         accepted accounting principles" means such accounting principles as
         are generally accepted in the United States at the time of any
         computation; and

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                  (iii)    the words "herein'", "hereof" and "hereunder" and
         other words of similar import refer to this Agreement as a whole and
         not to any particular Article, Section or other subdivision.

         (b)      Certain terms, used principally in Article Four, are defined
in that Article.

         (c)      The following terms shall have the meanings ascribed to them
as follows:

         "Act", when used with respect to any Holder, has the meaning specified
in Section 104.

         "Affiliate" means a person that, directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person.

         "Agreement" means this instrument as originally executed and as it may
from time to time be supplemented or amended pursuant to the applicable
provisions hereof.

         "Authorized Newspaper" means The Wall Street Journal (Eastern
Edition), or if The Wall Street Journal (Eastern Edition) shall cease to be
published, or, if the publication or general circulation of The Wall Street
Journal (Eastern Edition) shall be suspended for whatever reason, such other
English language newspaper as is selected by the Company with general
circulation in The City of New York, New York.

         "Board of Directors" means the board of directors of the Company.

         "Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

         "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York or in the State of
the principal office of the Trustee are authorized or obligated by law or
executive order to remain closed.

         "Cash Equivalents" has the meaning set forth in the Merger Agreement.

         "Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act.

         "Company" means the Person named as the "Company" in the first
paragraph of this instrument, until a successor Person shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Company" shall mean such successor Person.

         "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by the chairman of the Board of Directors,
the president, any vice president, the controller, the treasurer, the secretary
or any assistant secretary, and delivered to the Trustee.

         "Control" (including the terms "controlled", "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to

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direct or cause the direction of the management or policies of a person,
whether through the ownership of stock or as trustee or executor, by contract
or otherwise.

         "CVR Certificate" means a certificate representing any of the CVRs.

         "CVR Payment Amount" means any Excess Cash Equivalents Payment Amount
or Legacy A/R Payment Amount.

         "Default Interest Rate" means 8% per annum.

         "Effective Time" has the meaning set forth in the Preamble.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Holder" means a Person in whose name a CVR is registered in the
Security Register.

         "Officer's Certificate" means a certificate signed by the chairman of
the Board of Directors, the president, any vice president, the controller, the
treasurer, the secretary or any assistant secretary of the Company in his or
her capacity as such an officer, and delivered to the Trustee.

         "Opinion of Counsel" means a written opinion of counsel, who may be
General Counsel for the Company, and who shall be reasonably acceptable to the
Trustee.

         "Outstanding", when used with respect to CVRs means, as of the date of
determination, all CVRs theretofore authenticated and delivered under this
Agreement, except:

                  (a)      CVRs theretofore cancelled by the Trustee or
         delivered to the Trustee for cancellation;

                  (b)      From and after the Payment Date, CVRs, or portions
         thereof, for whose payment cash in the necessary amount has been
         theretofore deposited with the Trustee or any Paying Agent (other than
         the Company) in trust or set aside and segregated in trust by the
         Company (if the Company shall act as its own Paying Agent) for the
         Holders of such CVRs; and

                  (c)      CVRs in exchange for or in lieu of which other CVRs
         have been authenticated and delivered pursuant to this Agreement,
         other than any such CVRs in respect of which there shall have been
         presented to the Trustee proof satisfactory to it that such CVRs are
         held by a bona fide purchaser in whose hands the CVRs are valid
         obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
Outstanding CVRs have given any request, demand, direction, consent or waiver
hereunder, CVRs owned by the Company or any other obligor upon the CVRs or any
affiliate of the Company or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, direction, consent or
waiver, only CVRs which the Trustee knows to be so owned shall be so
disregarded.

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         "Paying Agent" means any Person authorized by the Company to pay the
amount determined pursuant to Section 301, if any, on any CVRs on behalf of the
Company, which shall initially be the Trustee.

         "Payment Date" means an Excess Cash Equivalents Payment Date or Legacy
A/R Payment Date, as the case may be.

         "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.

         "Representative" means the Person named as the "Representative" in the
first paragraph of this Agreement, until a successor Representative shall have
become such pursuant to the applicable provisions of this Agreement, and
thereafter "Representative" shall mean such successor Representative (except to
the extent specified in Section 505(c)).

         "Responsible Officer", when used with respect to the Trustee, means
any officer assigned to the Trustee Office and also means, with respect to any
particular corporate trust matter, any other officer of the Trustee to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.

         "Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.

         "Surviving Person" has the meaning set forth in Section 901.

         "Trustee" means the Person named as the "Trustee" in the first
paragraph of this Agreement, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Trustee" shall mean such successor Trustee.

         "Trustee Office" means the office of the Trustee, which office at the
date of execution of this Agreement is located at 44 West Lancaster Avenue,
Ardmore, Pennsylvania 19003.

         "vice president", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title of "vice president".

         Section 102.      Compliance Certificates and Opinions.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Agreement, the Company shall furnish to
the Trustee an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Agreement (including any covenants, compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.

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         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include, at a
minimum, a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

         Section 103.      Form of Documents Delivered to Trustee.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

         Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.

         Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as
the case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous. Any certificate or
opinion of any independent firm of public accountants filed with the Trustee
shall contain a statement that such firm is independent.

         Where any Person is required to take, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

         Section 104.      Acts of Holders.

         (a)      Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and the Representative and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and (subject to Section 401)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

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         (b)      The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.

         (c)      The ownership of CVRs shall be proved by the Security
Register.

         (d)      At any time prior to (but not after) the evidencing to the
Trustee, as provided in this Section 104, of the taking of any action by the
Holders of the CVRs specified in this Agreement in connection with such action,
any Holder of a CVR the serial number of which is shown by the evidence to be
included among the serial numbers of the CVRs the Holders of which have
consented to such action may, by filing written notice at the Trustee Office
and upon proof of holding as provided in this Section 104, revoke such action
so far as concerns such CVR. Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder or any CVR shall bind
every future Holder of the same CVR or the Holder of every CVR issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the Trustee, any
Paying Agent or the Company in reliance thereon, whether or not notation of
such action is made upon such CVR.

         Section 105.      Notices, etc., to Trustee and Company.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with:

                  (a)      the Trustee by any Holder or by the Company shall be
         sufficient for every purpose hereunder if made, given, furnished or
         filed, in writing, to or with the Trustee at its Trustee Office,
         Attention: Jonathan Miller; or

                  (b)      the Representative by any Holder, the Company or the
         Trustee shall be sufficient for every purpose hereunder if in writing
         and mailed, first-class postage prepaid to the Representative
         addressed to him at 3858 Modena Place, San Diego, California 92130, or
         at any other address previously furnished in writing to the Trustee by
         the Representative; or

                  (c)      the Company by the Trustee or by any Holder shall be
         sufficient for every purpose hereunder if in writing and mailed,
         first-class postage prepaid, to the Company addressed to it at 113
         Seaboard Lane, Suite C-100, Franklin, Tennessee 37067, Attention:
         Chief Executive Officer, or at any other address previously furnished
         in writing to the Trustee by the Company.

         Section 106.      Notice to Holders; Waiver.

         Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice, in any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the

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Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.

         In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Agreement, then any method of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.

         Section 107.      Effect of Headings and Table of Contents.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

         Section 108.      Successors and Assigns.

         All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.

         Section 109.      Benefits of Agreement.

         Nothing in this Agreement or in the CVRs, express or implied, shall
give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Agreement or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders.

         Section 110.      Governing Law.

         This Agreement and the CVRs shall be governed by and construed in
accordance with the laws of the State of New York.

         Section 111.      Legal Holidays.

         In the event that a Payment Date shall not be a Business Day, then
(notwithstanding any provision of this Agreement or the CVRs to the contrary)
any payment required to be made in respect of the CVRs on such date need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the applicable Payment Date.

         Section 112.      Separability Clause.

         In case any provision in this Agreement or in the CVRs shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

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                                  ARTICLE TWO

                                   CVR FORMS

         Section 201.      Forms Generally.

         The CVRs and the Trustee's certificate of authentication shall be in
substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may be
required by law or any rule or regulation pursuant thereto, all as may be
determined by officers executing such CVRs, as evidenced by their execution of
the CVRs. Any portion of the text of any CVR may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the CVR.

         The definitive CVRs shall be printed, lithographed, typewritten, or
engraved on steel engraved borders or otherwise produced by any combination of
these methods or may be produced in any other manner as determined by the
officers executing such CVRs, as evidenced by their execution of such CVRs.

         Section 202.      Form of Face of CVR.

                                PMR CORPORATION

No.______                     Certificate for _________ Contingent Value Rights

         This certifies that __________________________________________________
or registered assigns (the "Holder"), is the registered holder of the number of
Contingent Value Rights ("CVRs") set forth above. Each CVR entitles the Holder,
subject to the provisions contained herein and in the Agreement referred to on
the reverse hereof, to one or more payments from PMR Corporation, a Delaware
corporation (the "Company"), in an amount and in the form determined pursuant
to the provisions set forth on the reverse hereof and as more fully described
in the Agreement. Such payments shall be made on the applicable Payment Date as
defined in the Agreement referred to on the reverse hereof.

         Payment of any amounts pursuant to this CVR Certificate shall be made
only upon presentation of this CVR Certificate by the Holder hereof, at the
office or agency of the Trustee in Ardmore, Pennsylvania, or at any other
office or agency maintained by the Company for such purpose in such coin or
currency of the United States of America as at the time is legal tender for the
payment of public and private debts; provided, however, the Company may pay
such amounts by its check payable in such money mailed to the Holders at their
respective addresses listed in the Security Register. Trustee has been
appointed as Paying Agent in Ardmore, Pennsylvania.

         Reference is hereby made to the further provisions of this CVR
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

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         Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this CVR
Certificate shall not be entitled to any benefit under the Agreement or be
valid or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:                                       PMR CORPORATION

                                             By:
                                                -------------------------------

Attest:

----------------------------------
Authorized Signature

         Section 203.      Form of Reverse of CVR.

         This CVR Certificate is issued under and in accordance with the
Contingent Value Rights Agreement, dated as of August 2, 2002 (the
"Agreement"), between the Company, the Trustee and the Representative, and is
subject to the terms and provisions contained in the Agreement, all of which
terms and provisions the Holder of this CVR Certificate consents by acceptance
hereof. The Agreement is hereby incorporated herein by reference and made a
part hereof. Reference is hereby made to the Agreement for a full statement of
the respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee, the Representative and the
Holders of the CVRs. Copies of the Agreement can be obtained by contacting the
Trustee.

         The CVRs shall not be binding and enforceable obligations of the
Company until the Effective Time (as defined in the Agreement). Subject to the
provisions of the Agreement, at and after the Effective Time, any CVRs
previously issued in accordance with the Agreement and outstanding, and any
CVRs issued after the Effective Time in accordance with the Agreement, shall be
the valid and binding obligations of the Company.

         The Company shall pay to the Holder hereof on each applicable Payment
Date, for each CVR represented by this CVR Certificate, the applicable CVR
Payment Amount (as defined in the Agreement).

         Any CVR Payment Amount shall be payable by the Company in such coin or
currency of the United States of America as at the time is legal tender for the
payment of public and private debts; provided, however, the Company may pay
such amounts by its check payable in such money.

         If an Event of Default occurs and is continuing, either the Trustee or
the Holders holding an aggregate of at least 25% of the outstanding CVRs, by
notice to the Company and the Representative (and to the Trustee if given by
the Holders), may (but are not obligated to) declare the CVRs due and payable,
and upon such declaration, the Company shall pay to the Holder, in cash, for
each CVR held by the Holder, the full amount of any CVR Payment Amount

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then due and payable with interest at the Default Interest Rate from the
applicable Payment Date through the date payment is made or duly provided for.
Notwithstanding any provision of the Agreement or of this CVR Certificate to
the contrary, other than in the case of interest on a CVR Payment Amount
pursuant to the preceding sentence, no interest shall accrue on any amounts
payable on the CVRs to the Holder.

         "Authorized Newspaper" means The Wall Street Journal (Eastern
Edition), or if The Wall Street Journal (Eastern Edition) shall cease to be
published, or, if the publication or general circulation of The Wall Street
Journal (Eastern Edition) shall be suspended for whatever reason, such other
English language newspaper as is selected by the Company with general
circulation in The City of New York, New York.

         The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of CVRs under the Agreement at any time
by the Company, the Representative and the Trustee with the consent of the
holders of a majority of the CVRs at the time outstanding.

         No reference herein to the Agreement and no provision of this CVR
Certificate or of the Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay any amounts determined
pursuant to the terms hereof and of the Agreement at the times, place, and
amount, and in the cash or securities of the Company, herein prescribed.

         As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of the CVRs represented by this CVR Certificate
is registerable on the Security Register of the Company, upon surrender of this
CVR Certificate for registration of transfer at the office of the Trustee
maintained for such purpose in Ardmore, Pennsylvania duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new CVR
Certificates, for the same amount of CVRs, will be issued to the designated
transferee or transferees. The Company hereby initially designates the office
of StockTrans, Inc., at 44 West Lancaster Avenue, Ardmore, Pennsylvania 19003,
as the office for registration of transfer of this CVR Certificate.

         As provided in the Agreement and subject to certain limitations
therein set forth, this CVR Certificate is exchangeable for one or more CVR
Certificates representing the same number of CVRs as represented by this CVR
Certificate as requested by the Holder surrendering the same.

         No service charge will be made for any registration of transfer or
exchange of CVRs, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

         Prior to the time of due presentment of this CVR Certificate for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this CVR Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.

         All capitalized terms used in this CVR Certificate without definition
shall have the meanings assigned to them in the Agreement.

                                      10
<PAGE>

         Section 204.      Form of Trustee's Certificate of Authentication.

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

         This is one of the CVR Certificates referred to in the
within-mentioned Agreement.

                                    STOCKTRANS, INC.

                                    Trustee

                                    By
                                      -----------------------------------------
                                      Authorized Officer

                                 ARTICLE THREE

                                    THE CVRs

         Section 301.      Title and Terms.

         (a)      The aggregate number of CVR Certificates which may be
authenticated and delivered under this Agreement is limited to the number equal
to the number of shares of Company Common Stock issued and outstanding prior to
the Effective Time (other than shares of Company Common Stock in the treasury
of the Company and shares of Company Common Stock owned by any direct or
indirect wholly owned subsidiary of the Company), except for CVRs authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other CVRs pursuant to Section 304, 305, 308 or 606.

         (b)      The CVRs shall be known and designated as the "Contingent
Value Rights" of the Company.

         (c)      Notwithstanding any other provision of this Agreement and
notwithstanding the issuance of CVRs by the Company pursuant to this Agreement
prior to the Effective Time, the CVRs shall not be binding and enforceable
obligations of the Company until the Effective Time. Subject to the other
provisions of this Agreement, at and after the Effective Time, any CVRs issued
in accordance with this Agreement and outstanding shall be the valid and
binding obligations of the Company.

         (d)      On or before the 30th day following the Effective Time, the
Company shall issue to each holder of Common Stock of the Company one CVR for
each share of Common Stock of the Company held by such holder as of August 2,
2002, the record date for purposes of the CVRs. On or before the 60th day
following the Effective Time, the Company shall determine the aggregate dollar
amount of the Cash Equivalents of the Company immediately prior to the
Effective Time. In the event that the aggregate amount of Cash Equivalents of
the Company immediately prior to the Effective Time is greater than $5.175
million, then the Company shall pay to each Holder on the 90th day following
the Effective Time (such payment date referred to herein as

                                      11
<PAGE>

the "Excess Cash Equivalents Payment Date"), for each CVR held by such Holder,
an amount determined by dividing (i) the amount by which the aggregate amount
of Cash Equivalents of the Company immediately prior to the Effective Time
exceeds $5.175 million by (ii) the total number of CVRs then outstanding (the
quotient so determined referred to herein as the "Excess Cash Equivalents
Payment Amount"); provided, however, in the event that the amount determined
pursuant to clause (i) above is less than $100,000, then no payment shall be
made in respect of the CVRs pursuant to this subsection (c) but, in lieu
thereof, the amount determined pursuant to clause (i) shall be deemed to be a
Legacy Receivable (as defined below) collected in the first fiscal quarter
ending after the Effective Time. Not later than the 30th day following the last
day of each fiscal quarter of the Company for each fiscal quarter ending after
the Effective Time and on or before the Expiration Date (as defined below), the
Company shall (i) determine the aggregate amount of cash collections relating
to the Legacy Receivables (as defined below) received by the Company during
such fiscal quarter, and (ii) pay to each Holder on the 15th day thereafter
(each such payment date referred to herein as a "Legacy A/R Payment Date"), for
each CVR held by such Holder, an amount determined by dividing (A) the product
of (1) the amount determined pursuant to clause (i) above for such fiscal
quarter (the amount so determined for any such quarter shall be referred to
herein as the "Quarterly Receivables Amount"), less any fees and expenses of
any third-party incurred by the Company to collect the Legacy Receivables
(other than fees and expenses of the Representative), any amounts paid pursuant
to Section 504(a), Section 504(b) or Section 504(c) in excess of $30,000 in the
aggregate and any fees and expenses of the Trustee, in each case to the extent
not previously deducted pursuant to this clause (i) in any preceding fiscal
quarter, and (2) 85% by (B) the total number of CVRs then outstanding (the
quotient so obtained with respect to any Legacy A/R Payment Date referred to
herein as a "Legacy A/R Payment Amount"); provided, however, that in the event
that the aggregate amount determined in accordance with clause (A) above does
not equal or exceed $500,000, such amount shall not be distributed for such
quarter but shall be included in the amount payable in the next succeeding
quarter for which such threshold amount is available for payment (after taking
into account any amounts not paid in any prior quarters) or in the event that
all amounts determined pursuant to clause (A) above have not been paid to the
Holders of the CVRs prior to the Expiration Date, all such amounts that remain
unpaid shall be paid to the Holders of the CVRs on or prior to the 45th day
following the Expiration Date. "Legacy Receivables" means (i) any and all
accounts receivable of the Company that remain uncollected by the Company as of
the Effective Time other than accounts receivable attributable to any of the
contracts listed on Exhibit A attached hereto and other than notes payable from
employees of the Company and (ii) any amount deemed to be a Legacy Receivable
pursuant to Section 304(c); provided, however, that any and all accounts
receivable attributable to the contract listed as item 3 on Exhibit A with
respect to any period prior to the Effective Time shall also be deemed to be a
"Legacy Receivable".

         (e)      The Company shall use commercially reasonable efforts to
collect the Legacy Receivables. The Representative shall act as agent for the
Company to assist the Company in the collection of the Legacy Receivables and,
in this regard, the Company shall provide the Representative with accounting,
legal and administrative support (including expert witnesses for administrative
hearings and outside attorneys) reasonably necessary to facilitate the
Representative's efforts to collect the Legacy Receivables. The Representative
shall be entitled to take commercially reasonable actions on behalf of the
Company to collect the Legacy Receivables, including the bringing of any
action, suit or legal proceeding with respect to any Legacy Receivables, the
negotiation of a settlement or compromise of any Legacy Receivable and the
entry of any settlement or compromise agreement with respect to any Legacy
Receivable; provided, however, that the Representative shall not bring any
action, suit or other legal proceeding with respect to any Legacy Receivable
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. In the event that consent to the

                                      12
<PAGE>

bringing of any such action, suit or proceeding is withheld and the
Representative provides written notice to the Company that the Representative
believes that such consent was unreasonably withheld, then the Representative
shall be entitled to request Ernst & Young to make a determination within 30
days after the date of such notice to the Company as to whether such consent
was unreasonably withheld. Ernst & Young shall make such determination based on
its review of the relevant facts, including the likelihood of success on the
merits of any such action, suit or proceeding, the cost of pursuing such
action, suit or proceeding and any other factors that Ernst & Young deems
relevant. The Company and the Representative shall cooperate with Ernst & Young
to enable Ernst & Young to make such determination within such 30-day period,
including by means of making available relevant information with respect to the
Legacy Receivable that is the subject of the review. The determination of Ernst
& Young that such consent was unreasonably withheld shall allow the
Representative to bring the action, suit or proceeding as to which consent had
been withheld, and a determination by Ernst & Young that such consent was not
unreasonably withheld shall preclude the Representative from bringing such
action, suit or proceeding. Any determination by Ernst & Young shall be final
and binding upon the Company and the Representative. The settlement or
compromise by the Company of any Legacy Receivable for less than its full face
amount shall require the consent of the Representative, which consent shall not
be unreasonably withheld or delayed. The Representative shall have (i)
reasonable access to information concerning any Legacy Receivable that is in
the possession, custody or control of the Company and (ii) the reasonable
assistance of the Company's officers and employees for purposes of performing
the Representative's duties under this Agreement; provided, however, that the
Representative shall treat confidentially and not disclose any nonpublic
information concerning any Legacy Receivable to anyone (except to the Company's
attorneys, accountants and other advisors).

         (f)      The determination by the Company of any CVR Payment Amount,
absent manifest error, shall be final and binding on the Company and the
Holder.

         (g)      If an Event of Default occurs and is continuing, either the
Trustee or the Holders holding an aggregate of at least 25% of the outstanding
CVRs, by notice to the Company (and to the Trustee if given by the Holders),
may (but are not obligated to) declare the CVRs due and payable, and upon such
declaration, the Company shall pay to the Holder, in cash, for each CVR held by
the Holder, the aggregate amount of all CVR Payment Amounts, with interest at
the Default Interest Rate from each applicable Payment Date through the date
payment is made or duly provided for. Notwithstanding any provision of this
Agreement or the CVR Certificates to the contrary, other than in the case of
interest on the CVR Payment Amount specified in the preceding sentence, no
interest shall accrue on any amounts payable on the CVRs to any Holder.

         (h)      The CVRs shall terminate on the second anniversary of the
Effective Time unless the Company is engaged in active litigation with respect
to one or more Legacy Receivables in which case the CVRs shall terminate on the
final resolution of all such litigation; provided that in the event that at any
time after the first anniversary of the Effective Time (i) the Legacy
Receivables listed on Exhibit B have been collected in full or a settlement or
compromise with respect to each of such Legacy Receivables has been obtained
with the consent of the Representative and (ii) no Event of Default has
occurred and is continuing, then upon the execution of a written instrument by
the Company and the Representative at any time following the first anniversary
of the date of this Agreement evidencing a determination to terminate the CVRs
that is provided to the Trustee, the CVRs shall terminate and become null and
void and the

                                      13
<PAGE>

Holders thereof shall have no further rights with respect thereto except with
respect to the payment of any amount due and payable in respect of the CVRs on
or prior to the date of such termination (the termination date of the CVRs is
referred to herein as the "Expiration Date"). The failure to give such notice
or any defect therein shall not affect the validity of such determination.

         (i)      Except as contemplated hereby, no amount payable by the
Company in respect of the CVRs shall be subject to any setoff, offset or other
claim by the Company against any Holder or any other Person in respect of any
matter related to the Merger Agreement or the transactions contemplated
thereby.

         (j)      The Company undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. The Company shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
provided, however, that the Company shall not be liable for any acts or
omissions except to the extent that the Company has engaged in willful
misconduct or bad faith or to the extent any such act or omission violates any
express provision of this Agreement. The Company makes no representation or
guaranty, express or implied, with respect to the collection or collectability
of any of the Legacy Receivables.

         Section 302.      Registrable Form.

         The CVRs shall be issuable only in registered form.

         Section 303.      Execution, Authentication, Delivery and Dating.

         The CVRs shall be executed on behalf of the Company by its chairman of
the Board of Directors or its president or any vice president or its treasurer,
under its corporate seal which may, but need not, be attested. The signature of
any of these officers on the CVRs may be manual or facsimile.

         CVRs bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such CVRs or did not hold
such offices at the date of such CVRs.

         At any time and from time to time after the execution and delivery of
this Agreement, the Company may deliver CVRs executed by the Company to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such CVRs; and the Trustee in accordance with
such Company Order shall authenticate and deliver such CVRs as provided in this
Agreement and not otherwise.

         Each CVR shall be dated the date of its authentication.

         No CVR shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such CVR a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any CVR shall be conclusive evidence, and the only
evidence,

                                      14
<PAGE>

that such CVR has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Agreement.

         Section 304.      Temporary CVRs.

         Pending the preparation of definitive CVRs, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
CVRs which are printed, lithographed, typewritten, mimeographed or otherwise
produced, substantially of the tenor of the definitive CVRs in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such CVRs may determine with the
concurrence of the Trustee. Temporary CVRs may contain such reference to any
provisions of this Agreement as may be appropriate. Every temporary CVR shall
be executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive CVRs.

         If temporary CVRs are issued, the Company will cause definitive CVRs
to be prepared without unreasonable delay. After the preparation of definitive
CVRs, the temporary CVRs shall be exchangeable for definitive CVRs upon
surrender of the temporary CVRs at the office or agency of the Company
designated for such purpose pursuant to Section 802, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary CVRs, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like amount of definitive CVRs. Until so exchanged, the
temporary CVRs shall in all respects be entitled to the same benefits under
this Agreement as definitive CVRs.

         Section 305.      Registration, Registration of Transfer and Exchange.

         The Company shall cause to be kept at the Trustee Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 802 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of CVRs and of transfers of CVRs. The Trustee is hereby initially appointed
"Security Registrar" for the purpose of registering CVRs and transfers of CVRs
as herein provided.

         Upon surrender for registration of transfer of any CVR at the office
or agency of the Company designated pursuant to Section 802, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new CVR Certificates
representing the same aggregate number of CVRs represented by the CVR
Certificate so surrendered that are to be transferred and the Company shall
execute and the Trustee shall authenticate and deliver, in the name of the
transferor, one or more new CVR Certificates represented by such CVR
Certificate that are not to be transferred.

         At the option of the Holder, CVR Certificates may be exchanged for
other CVR Certificates that represent in the aggregate the same number of CVRs
as the CVR Certificates surrendered at such office or agency. Whenever any CVR
Certificates are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the CVR Certificates which the
Holder making the exchange is entitled to receive.

                                      15
<PAGE>

         All CVRs issued upon any registration of transfer or exchange of CVRs
shall be the valid obligations of the Company, evidencing the same right, and
entitled to the same benefits under this Agreement, as the CVRs surrendered
upon such registration of transfer or exchange.

         Every CVR presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.

         No service charge to Holders shall be made for any registration of
transfer or exchange of CVRs, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of CVRs, other than
exchanges pursuant to Section 304 or not involving any transfer.

         Section 306.      Mutilated, Destroyed, Lost and Stolen CVRs.

         If (a) any mutilated CVR is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any CVR, and there is delivered to the Company
and the Trustee such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such CVR has been acquired by a bona fide purchaser, the Company
shall execute and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated CVR or in lieu of any such
destroyed, lost or stolen CVR, a new CVR Certificate of like tenor and amount
of CVRs, bearing a number not contemporaneously outstanding.

         Upon the issuance of any new CVRs under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.

         Every new CVR issued pursuant to this Section in lieu of any
destroyed, lost or stolen CVR shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen CVR shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Agreement equally and proportionately with any and all
other CVRs duly issued hereunder.

         The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen CVRs.

         Section 307.      Presentation of CVR Certificate.

         Payment of any amounts on the CVRs shall be made only upon
presentation by the Holder thereof at the office or agency of the Company
maintained for that purpose in the Ardmore, Pennsylvania, or the Trustee Office
and at any other office or agency maintained by the Company for such purpose in
such coin or currency of the United States of America as at the time is legal
tender for the payment of public and private debts; provided, however, the
Company may pay such amounts by its check payable in such money mailed to
Holders at their respective addresses set forth in the Security Register.

                                      16
<PAGE>

         Section 308.      Persons Deemed Owners.

         Prior to the time of due presentment for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name any CVR is registered as the owner of such CVR for the
purpose of receiving payment on such CVR and for all other purposes whatsoever,
whether or not such CVR be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.

         Section 309.      Cancellation.

         All CVRs surrendered for payment, registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any CVRs previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all CVRs so delivered shall be promptly cancelled by the
Trustee. No CVRs shall be authenticated in lieu of or in exchange for any CVRs
cancelled as provided in this section, except as expressly permitted by this
Agreement. All cancelled CVRs held by the Trustee shall be disposed of as
directed by a Company Order.

                                 ARTICLE FOUR

                                  THE TRUSTEE

         Section 401.      Certain Duties and Responsibilities.

         (a)      With respect to the Holders of CVRs issued hereunder, the
Trustee, prior to the occurrence of an Event of Default with respect to the
CVRs and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. In case an Event of Default with
respect to the CVRs has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

         (b)      In the absence of bad faith on its part, prior to the
occurrence of an Event of Default and after the curing or waiving of all such
Events of Default which may have occurred, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement.

         (c)      No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own willful misconduct, except that:

                  (1)      this Subsection (c) shall not be construed to limit
                           the effect of Subsections (a) and (b) of this
                           Section;

                  (2)      the Trustee shall not be liable for any error of
                           judgment made in good faith by a Responsible
                           Officer;

                                      17
<PAGE>

                  (3)      no provision of this Agreement shall require the
                           Trustee 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
                           any of its rights or powers, if it shall have
                           reasonable grounds for believing that repayment of
                           such funds or adequate indemnity against such risk
                           or liability is not reasonably assured to it; and

                  (4)      the Trustee shall not be liable with respect to any
                           action taken or omitted to be taken by it in good
                           faith in accordance with the direction of the
                           Holders pursuant to Section 909 relating to the
                           time, method and place of conducting any proceeding
                           for any remedy available to the Trustee, or
                           exercising any trust or power conferred upon the
                           Trustee, under this Agreement.

         (d)      Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

         (e)      Notwithstanding any other provision hereof, neither Trustee
nor any of its representatives will be liable for any action taken or omitted
to be taken by it or them under this Agreement in good faith or be responsible
for the consequences of any error of judgment (except for fraud or willful
misconduct), and neither Trustee nor any of its representatives has a fiduciary
relationship with any Holder by virtue of this Agreement (but nothing in this
Agreement negates the obligation of Trustee to account for funds received by it
for the account of any Holder). If Trustee requests instructions from the
Company, the Representative, or the Holders, as the case may be, with respect
to any act or action in connection with this Agreement, Trustee is entitled to
refrain (without incurring any liability to any person or entity by so
refraining) from the act or action unless and until it has received
instructions. THE COMPANY AGREES TO INDEMNIFY TRUSTEE AND ITS REPRESENTATIVES
AND HOLD THEM HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE
EXPENSES AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY'S FEES AND EXPENSES) THAT
MAY BE IMPOSED ON, ASSERTED AGAINST OR INCURRED BY THEM UNDER THE AGREEMENT OR
THE CVRS. TRUSTEE AND ITS REPRESENTATIVES SHALL BE SO INDEMNIFIED UNDER THIS
AGREEMENT FOR ITS OR THEIR OWN ORDINARY OR GROSS NEGLIGENCE, BUT TRUSTEE AND ITS
REPRESENTATIVES DO NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR
ITS OR THEIR OWN FRAUD OR WILLFUL MISCONDUCT.

         Section 402.      Certain Rights of Trustee.

         The Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Trustee. Subject to
Section 401 hereof:

                  (a)      the Trustee may rely and shall be protected in
         acting or refraining from acting upon any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture, note, other evidence of indebtedness

                                      18
<PAGE>

         or other paper or document believed by it to be genuine and to have
         been signed, made or presented by the proper party or parties;

                  (b)      any request or direction of the Company mentioned
         herein shall be sufficiently evidenced by a Company Request or Company
         Order and any resolution of the Board of Directors may be sufficiently
         evidenced by a Board Resolution;

                  (c)      whenever in the administration of this Agreement the
         Trustee shall deem it desirable that a matter be proved or established
         prior to taking, suffering or omitting any action hereunder, the
         Trustee (unless other evidence be herein specifically prescribed) may,
         in the absence of bad faith on its part, rely upon an Officer's
         Certificate;

                  (d)      the Trustee may, but is not obligated to, consult
         with counsel and the advice of such counsel or any opinion of Counsel
         shall be full and complete authorization and protection in respect of
         any action taken, suffered or omitted by it hereunder in good faith
         and in reliance thereon;

                  (e)      the Trustee shall be under no obligation to exercise
         any of the rights or powers vested in it by this Agreement at the
         request or direction of any of the Holders pursuant to this Agreement,
         unless such Holders shall have offered to the Trustee reasonable
         security or indemnity against the costs, expenses and liabilities
         which might be incurred by it in compliance with such request or
         direction;

                  (f)      the Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, approval, appraisal, bond, debenture, note, coupon,
         security, or other paper or document; and

                  (g)      the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys and the Trustee shall not be responsible
         for any misconduct or negligence on the part of any agent or attorney
         appointed with due care by it hereunder;

                  (h)      the permissive rights of the Trustee to do things
         enumerated in this Agreement shall not be construed as a duty and the
         Trustee shall be liable for its bad faith or willful misconduct;

                  (i)      the Trustee shall not be required to give any note
         or surety in respect of the execution of the said trusts and powers or
         otherwise in respect of the premises; and

                  (j)      except for a default under Section 901(a), the
         Trustee shall not be deemed to have notice of any default or event
         unless specifically notified in writing of such event by the Company
         or the Holders of not less than 25% in aggregate number of CVRs
         outstanding.

         No provision of this Agreement shall require the Trustee 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 any of its
rights or powers, if it determines, in its discretion, that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

                                      19
<PAGE>

         Section 403.      Not Responsible for Recitals or Issuance of CVRs.

         The recitals contained herein and in the CVRs, except the Trustees
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the CVRs. The Trustee shall not be accountable for the use or
application by the Company of CVRs or the proceeds thereof.

         Section 404.      May Hold CVRs.

         The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner
or Pledgee of CVRs, and may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar
or such other agent.

         Section 405.      Money Held in Trust.

         Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law, and no interest on such
funds shall be paid to the Company, the Representative or any Holders. The
Trustee shall be under no liability for interest on any money received by it
hereunder.

         Section 406.      Compensation, Reimbursement and Indemnification of
the Trustee.

         The Company agrees:

                  (a)      to pay to the Trustee from time to time reasonable
         compensation for all services rendered by it hereunder (which
         compensation shall not be limited by any provision of law in regard to
         the compensation of a trustee of an express trust);

                  (b)      except as otherwise expressly provided herein, to
         reimburse the Trustee upon its request for all reasonable expenses,
         disbursements and advances incurred or made by the Trustee in
         accordance with any provision of this Agreement (including the
         reasonable compensation and the expenses and disbursements of its
         agents and counsel), except any such expense, disbursement or advance
         as may be attributable to its bad faith; and

                  (c)      to indemnify the Trustee for, and to hold it
         harmless against, any loss, liability or expense incurred without bad
         faith on its part, arising out of or in connection with the acceptance
         or administration of this trust, including the costs and expenses of
         defending itself against any claim or liability in connection with the
         exercise or performance of any of its powers or duties hereunder,
         including the enforcement of this Section 406.

         When the Trustee incurs expenses or renders services after a Default
specified in Section 901(c) or 901(d) occurs, the reasonable expenses and the
compensation for services (including the reasonable fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any bankruptcy law.

                                      20
<PAGE>

         Section 407.      Resignation and Removal; Appointment of Successor.

         (a)      No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee under Section 408.

         (b)      The Trustee, or any trustee or trustees hereafter appointed,
may resign at any time by giving written notice thereof to the Company; if an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may, but is not obligated to, petition any court of
competent jurisdiction for the appointment of a successor Trustee.

         (c)      The Trustee may be removed at any time by (i) the Company, by
a Board Resolution or (ii) an Act of the Holders of a majority of the
outstanding CVRs, delivered to the Trustee and to the Company.

         (d)      If at any time the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, (i) the Company by a Board
Resolution may remove the Trustee, or (ii) the Holder of any CVR who has been a
bona fide Holder of a CVR for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

         (e)      If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority of the Outstanding CVRs delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with Section 408, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders of the CVRs and so accepted appointment, the Holder of any CVR who has
been a bona fide Holder for at least six months may on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.

         (f)      The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of CVRs as their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee and the address of
its Trustee Office. If the Company fails to send such notice within ten days
alter acceptance of appointment by a successor Trustee, the successor Trustee
shall cause the notice to be mailed at the expense of the Company.

                                      21
<PAGE>

         Section 408.      Acceptance of Appointment by Successor.

         Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.

         No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.

         Section 409.      Merger, Conversion, Consolidation or Succession to
Business.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act an the
part of any of the parties hereto. In case any CVRs shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the CVRs so authenticated with the same effect
as if such successor Trustee had itself authenticated such CVRs; and such
certificate shall have the full force which it is anywhere in the CVRs or in
this Agreement provided that the certificate of the Trustee shall have;
provided that the right to adopt the certificate of authentication of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.

                                 ARTICLE FIVE

                               THE REPRESENTATIVE

         Section 501.      Certain Duties and Responsibilities.

         (a)      The Representative undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. The Representative
shall exercise such of the rights and powers vested in it by this Agreement,
and use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs; provided, however, that the Representative shall not be liable for any
acts or omissions except to the extent that the Representative has engaged in
willful misconduct or bad faith.

         (b)      No provision of this Agreement shall be construed to relieve
the Representative from liability for its own willful misconduct, except that
no provision of this Agreement shall require the Representative to expend or
risk its own funds or otherwise incur any financial

                                      22
<PAGE>

liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers.

         (c)      Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Representative shall be subject to the provisions
of this Section.

         Section 502.      Certain Rights of Representative.

         The Representative undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Representative. In addition:

                  (a)      the Representative may rely and shall be protected
         in acting or refraining from acting upon any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture, note, other evidence of indebtedness
         or other paper or document believed by it to be genuine and to have
         been signed or presented by the proper party or parties;

                  (b)      whenever the Representative shall deem it desirable
         that a matter be proved or established prior to taking, suffering or
         omitting any action hereunder, the Representative (unless other
         evidence be herein specifically prescribed) may, in the absence of bad
         faith on its part, rely upon an Officer's Certificate;

                  (c)      the Representative may consult with counsel and the
         written advice of such counsel or any Opinion of Counsel shall be full
         and complete authorization and protection in respect of any action
         taken, suffered or omitted by it hereunder in good faith and in
         reliance thereon;

                  (d)      the Representative may execute any of the powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys and the Representative shall not be
         responsible for any misconduct or negligence on the part of any agent
         or attorney appointed with due care by it hereunder;

                  (e)      the permissive rights of the Representative to do
         things enumerated in this Agreement shall not be construed as a duty
         and the Representative shall be liable for its willful misconduct or
         bad faith; and

                  (f)      the Representative shall not be required to give any
         note or surety in respect of the execution of the such powers or
         otherwise in respect of the premises.

         Section 503.      Not Responsible for Recitals or Issuance of CVRs.

         The recitals contained herein and in the CVRs shall be taken as the
statements of the Company, and the Representative assumes no responsibility for
their correctness. The Representative makes no representations as to the
validity or sufficiency of this Agreement or of the CVRs. The Representative
shall not be accountable for the use or application by the Company of CVRs or
the proceeds thereof.

                                      23
<PAGE>

         Section 504.      Compensation, Reimbursement and Indemnification of
the Representative.

         The Company agrees:

                  (a)      to pay to the Representative $5,000 on the first day
         of each month following the execution of this Agreement for the first
         12 months following the execution of this Agreement;

                  (b)      to pay to the Representative $3,500 on the first day
         of each month thereafter until the CVRs have expired by their terms;

                  (c)      to pay to the Representative 10% of any collections
         of the Legacy Receivables specified in Item 3 or Item 4 of Schedule B
         attached hereto during any fiscal quarter during the term of this
         Agreement within 45 days after the end of such quarter;

                  (d)      except as otherwise expressly provided herein, to
         advance the Representative, upon its request, all reasonable expenses
         and disbursements incurred or to be incurred by the Representative in
         accordance with any provision of this Agreement (including the
         reasonable compensation and the expenses and disbursements of its
         agents and counsel), except any such expense or disbursement as may be
         attributable to its willful misconduct or bad faith; and

                  (e)      to indemnify the Representative for, and to hold it
         harmless against, any loss, liability or expense incurred without
         willful misconduct or bad faith on its part, arising out of or in
         connection with its power or duties under this Agreement, including
         the costs and expenses of defending itself against any claim or
         liability, including reasonable attorney's fees and expenses, in
         connection with the exercise or performance of any of its powers or
         duties hereunder, including the enforcement of this Section 504.

         Section 505.      Resignation and Removal; Appointment of Successor.

                  (a)      The Representative may resign at any time by giving
         written notice thereof to the Company.

                  (b)      The Representative may be removed at any time by (i)
         the Company if the Representative has engaged in willful misconduct in
         the conduct of his duties hereunder or (ii) an Act of the Holders of a
         majority of the outstanding CVRs, delivered to the Representative and
         to the Company.

                  (c)      In the event that the Representative is removed for
         willful misconduct, then the Representative shall not be entitled to
         any compensation payable pursuant to Section 504(a), Section 504(b) or
         Section 504(c) from and after the date of his removal. In the event
         that the Representative is removed for reasons other than willful
         misconduct, the Representative shall be entitled to receive (i) the
         full amount of the compensation payable pursuant to Section 504(a)
         even if such removal is prior to the first anniversary of the date of
         the execution of this Agreement, (ii) any amounts payable pursuant to
         Section 504(c) that are payable at the time of such removal and (iii)
         any amounts that would have been payable pursuant to Section 504(c)
         within 12 months following such removal to the extent that the
         Representative was the effective cause for the collection of Legacy
         Receivables for which such payments under Section 504(c)

                                      24
<PAGE>

         would have been payable to the Representative but for such removal;
         provided, however, any such payments shall be made only from the
         collection of Legacy Receivables. The rights under this Section 505(c)
         shall be applicable only to the initial Representative, and all
         references in this Section 505(c) shall refer to the initial
         Representative and not any successor Representative.

                  (d)      If at any time the Representative shall become
         incapable of acting or shall be adjudged a bankrupt or insolvent, or a
         receiver of the Representative or of its property shall be appointed,
         then, in any case, (i) the Company by a Board Resolution may remove
         the Representative, or (ii) the Holder of any CVR who has been a bona
         fide Holder of a CVR for at least six months may, on behalf of himself
         and all others similarly situated, petition any court of competent
         jurisdiction for the removal of the Representative and the appointment
         of a successor Representative.

                  (e)      If the Representative shall resign, be removed or
         become incapable of acting, the Company, by a Board Resolution, shall
         promptly appoint a successor Representative. If, within 90 days after
         such resignation, removal or incapability, or the occurrence of such
         vacancy, a successor Representative shall not have been appointed by
         the Company, the Holders of the CVRs may appoint a successor
         Representative by the Act of the Holders of 25% of the Outstanding
         CVRs delivered to the Company. The successor Representative so
         appointed shall, forthwith upon its acceptance of such appointment in
         accordance with Section 506, become the successor Representative. If
         no successor Representative shall have been so appointed by the
         Company or the Holders of the CVRs and so accepted appointment, the
         Holder of any CVR who has been a bona fide Holder for at least six
         months may on behalf of himself and all others similarly situated,
         petition any court of competent jurisdiction for the appointment of a
         successor Representative.

                  (f)      The Company shall give notice of each resignation
         and each removal of the Representative and each appointment of a
         successor Representative by mailing written notice of such event by
         first-class mail, postage prepaid, to the Holders of CVRs as their
         names and addresses appear in the Security Register. Each notice shall
         include the name of the successor Representative. If the Company fails
         to send such notice within ten days alter acceptance of appointment by
         a successor Representative, the successor Representative shall cause
         the notice to be mailed at the expense of the Company.

         Section 506.      Acceptance of Appointment by Successor.

         Every successor Representative appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Representative an
instrument accepting such appointment, and thereupon such successor
Representative, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring
Representative; but, on request of the Company or the successor Representative,
such retiring Representative shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Representative all the
rights, powers and trusts of the retiring Representative. Upon request of any
such successor Representative, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Representative all such rights, powers and trusts.

                                      25
<PAGE>

                                  ARTICLE SIX

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

         Section 601.      Company to Furnish Trustee Names and Addresses of
Holders.

         The Company will furnish or cause to be furnished to the Trustee (a)
semiannually, on the 15th day of June and December of each year, a list, in
such form as the Trustee may reasonably require, of the names and addressee of
the Holders as of a date within 15 days prior to such semiannual date, and (b)
at such times as the Trustee may request in writing, within 30 days after
receipt by the Company of any such request, a list, in such form as the Trustee
may reasonably require, of the names and the addresses of the Holders as of a
date not more than 15 days prior to the time such list is furnished; provided,
however, that, if and so long as the Trustee shall be the Security Registrar,
no such list need be furnished.

         Section 602.      Preservation of Information Communications to
Holders.

         (a)      The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addressee of Holders contained in the
most recent list furnished to the Trustee as provided in Section 601 and the
names and addressee of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 601 upon receipt of a new list so furnished.

         (b)      If three or more Holders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a CVR for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders with
respect to their rights under this Agreement or under the CVRs and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application at its election, either

                  (1)      afford such applicants access to the information
                           preserved at the time by the Trustee in accordance
                           with Section 602(a), or

                  (2)      inform such applicants as to the approximate number
                           of Holders whose names and addresses appear in the
                           information preserved at the time by the Trustee in
                           accordance with Section 602(a), and as to the
                           approximate cost of mailing to such Holders the form
                           of proxy or other communication, if any, specified
                           in such application.

         If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants and at such applicant's cost and expense, mail to each Holder whose
name and address appear in the information preserved at the time by the Trustee
in accordance with Section 602(a), a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would

                                      26
<PAGE>

be in violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise, the Trustee
shall be relieved of any obligation or duty to such applicants respecting their
application.

         (c)      Every Holder of CVRs, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company, the Trustee
nor the Representative shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders in accordance
with Section 602(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 602(b).

         Section 603.      Reports by Company.

         The Company shall:

                  (a)      file with the Trustee, within 15 days after the
         Company is required to file the same with the Commission, copies of
         the annual reports and of the information, documents and other reports
         (or copies of such portions of any of the foregoing as the Commission
         may from time to time by rules and regulations prescribe) which the
         Company may be required to file with the Commission pursuant to
         Section 13 or Section 15(d) of the Exchange Act; or, if the Company is
         not required to file information, documents or reports pursuant to
         either of said Sections, then it shall file with the Trustee and the
         Commission, in accordance with rules and regulations prescribed from
         time to time by the Commission, such of the supplementary and periodic
         information, documents and reports which may be required pursuant to
         Section 13 of the Exchange Act in respect of a security listed and
         registered on a national securities exchange as may be prescribed from
         time to time in such rules and regulations; and

                  (b)      file with the Trustee and the Commission, in
         accordance with rules and regulations prescribed from time to time by
         the Commission, such additional information, documents and reports
         with respect to compliance by the Company with the conditions and
         covenants of this Agreement as may be required from time to time by
         such rules and regulations.

         The Trustee shall transmit, as instructed by the Company in writing
and at the Company's cost and expense, by mail to all Holders, as their names
and addresses appear in the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to Subsections (a) and (b)
of this Section as may be required by rules and regulations prescribed from
time to time by the Commission. Any such summaries of information, documents
and reports must be provided by the Company to the Trustee for such mailing.

                                      27
<PAGE>

                                 ARTICLE SEVEN

                                   AMENDMENTS

         Section 701.      Amendments Without Consent of Holders.

         Without the consent of any Holders, the Company, when authorized by a
Board Resolution, the Representative, and the Trustee, at any time and from
time to time, may enter into one or more amendments hereto, in form
satisfactory to the Trustee and the Representative, for any of the following
purposes:

                  (a)      to convey, transfer, assign, mortgage or pledge to
         the Trustee as security for the CVRs any property or assets; or

                  (b)      to evidence the succession of another Person to the
         Company, and the assumption by any such successor of the covenants of
         the Company herein and in the CVRs; or

                  (c)      to add to the covenants of the Company such further
         covenants, restrictions, conditions or provisions as its Board of
         Directors and the Trustee shall consider to be for the protection of
         the Holders of CVRs, and to make the occurrence, or the occurrence and
         continuance, of a default in any such additional covenants,
         restrictions, conditions or provisions an Event of Default permitting
         the enforcement of all or any of the several remedies provided in this
         Agreement as herein set forth; provided that in respect of any such
         additional covenant, restriction, condition or provision such
         amendment may provide for a particular period of grace after default
         (which period may be shorter or longer than that allowed in the case
         of other defaults) or may provide for an immediate enforcement upon
         such an Event of Default or may limit the remedies available to the
         Trustee upon such an Event of Default or may limit the right of the
         Holders of a majority in aggregate principal amount of the CVRs to
         waive such an Event of Default; or

                  (d)      to cure any ambiguity, to correct or supplement any
         provision herein which may be defective or inconsistent with any other
         provision herein, or to make any other provisions with respect to
         matters or questions arising under this Agreement; provided that in
         each case, such provisions shall not adversely affect the interests of
         the Holders.

         Section 702.      Amendments with Consent of Holders.

         With the consent of the Holders of not less than 66 2/3% of the
outstanding CVRs, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, the Trustee and
the Representative may enter into one or more amendments hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders under this Agreement; provided, however, that no such amendment shall,
without the consent of the Holder of each Outstanding CVR affected thereby:

                                      28
<PAGE>

                  (a)      reduce the amount of the Outstanding CVRs, the
         consent of whose Holders is required for any such amendment; or

                  (b)      modify any of the provisions of this Section, except
         to increase any such percentage or to provide that certain other
         provisions of this Agreement cannot be modified or waived without the
         consent of the Holder of each CVR affected thereby.

         It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such act shall approve the substance thereof.

         Promptly after the execution by the Company and the Trustee of any
amendment pursuant to the provisions of this Section, the Company shall mail a
notice thereof by first class mail to the Holders of CVRs at their addresses as
they shall appear on the Security Register, setting forth in general terms the
substance of such amendment. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such amendment.

         Section 703.      Execution of Amendments.

         In executing any amendment permitted by this Article, the Trustee
shall be entitled to receive, and (subject to Section 401) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement. The Trustee may,
but is not obligated to, enter into any such amendment which affects the
Trustees own rights, duties or immunities under this Agreement or otherwise.

         Section 704.      Effect of Amendments.

         Upon the execution of any amendment under this Article, this Agreement
shall be modified in accordance therewith, and such amendment shall form a part
of this Agreement for all purposes; and every Holder of CVRs theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.

         Section 705.      Reference in CVRs to Amendments.

         CVRs authenticated and delivered after the execution of any amendment
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
amendment. If the Company shall so determine, new CVRs so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
amendment may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding CVRs.

                                      29
<PAGE>

                                 ARTICLE EIGHT

                                   COVENANTS

         Section 801.      Payment of Amounts, if Any, to Holders.

         The Company will duly and punctually pay the amounts, if any, in the
manner provided for in Section 307 on the CVRs in accordance with the terms of
the CVRs and this Agreement.

         Section 802.      Maintenance of Office or Agency.

         As long as any of the CVRs remain Outstanding, the Company will
maintain in the Ardmore, Pennsylvania, an office or agency where CVRs may be
presented or surrendered for payment. The Company also will maintain in the
Ardmore, Pennsylvania, an office or agency (i) where CVRs may be surrendered
for registration of transfer or exchange and (ii) where notices and demands to
or upon the Company in respect of the CVRs and this Agreement may be served.
The Company hereby initially designates the office of StockTrans, Inc., 44 West
Lancaster Avenue, Ardmore, Pennsylvania 19003 as the office or agency of the
Company where CVRs may be presented for payment, and the Trustee Office as the
office or agency where CVRs may be surrendered for registration of transfer or
exchange and where such notices or demands may be served, in each case, unless
the Company shall designate and maintain some other office or agency for one or
more of such purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Trustee Office of
the Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.

         The Company may from time to time designate one or more other offices
or agencies (in or outside of Ardmore, Pennsylvania) where the CVRs may be
presented or surrendered for any or all such purposes, and may from time to
time rescind such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligations as set
forth in the preceding paragraph. The Company will give prompt written notice
to the Trustee of any such designation or rescission and any change in the
location of any such office or agency.

         Section 803.      Money for CVR Payments to Be Held in Trust.

         Any amounts payable to the Holders pursuant to this Agreement,
including amounts related to the collection of Legacy Receivables, shall be
segregated from the other funds of the Company and held in trust for the
benefit of the Holders of the CVRs. All such amounts shall be promptly paid
over to the Paying Agent to be held in trust for such payment or if the Company
shall at any time act as its own Paying Agent, it will, on or before the
Payment Date, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the amounts, if any, so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.

                                      30
<PAGE>

         Whenever the Company shall have one or more Paying Agents for the
CVRs, it will, on or before the Payment Date, deposit with a Paying Agent a sum
in same day funds sufficient to pay the amount, if any, so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such amount,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of such action or any failure so to act.

         The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
(A) such Paying Agent will hold all sums held by it for the payment of any
amount payable on CVRs in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and (B) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the CVRs) to make any payment on the
CVRs when the same shall be due and payable.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment on any CVR and remaining unclaimed for
one year after the Payment Date shall be paid to the Company on Company
Request, or if then held by the Company, shall be discharged from such trust;
and the Holder of such CVR shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease.

         Section 804.      Written Statement to Trustee.

         The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Agreement. For purposes of this Section, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Agreement.

                                 ARTICLE NINE

            REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT

         Section 901.      Event of Default Defined; Acceleration of Maturity;
Waiver of Default.

         "Event of Default", with respect to CVRs, means each one of the
following events which shall have occurred and be continuing (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

                  (a)      default in the payment of all or any part of the
         amounts payable in respect of any of the CVRs as and when the same
         shall become due and payable at the Payment Date or otherwise; or

                  (b)      default in the performance, or breach, of any
         covenant or warranty of the Company in respect of the CVRs (other than
         a covenant or warranty in respect of the CVRs a default in whose
         performance or whose breach is elsewhere in this Section

                                      31
<PAGE>

         specifically dealt with), and continuance of such default or breach
         for a period of 90 days after there has been given, by registered or
         certified mail, to the Company and the Representative by the Trustee
         or to the Company, the Representative and the Trustee by the Holders
         of at least 25% of the Outstanding CVRs, a written notice specifying
         such default or breach and requiring it to be remedied and stating
         that such notice is a "Notice of Default" hereunder; or

                  (c)      a court having jurisdiction in the premises shall
         enter a decree or order for relief in respect of the Company in an
         involuntary case under any applicable bankruptcy, insolvency or other
         similar law now or hereafter in effect, or appointing a receiver,
         liquidator, assignee, custodian, trustee or sequestrator (or similar
         official) of the Company or for any substantial part of its property
         or ordering the winding up or liquidation of its affairs, and such
         decree or order shall remain unstayed and in effect for a period of 30
         consecutive days; or

                  (d)      the Company shall commence a voluntary case under
         any applicable bankruptcy, insolvency or other similar law now or
         hereafter in effect, or consent to the entry of an order for relief in
         an involuntary case under any such law, or consent to the appointment
         of or taking possession by a receiver, liquidator, assignee,
         custodian, trustee or sequestrator (or similar official) of the
         Company or for any substantial part of its property, or make any
         general assignment for the benefit of creditors; or

                  (e)      default in any payment due to the Representative
         pursuant to Section 504.

         If an Event of Default described above occurs and is continuing, then,
and in each and every such case, unless all of the CVRs shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
of the CVRs then outstanding hereunder by notice in writing to the Company (and
to the Trustee if given by the Holders) may, but are not obligated to, declare
the CVRs to be due and payable immediately, and upon any such declaration the
Default Amount shall become immediately due and payable and, thereafter, shall
bear interest at the Default Interest Rate until payment is made to the
Trustee.

         The foregoing provisions, however, are subject to the condition that
if, at any time after the CVRs shall have been so declared due and payable, and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all amounts which shall have
become due otherwise than by acceleration, with interest upon such overdue
amount at the Default Interest Rate to the date of such payment or deposit, and
such amount as shall be sufficient to cover reasonable compensation to the
Trustee, its agents, attorneys and counsel, and all other expenses and
liabilities incurred and, all advances made, by the Trustee except as a result
of bad faith, and if any and all Events of Default under this Agreement, other
than the nonpayment of the amounts which shall have become due by acceleration,
shall have been cured, waived or otherwise remedied as provided herein, then
and in every such case the Holders of a majority of all the CVRs then
Outstanding, by written notice to the Company and to the Trustee, may waive all
defaults with respect to the CVRs and rescind and annul such declaration and
its consequences, but no such waiver or rescission and annulment shall extend
to or shall affect any subsequent default or shall impair any right consequent
thereof.

                                      32
<PAGE>

         Section 902.      Collection of indebtedness by Trustee; Trustee may
Prove Debt.

         The Company covenants that in case default shall be made in the
payment of all or any part of the CVRs when the same shall have become due and
payable on the Payment Date or otherwise, then upon demand of the Trustee, the
Company will pay to the Trustee for the benefit of the Holders of the CVRs the
whole amount, in cash, that then shall have become due and payable on all CVRs,
with interest from the date due and payable to the date of such payment upon
the overdue amount at the Default Interest Rate and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, and any
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of its bad faith.

         In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered, but shall not be obligated, to institute any action
or proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Company
or other obligor upon such CVRs and collect in the manner provided by law out
of the property of the Company or other obligor upon such CVRs, wherever
situated, the moneys adjudged or decreed to be payable.

         In case there shall be pending proceedings relative to the Company or
any other obligor upon the CVRs under Title 11 of the United States Code or any
other applicable Federal or State bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or its property or such other obligor, or in
case of any other judicial proceedings relative to the Company or other obligor
upon the CVRs, or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of any CVRs shall
then be due and payable as therein expressed or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, but shall not be obligated, by
intervention in such proceedings or otherwise:

                  (a)      to file and prove a claim or claims for the whole
         amount owing and unpaid in respect of the CVRs, and to file such other
         papers or documents as may be necessary or advisable in order to have
         the claims of the Trustee, including any claim for reasonable
         compensation to the Trustee and each predecessor Trustee, and their
         respective agents, attorneys and counsel, and for reimbursement of all
         expenses and liabilities incurred, and all advances made, by the
         Trustee and each predecessor Trustee (except as a result of bad faith)
         and of the Holders allowed in any judicial proceedings relative to the
         Company or other obligor upon the CVRs, or to the creditors or
         property of the Company or such other obligor;

                  (b)      unless prohibited by applicable law and regulations,
         to vote on behalf of the Holders in any election of a trustee or a
         standby trustee in arrangement, reorganization, liquidation or other
         bankruptcy or insolvency proceedings or person performing similar
         functions in comparable proceedings; and

                                      33
<PAGE>

                  (c)      to collect and receive any moneys or other property
         payable or deliverable on any such claims, and to distribute all
         amounts receivable with respect to the claims of the Holders and of
         the Trustee on their behalf and any trustee, receiver, or liquidator,
         custodian or other similar official is hereby authorized by each of
         the Holders to make payments to the Trustee, and, in the event that
         the Trustee shall consent to the making of payments directly to the
         Holders, to pay to the Trustee such amounts as shall be sufficient to
         cover reasonable compensation to the Trustee, each predecessor Trustee
         and their respective agents, attorneys and counsel, and all other
         expenses and liabilities incurred, and all advances made, by the
         Trustee and each predecessor Trustee except as a result of bad faith
         and all other amounts due to the Trustee or any predecessor Trustee
         pursuant to Section 406.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the CVRs or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.

         All rights of action and of asserting claims under this Agreement, or
under any of the CVRs, may be enforced by the Trustee (in its discretion)
without the possession of any of the CVRs or the production thereof on any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders.

         In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Agreement to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Holders, and it shall not be necessary to make any Holders of such CVRs parties
to any such proceedings.

         Section 903.      Application of Proceeds.

         Any monies (including CVRs of the Company) collected by the Trustee
pursuant to this Article in respect of any CVRs shall be applied in the
following order at the date or dates fixed by the Trustee upon presentation of
the several CVRs in respect of which monies have been collected thereon, the
payment in exchange for the presented CVRs if only partially paid or upon
surrender thereof if fully paid:

                  FIRST: To the payment of costs and expenses in respect of
         which monies have been collected, including reasonable compensation to
         the Trustee and each predecessor Trustee and their respective agents
         and attorneys and of all expenses and liabilities incurred, and all
         advances made, by the Trustee and each predecessor Trustee except as a
         result of bad faith, and all other amounts due to the Trustee or any
         predecessor Trustee pursuant to Section 406;

                  SECOND: To the payment of all amounts due to the
         Representative pursuant to Section 504;

                                      34
<PAGE>

                  THIRD: To the payment of the whole amount then owing and
         unpaid upon all the CVRs, with interest at the Default Interest Rate
         on all such amounts, and in case such moneys shall be insufficient to
         pay in full the whole amount so due and unpaid upon the CVRs, then to
         the payment of such amounts without preference or priority of any CVR
         over any other CVR, ratably to the aggregate of such amounts due and
         payable; and

                  FOURTH: To the payment of the remainder, if any, to the
         Company or any other person lawfully entitled thereto.

         Section 904.      Suits for Enforcement.

         In case an Event of Default has occurred, has not been waived and is
continuing, the Trustee may, but is not obligated to, proceed to protect and
enforce the rights vested in it by this Agreement by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Agreement or in aid of the exercise of any power granted in this Agreement
or to enforce any other legal or equitable right vested in the Trustee by this
Agreement or by law.

         Section 905.      Restoration of Rights on Abandonment of Proceedings.

         In case the Trustee shall have proceeded to enforce any right under
this Agreement and such proceedings shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the Trustee, then
and in every such case the Company and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the Holders shall continue
as though no such proceedings had been taken.

         Section 906.      Limitations on Suits by Holders.

         No Holder of any CVR shall have any right by virtue or by availing
itself of any provision of this Agreement to institute any action or proceeding
at law or in equity or in bankruptcy or otherwise upon or under or with respect
to this Agreement, or for the appointment of a trustee, receiver, liquidator,
custodian or other similar official or for any other remedy hereunder, unless
such Holder previously shall have given to the Trustee written notice of
default and of the continuance thereof as hereinbefore provided, and unless
also the Holders of not less than 25% of the CVRs then outstanding shall have
made written request upon the Trustee to institute such action or proceedings
in its own name as trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity shall have failed to
institute any such action or proceeding and no direction inconsistent with such
written request shall have been given to the Trustee pursuant to Section 909;
it being understood and intended, and being expressly covenanted by the taker
and Holder of every CVR with every other taker and Holder and the Trustee, that
no one or more Holders of CVRs shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provision of this Agreement
to effect, disturb or prejudice the rights of any other such Holder of CVRs, or
to obtain or seek to obtain priority over or preference to any other such
Holder or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders of
CVRs.

                                      35
<PAGE>

For the protection and enforcement of the provisions of this Section, each and
every Holder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

         Section 907.      Unconditional Right of Holders to Institute Certain
Suits.

         Notwithstanding any other provision in this Agreement and any
provision of any CVR, the right of any Holder of any CVR to receive payment of
the amounts payable in respect of such CVR on or after the respective due dates
expressed in such CVR, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

         Section 908.      Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default.

         Except as provided in Section 906, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

         No delay or omission of the Trustee or of any Holder to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 906, every power and remedy given by this Agreement or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Holders.

         Section 909.      Control by Holders.

         The Holders of a majority of the CVRs at the time outstanding shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the CVRs by this Agreement;
provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Agreement, and provided the Trustee is paid in
advance for its anticipated expenses and compensation for its services in
following such direction(s), or is satisfied that it will be paid therefore;
and provided further that (subject to the provisions of Section 401) the
Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust committee
of directors or Responsible Officers of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability, or if the Trustee in good faith shall so determine that the actions
or forbearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the CVRs not joining in the giving
of said direction, it being understood that (subject to Section 401) the
Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders.

                                      36

<PAGE>

         Nothing in this Agreement shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which action it
reasonably believes is not inconsistent with such direction or directions by
Holders.

         Section 910.      Waiver of Past Defaults.

         Prior to the declaration of the acceleration of the maturity of the
CVRs as provided in Section 901, in the case of a default or an Event of
Default specified in clause (b), (c) or (d) of Section 901, the Holders of a
majority of all the CVRs then outstanding may waive any such default or Event
of Default, and its consequences, except a default in respect of a covenant or
provisions hereof which cannot be modified or amended without the consent of
the Holder of each CVR affected. In the case of any such waiver, the Company,
the Trustee and the Holders of the CVRs shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.

         Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured. and not to have occurred for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

         Section 911.      Trustee to Give Notice of Default, but May Withhold
in Certain Circumstances.

         The Trustee shall transmit to the Holders, as the names and addresses
of such Holders appear on the Security Register, notice by mail of all defaults
which have occurred of which the Trustee has been notified in writing, such
notice to be transmitted within 90 days after the later of the occurrence
thereof or the written notification to the Trustee thereof, unless such
defaults shall have been cured before the giving of such notice (the term
"default" or "defaults" for the purposes of this Section being hereby defined
to mean any event or condition which is, or with notice or lapse of time or
both would become, an Event of Default); provided that, except in the case of
default in the payment of the amounts payable in respect of any of the CVRs,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
or trustees and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.

         Section 912.      Right of Court to Require Filing of Undertaking to
Pay Costs.

         All parties to this Agreement agree, and each Holder of any CVR by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Agreement or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys fees,
against any party litigant in such suit, having due regard to the merits and
good faith or the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the

                                      37
<PAGE>

Trustee, to any suit instituted by any Holder or group of Holders holding in
the aggregate more than 10% of the CVRs outstanding or to any suit instituted
by any Holder for the enforcement of the payment of any CVR on or after the due
date expressed in such CVR.

                                  ARTICLE TEN

                   CONSOLIDATION, MERGER, SALE OR CONVEYANCE

         Section 1001.     Company May Consolidate, Etc.

         (a)      The Company shall not consolidate with or merge into any
other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:

                  (1)      in case the Company shall consolidate with or merge
                           into any other Person or convey, transfer or lease
                           its properties and assets substantially as an
                           entirety to any person, the Person formed by such
                           consolidation or into which the Company is merged or
                           the Person which acquires by conveyance or transfer,
                           or which leases, the properties and assets of the
                           Company substantially as an entirety (the "Surviving
                           Person") shall be a corporation, partnership or
                           trust organized and existing under the laws of the
                           United States of America, any state thereof or the
                           District of Columbia and shall expressly assume
                           payment of amounts on all the CVRs and the
                           performance of every covenant of this Agreement on
                           the part of the Company to be performed or observed;

                  (2)      immediately after giving effect to such transaction
                           and treating any indebtedness which becomes an
                           obligation of the Surviving Person, the Company or
                           any Subsidiary as a result of such transaction as
                           having been incurred by the Surviving Person, the
                           Company or such Subsidiary at the time of such
                           transaction, no Event of Default shall have happened
                           and be continuing; and

                  (3)      the Company has delivered to the Trustee an
                           Officer's Certificate, stating that such
                           consolidation, merger, conveyance, transfer or lease
                           complies with this Article and that all conditions
                           precedent herein provided for relating to such
                           transaction have been complied with.

         (b)      Solely for purposes of this Section 1001, "convey, transfer
or lease its properties and assets substantially as an entirety" shall mean
properties and assets contributing in the aggregate at least 80% of the
Company's total revenues as reported in the Company's last available periodic
financial report (quarterly or annual, as the case may be) filed with the
Commission.

         Section 1002.     Successor Substituted.

         Upon any consolidation of or merger by the Company with or into any
other Person, or any conveyance, transfer or lease of the properties and assets
substantially as an entirety to any Person in accordance with Section 1001, the
Surviving Person shall succeed to, and be

                                      38
<PAGE>

substituted for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if the Surviving Person had been named
as the Company herein, and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants
under this Agreement and the CVRs.

         Section 1003.     Opinion of Counsel to Trustee.

         The Trustee, subject to the provisions of Sections 401 and 402, may
receive an Opinion of Counsel, prepared in accordance with Sections 102 and
103, as conclusive evidence that any such consolidation, merger, sale, lease or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Agreement.

         This Agreement may be signed in any number of counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Agreement.

                                      39
<PAGE>

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

                                    PMR CORPORATION

                                    By: /s/ Allen Tepper
                                       ----------------------------------------
                                       Name:  Allen Tepper
                                       Title:  Chief Executive Officer

Attest: /s/ Reggie Roman
        ----------------------
        Title:

                                    STOCKTRANS, INC., as Trustee

                                    By: /s/ Jonathan Miller
                                       ----------------------------------------
                                       Name: Jonathan Miller
                                       Title:

Attest: /s/ Christina Bastas
        ----------------------
        Title:

                                    By: /s/ Fred Furman
                                       ----------------------------------------
                                       Fred Furman, as Representative

             [SIGNATURE PAGE TO CONTINGENT VALUE RIGHTS AGREEMENT]

<PAGE>

                                   EXHIBIT A

1.       Consulting Agreement with Alameda County Medical Center dated March 8,
         2002.

2.       Transportation Agreement with Alameda County Medical Center dated
         November 17, 1999.

3.       License Agreement with Conundrum Communications, Inc. dated July 31,
         2001.

4.       Management and Affiliation Agreement dated April 13, 1995, between
         Mental Health Cooperative, Inc. and Tennessee Mental Health
         Cooperative, Inc. with Addendum, as amended.

5.       Provider Agreement dated December 4, 1995, between Tennessee
         Behavioral Health, Inc. and Tennessee Mental Health Corporations,
         Inc., as amended.

6.       Provider Participation Agreement dated February 13, 1996, among Green
         Spring Health Services, Inc., AdvoCare, Inc. and Tennessee Mental
         Health Cooperative, Inc., as amended.

7.       Management Agreement between PMR Corporation and New Center Community
         Health Services.

<PAGE>

                                   EXHIBIT B

1.       LITTLE ROCK COMMUNITY MENTAL HEALTH CENTER

2.       AUSTIN TRAVIS MENTAL HEALTH MENTAL RETARDATION<PAGE>
                                                                     EXHIBIT 4.1

                                  SYBASE, INC.

                                       AND

                    AMERICAN STOCK TRANSFER AND TRUST COMPANY

                        PREFERRED STOCK RIGHTS AGREEMENT

                            DATED AS OF JULY 31, 2002

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                              PAGE
                                                                                              ----
<S>            <C>                                                                           <C>
Section 1.     Certain Definitions...............................................................1

Section 2.     Appointment of Rights Agent.......................................................7

Section 3.     Issuance of Rights Certificates...................................................7

Section 4.     Form of Rights Certificates.......................................................9

Section 5.     Countersignature and Registration................................................10

Section 6.     Transfer, Split Up, Combination and Exchange of Rights Certificates;
               Mutilated, Destroyed, Lost or Stolen Rights Certificates.........................10

Section 7.     Exercise of Rights; Exercise Price; Expiration Date of Rights....................11

Section 8.     Cancellation and Destruction of Rights Certificates..............................13

Section 9.     Reservation and Availability of Preferred Shares.................................13

Section 10.    Record Date......................................................................15

Section 11.    Adjustment of Exercise Price, Number of Shares or Number of Rights...............15

Section 12.    Certificate of Adjusted Exercise Price or Number of Shares.......................22

Section 13.    Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............22

Section 14.    Fractional Rights and Fractional Shares..........................................26

Section 15.    Rights of Action.................................................................27

Section 16.    Agreement of Rights Holders......................................................27

Section 17.    Rights Certificate Holder Not Deemed a Stockholder...............................28

Section 18.    Concerning the Rights Agent......................................................28

Section 19.    Merger or Consolidation or Change of Name of Rights Agent........................28

Section 20.    Duties of Rights Agent...........................................................29

Section 21.    Change of Rights Agent...........................................................31

</TABLE>

                                      -ii-
<PAGE>
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<S>            <C>                                                                           <C>
Section 22.    Issuance of New Rights Certificates..............................................32

Section 23.    Redemption.......................................................................32

Section 24.    Exchange.........................................................................33

Section 25.    Notice of Certain Events.........................................................35

Section 26.    Notices..........................................................................35

Section 27.    Supplements and Amendments.......................................................36

Section 28.    Successors.......................................................................37

Section 29.    Determinations and Actions by the Board of Directors, etc. ......................37

Section 30.    Benefits of this Agreement.......................................................37

Section 31.    Severability.....................................................................37

Section 32.    Governing Law....................................................................38

Section 33.    Counterparts.....................................................................38

Section 34.    Descriptive Headings.............................................................38
</TABLE>

EXHIBITS

Exhibit A      Form of Certificate of Designation

Exhibit B      Form of Rights Certificate

Exhibit C      Summary of Rights

                                     -iii-

<PAGE>

                        PREFERRED STOCK RIGHTS AGREEMENT

        This Preferred Stock Rights Agreement is dated as of July 31, 2002,
between Sybase, Inc., a Delaware corporation, (the "COMPANY"), and American
Stock Transfer and Trust Company (the "RIGHTS AGENT").

        On July 31, 2002, (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board of
Directors of the Company authorized and declared a dividend of one Preferred
Share Purchase Right (a "RIGHT") for each Common Share (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on August 15, 2002 (the "RECORD DATE"), each Right representing the right to
purchase one one-thousandth (0.001) of a share of Series A Participating
Preferred Stock (as such number may be adjusted pursuant to the provisions of
this Agreement), having the rights, preferences and privileges set forth in the
form of Certificate of Designations of Rights, Preferences and Privileges of
Series A Participating Preferred Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right (as such number may be adjusted pursuant to
the provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the Distribution
Date and the Expiration Date (as such terms are hereinafter defined), and in
certain circumstances after the Distribution Date.

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

        Section 1. Certain Definitions. For purposes of this Agreement, the
following terms 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 15% or more of the Common Shares then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person as the result of an acquisition
of Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company 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 Common Shares of the Company
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be deemed
to be an Acquiring Person unless upon becoming the Beneficial Owner of such
additional Common Shares of the Company such Person does not beneficially own

                                      -1-
<PAGE>

15% or more of the Common Shares of the Company then outstanding.
Notwithstanding the foregoing, (i) if the Company's Board of Directors
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of the Common Shares
that would otherwise cause such Person to be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), or (B) such Person
was aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement including, without
limitation Section 1(gg) hereof; and (ii) if, as of the date hereof, any Person
is the Beneficial Owner of 15% or more of the Common Shares outstanding, such
Person shall not be or become an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), unless and until such time as such
Person shall become the Beneficial Owner of additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), unless, upon becoming the Beneficial Owner of
such additional Common Shares, such Person is not then the Beneficial Owner of
15% or more of the Common Shares then outstanding.

            (b) "ADJUSTMENT FRACTION" shall have the meaning set forth in
Section 11(a)(i) hereof.

            (c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.

            (d) A Person shall be deemed the "BENEFICIAL OWNER" of and shall be
deemed to "BENEFICIALLY OWN" any securities:

                (i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or
successor law or regulation);

                (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), 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 pursuant to this Section
1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially own,

                                      -2-
<PAGE>

(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, or (2)
securities which a Person or any of such Person's Affiliates or Associates may
be deemed to have the right to acquire pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or more of its
Affiliates or Associates) if such agreement has been approved by the Board of
Directors of the Company prior to there being an Acquiring Person; or (B) the
right to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security under this Section 1(d)(ii)(B) if the agreement,
arrangement or understanding to vote such security (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 on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

                (iii) which are beneficially owned, directly or indirectly, by
any other Person (or any 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 (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section 1(d)(ii)(B))
or disposing of any securities of the Company; provided, however, that in no
case shall an officer or director of the Company be deemed (x) the Beneficial
Owner of any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of the
Company or any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the voting
of the securities held in the plan.

            (e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in New York are authorized or obligated
by law or executive order to close.

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

            (g) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a)(iii) hereof. "COMMON SHARES" when used with reference to the
Company shall mean the shares of Common Stock of the Company, par value at
$0.001 per share. Common Shares 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 other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.

                                      -3-
<PAGE>

            (h) "COMPANY" shall mean Sybase, Inc., a Delaware corporation,
subject to the terms of Section 13(a)(iii)(C) hereof.

            (i) "CURRENT PER SHARE MARKET PRICE" of any security (a "Security"
for purposes of this definition), for all computations other than those made
pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price
of any Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the ten (10) consecutive Trading
Days immediately prior to such date; provided, however, that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30) Trading Day or ten (10) Trading Day period, 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 reflect the current market
price per share equivalent of such Security. 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 Security is 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 national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such date the
Security is 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 Security selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Security, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used. If the Preferred Shares are not publicly traded, the
Current Per Share Market Price of the Preferred Shares shall be conclusively
deemed to be (x) the Current Per Share Market Price of the Common Shares as
determined pursuant to this Section 1(j), as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof, multiplied by (y) 1,000. If the Security is not publicly held or 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 of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

            (j) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.

                                      -4-
<PAGE>

            (k) "DISTRIBUTION DATE" shall mean the earlier of (i) the Close of
Business on the tenth (10th) day (or such later date as may be determined by
action of the Company's Board of Directors) after the Shares Acquisition Date
(or, if the tenth (10th) day after the Shares Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth (10th) Business Day (or such later date as may be
determined by action of the Company's Board of Directors) after the date that a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, assuming the successful consummation
thereof, such Person would be an Acquiring Person.

            (l) "EQUIVALENT SHARES" shall mean Preferred Shares and any other
class or series of capital stock of the Company which is entitled to the same
rights, privileges and preferences as the Preferred Shares.

            (m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

            (n) "EXCHANGE RATIO" shall have the meaning set forth in Section
24(a) hereof.

            (o) "EXERCISE PRICE" shall have the meaning set forth in Section
4(a) hereof.

            (p) "EXPIRATION DATE" shall mean the earliest to occur of: (i) the
Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which the Board of Directors orders the exchange of the Rights
as provided in Section 24 hereof.

            (q) "FINAL EXPIRATION DATE" shall mean August 15, 2012.

            (r) "NASDAQ" shall mean The Nasdaq Stock Market, Inc.

            (s) "PERSON" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.

            (t) "POST-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

            (u) "PREFERRED SHARES" shall mean shares of Series A Participating
Preferred Stock, par value $0.001 per share, of the Company.

            (v) "PRE-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

                                      -5-
<PAGE>

            (w) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b) hereof.

            (x) "RECORD DATE" shall have the meaning set forth in the recitals
at the beginning of this Agreement.

            (y) "REDEMPTION DATE" shall have the meaning set forth in Section
23(a) hereof.

            (z) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.

            (aa) "RIGHTS AGENT" shall mean (i) American Stock Transfer and Trust
Company, (ii) its successor or replacement as provided in Sections 19 and 21
hereof or (iii) any additional Person appointed pursuant to Section 2 hereof.

            (bb) "RIGHTS CERTIFICATE" shall mean a certificate substantially in
the form attached hereto as Exhibit B.

            (cc) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set
forth in the recitals at the beginning of this Agreement.

            (dd) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set
forth in Section 11(a)(iii) hereof.

            (ee) "SECTION 13 EVENT" shall mean any event described in clause
(i), (ii) or (iii) of Section 13(a) hereof.

            (ff) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

            (gg) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such;
provided that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be
deemed to have occurred by virtue of such event.

            (hh) "SPREAD" shall have the meaning set forth in Section 11(a)(iii)
hereof.

            (ii) "SUBSIDIARY" of any Person shall mean any corporation or other
entity of which an amount of voting securities sufficient to elect a majority of
the directors or Persons having similar authority of such corporation or other
entity is beneficially owned, directly or indirectly, by such Person, or any
corporation or other entity otherwise controlled by such Person.

                                      -6-
<PAGE>

            (jj) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.

            (kk) "SUMMARY OF RIGHTS" shall mean a summary of this Agreement
substantially in the form attached hereto as Exhibit C.

            (ll) "TOTAL EXERCISE PRICE" shall have the meaning set forth in
Section 4(a) hereof.

            (mm) "TRADING DAY" shall mean a day on which the principal national
securities exchange on which a referenced security is listed or admitted to
trading is open for the transaction of business or, if a referenced security is
not listed or admitted to trading on any national securities exchange, a
Business Day.

            (nn) A "TRIGGERING EVENT" shall be deemed to have occurred upon any
Person becoming an Acquiring Person.

        Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) 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 shall in no event be liable
for, the acts or omissions of any co-Rights Agent.

        Section 3. Issuance of Rights Certificates.

            (a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates) and not by separate
Rights Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of certificates for Common Shares shall also constitute the surrender
for transfer of the Rights associated with the Common Shares represented
thereby. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate evidencing one Right
for each Common Share so held, subject to

                                      -7-
<PAGE>

adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11 hereof, then at the
time of distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights (in accordance
with Section 14(a) hereof). As of the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of Common Shares, and the holders of such Rights Certificates
as listed in the records of the Company or any transfer agent or registrar for
the Rights shall be the record holders thereof.

            (b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company's transfer agent and registrar. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights.

            (c) Unless the Board of Directors by resolution adopted at or before
the time of the issuance of any Common Shares after the Record Date but prior to
the earlier of the Distribution Date or the Expiration Date (or, in certain
circumstances provided in Section 22 hereof, after the Distribution Date)
specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are so issued, and Certificates representing such Common Shares
shall also be deemed to be certificates for Rights, and shall bear the following
legend:

        THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
        CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN SYBASE, INC.
        AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS THE RIGHTS AGENT,
        DATED AS OF JULY 31, 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 SYBASE, INC. 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 WITHOUT CHARGE AFTER 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

                                      -8-
<PAGE>

        BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
        VOID.

With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.

            (d)In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.

        Section 4. Form of Rights Certificates.

            (a) The Rights Certificates (and the forms of election to purchase
Common Shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and 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 or a national market system, on which
the Rights may from time to time be listed or included, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or in
the case of Rights issued with respect to Common Shares issued by the Company
after the Record Date, as of the date of issuance of such Common Shares) and on
their face shall entitle the holders thereof to purchase such number of
one-thousandths (0.001) of a Preferred Share as shall be set forth therein at
the price set forth therein (such exercise price per one one-thousandth (0.001)
of a Preferred Share being hereinafter referred to as the "EXERCISE Price" and
the aggregate Exercise Price of all Preferred Shares issuable upon exercise of
one Right being hereinafter referred to as the "TOTAL EXERCISE PRICE"), but the
number and type of securities purchasable upon the exercise of each Right and
the Exercise Price shall be subject to adjustment as provided herein.

               (b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a Post-Event
Transferee, (iii) a Pre-Event Transferee or (iv) any subsequent transferee
receiving transferred Rights from a Post-Event Transferee or a Pre-Event
Transferee, either directly or through one or more intermediate transferees, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:

                                      -9-
<PAGE>

        THE RIGHTS REPRESENTED BY THIS RIGHTS 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 RIGHTS CERTIFICATE
        AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
        CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.

        Section 5. Countersignature and Registration.

            (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Financial Officer, its President or any Vice President, either manually or by
facsimile signature, and by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal (if any) or a facsimile thereof. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates on behalf of the Company had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights 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 its office designated for such purposes, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

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

            (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one-thousandths (0.001) of a Preferred Share
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Rights

                                      -10-
<PAGE>

Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged 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 Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights 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
shall reasonably request. Thereupon the Rights Agent shall, subject to Sections
7(e), 14 and 24 hereof, countersign and deliver to the person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment from the registered holder of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Rights Certificates.

            (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably 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 Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.

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

            (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date and prior to the Close of Business on the Expiration Date by
surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Exercise
Price for each one-thousandth (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) as
to which the Rights are exercised.

            (b) The Exercise Price for each one-thousandth (0.001) of a
Preferred Share issuable pursuant to the exercise of a Right shall initially be
$90, shall be subject to adjustment from time to time as provided in Sections 11
and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.

            (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Exercise Price for the number of one-thousandths (0.001) of a
Preferred Share (or, following a Triggering Event, other

                                      -11-
<PAGE>

securities, cash or other assets as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Rights Certificate in accordance with Section 9(e) hereof, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent for the Preferred Shares) a certificate or
certificates for the number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the case
may be) 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 one-thousandths (0.001) of a Preferred
Share (or, following a Triggering Event, other securities, cash or other assets
as the case may be) issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depository agent depository receipts
representing such number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the case
may be) as are to be purchased (in which case certificates for the Preferred
Shares (or, following a Triggering Event, other securities, cash or other assets
as the case may be) represented by such receipts shall be deposited by the
transfer agent with the depository agent) and the Company hereby directs the
depository 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
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Rights Certificate. The payment of the Exercise
Price (as such amount may be reduced (including to zero) pursuant to Section
11(a)(iii) hereof) and an amount equal to any applicable transfer tax required
to be paid by the holder of such Rights Certificate in accordance with Section
9(e) hereof, may be made in cash or by certified bank check, cashier's check or
bank draft payable to the order of the Company. In the event that the Company is
obligated to issue securities of the Company other than Preferred Shares, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.

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

            (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such (a
"POST-EVENT TRANSFEREE"), (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration)

                                      -12-
<PAGE>

from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Company's Board of Directors has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) (a "PRE-EVENT TRANSFEREE") or (iv) any subsequent
transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate
transferees, shall become 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) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or to any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees hereunder.

            (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
exercise as set forth in Section 7 unless such registered holder shall, in
addition to having complied with the requirements of subsection 7(a), have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

        Section 8. Cancellation and Destruction of Rights Certificates. All
Rights 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
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 Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate evidencing the destruction thereof to the Company.

        Section 9. Reservation and Availability of Preferred Shares.

            (a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of its authorized and
unissued Preferred Shares not reserved for another purpose (and, following the
occurrence of a Triggering Event, out of its authorized and unissued Common
Shares and/or other securities), the number of Preferred Shares (and, following

                                      -13-
<PAGE>

the occurrence of the Triggering Event, Common Shares and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.

            (b) If the Company shall hereafter list any of its Preferred Shares
on a national securities exchange, then so long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that it
is reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.

            (c) The Company shall use its best efforts to (i) file, as soon as
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 is described in Section 11(a)(ii) or Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act with respect to
the securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the date of expiration of the
Rights. The Company may temporarily suspend, for a period 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. Upon any such
suspension, the Company shall issue a public announcement stating, and notify
the Rights Agent, that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notification to the Rights Agent
at such time as the suspension is no longer in effect. 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 in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction, unless
the requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available, and until a registration statement has
been declared and remains effective.

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

            (e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of

                                      -14-
<PAGE>

the original issuance or delivery of the Rights Certificates or of any Preferred
Shares (or other securities of the Company) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or depository
receipts for the Preferred Shares (or other securities of the Company) in a name
other than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or to issue or to deliver any certificates or
depository receipts for Preferred Shares (or other securities of the Company)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.

        Section 10. Record Date. Each Person in whose name any certificate for a
number of one-thousandths (0.001) of a Preferred Share (or other securities of
the Company) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of Preferred Shares (or other
securities of the Company) represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Total Exercise Price with respect to which
the Rights have been exercised (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of Preferred Shares (or other securities of the Company) 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 Exercise Price, Number of Shares or Number of
Rights. The Exercise Price, the number and kind of shares or other property
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) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification shall be adjusted so that
the Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the
"ADJUSTMENT FRACTION"), the numerator of which shall be the total number of
Preferred Shares (or

                                      -15-
<PAGE>

shares of capital stock issued in such reclassification of the Preferred Shares)
outstanding immediately following such time and the denominator of which shall
be the total number of Preferred Shares outstanding immediately prior to such
time; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of such Right; and
(2) the number of one-thousandths (0.001) of a Preferred Share (or share of such
other capital stock) issuable upon the exercise of each Right shall equal the
number of one-thousandths (0.001) of a Preferred Share (or share of such other
capital stock) as was issuable upon exercise of a Right immediately prior to the
occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i),
multiplied by the Adjustment Fraction; provided, however, that, no such
adjustment shall be made pursuant to this Section 11(a)(i) to the extent that
there shall have simultaneously occurred an event described in clause (A), (B),
(C) or (D) of Section 11(n) with a proportionate adjustment being made
thereunder. Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section 11(a)(i) shall have associated with it
the number of Rights, exercisable at the Exercise Price and for the number of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(a)(i).

                (ii) Subject to Section 24 of this Agreement, in the event that
a Triggering Event shall have occurred, then promptly following such Triggering
Event each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive for each Right, upon exercise thereof in
accordance with the terms of this Agreement and payment of the Exercise Price in
effect immediately prior to the occurrence of the Triggering Event, in lieu of a
number of one-thousandths (0.001) of a Preferred Share, such number of Common
Shares of the Company as shall equal the quotient obtained by dividing (A) the
product obtained by multiplying (1) the Exercise Price in effect immediately
prior to the occurrence of the Triggering Event by (2) the number of
one-thousandths (0.001) of a Preferred Share for which a Right was exercisable
(or would have been exercisable if the Distribution Date had occurred)
immediately prior to the first occurrence of a Triggering Event, by (B) fifty
percent (50%) of the Current Per Share Market Price for Common Shares on the
date of occurrence of the Triggering Event; provided, however, that the Exercise
Price and the number of Common Shares of the Company so receivable upon exercise
of a Right shall be subject to further adjustment as appropriate in accordance
with Section 11(e) hereof to reflect any events occurring in respect of the
Common Shares of the Company after the occurrence of the Triggering Event.

                (iii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if the Company's Board of Directors
determines that such action is necessary or appropriate and not contrary to the
interest of holders of Rights and, in the event that the number of Common Shares
which are authorized by the Company's Certificate of Incorporation but 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, or
if any necessary regulatory approval for such issuance has not been obtained by
the Company, the Company shall: (A) determine the excess of (1) the value of the
Common Shares issuable upon the exercise of a Right (the "CURRENT VALUE")

                                      -16-
<PAGE>

over (2) the Exercise Price (such excess, the "SPREAD") and (B) with respect to
each Right, make adequate provision to substitute for such Common Shares, upon
exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3)
other equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred stock which the Company's Board of
Directors has deemed to have the same value as Common Shares (such shares or
units of shares of preferred stock are herein called "COMMON STOCK
EQUIVALENTS")), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, (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 Company's Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Company's 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
later of (x) the first occurrence of a Triggering 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 Exercise Price, Common
Shares (to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Company's Board of Directors shall determine in good faith
that it is likely that sufficient additional Common Shares could be authorized
for issuance upon exercise in full of the Rights or that any necessary
regulatory approval for such issuance will be obtained, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval 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. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the Current Per Share Market Price of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Shares on such date.

            (b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Shares entitling such holders (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares or Equivalent Shares or securities convertible into

                                      -17-
<PAGE>

Preferred Shares or Equivalent Shares at a price per share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Shares) less than the then Current Per Share Market Price of the
Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred Shares or Equivalent Shares, as the case may be,
which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the
aggregate initial conversion price of the convertible securities to be offered
or issued) would purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Preferred Shares
or Equivalent Shares, as the case may be, to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Company's
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. Preferred Shares and Equivalent Shares 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, options or warrants are
not so issued, the Exercise Price shall be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.

            (c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the Preferred Shares or of any class or series of Equivalent Shares (including
any such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any, or
a dividend payable in Preferred Shares) or subscription rights, options or
warrants (excluding those referred to in Section 11(b)), then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Per Share
Market Price of a Preferred Share or an Equivalent Share on such record date,
less the fair market value per Preferred Share or Equivalent Share (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) 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 Preferred
Share or Equivalent Share, as the case may be, and the denominator of which
shall be such Current Per Share Market Price of a Preferred Share or Equivalent
Share on such record date; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon

                                      -18-
<PAGE>

exercise of one Right. 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 Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.

            (d) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) of the Exercise Price;
provided, however, that any adjustments which by reason of this Section 11(d)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth (0.0001) of a Common Share
or other share or one hundred-thousandth (0.00001) of a Preferred Share, as the
case may be. Notwithstanding the first sentence of this Section 11(d), 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 requires such
adjustment or (ii) the Expiration Date.

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

            (f) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one-thousandths (0.001)
of a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.

            (g) Unless the Company shall have exercised its election as provided
in Section 11(h), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 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 Exercise Price, that number of Preferred Shares
(calculated to the nearest one hundred-thousandth (0.00001) of a share) obtained
by (i) multiplying (x) the number of Preferred Shares covered by a Right
immediately prior to this adjustment, by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price, and (ii) dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.

            (h) The Company may elect on or after the date of any adjustment of
the Exercise Price as a result of the calculations made in Section 11(b) or (c)
to adjust the number of Rights, in

                                      -19-
<PAGE>

substitution for any adjustment in the number of Preferred Shares 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-thousandths (0.001) of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth (0.00001)) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Exercise Price is adjusted or any day
thereafter, but, if any Rights Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights 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 Exercise Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

            (i) Irrespective of any adjustment or change in the Exercise Price
or the number of Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Exercise Price per one one-thousandth (0.001) of a Preferred Share and the
number of one-thousandths (0.001) of a Preferred Share which were expressed in
the initial Rights Certificates issued hereunder.

            (j) Before taking any action that would cause an adjustment reducing
the Exercise Price below the par or stated value, if any, of the number of
one-thousandths (0.001) of a Preferred Share 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 as fully paid and nonassessable shares such number of one-thousandths
(0.001) of a Preferred Share at such adjusted Exercise Price.

            (k) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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 of
the number of one-thousandths (0.001) of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one-

                                      -20-
<PAGE>

thousandths (0.001) of a Preferred Share and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the Exercise
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) upon the occurrence of the event requiring such adjustment.

            (l) Anything in this Section 11 to the contrary notwithstanding,
prior to the Distribution Date, the Company shall be entitled to make such
reductions in the Exercise Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred or Common Shares, (ii) issuance wholly for cash of
any Preferred or Common Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred or Common Shares or securities which by
their terms are convertible into or exchangeable for Preferred or Common Shares,
(iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Preferred or
Common Shares shall not be taxable to such stockholders.

            (m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or
permit to be taken) 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.

            (n) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares (by reverse stock split or otherwise) into a smaller number of
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) hereof: (1) each Common Share
(or shares of capital stock issued in such reclassification of the Common
Shares) outstanding immediately following such time shall have associated with
it the number of Rights as were associated with one Common Share immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price thereafter shall equal the result obtained
by multiplying the Exercise Price in effect immediately prior to such time by a
fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the event described in clauses (A)-(D) above,
and the denominator of which shall be the total number of Common Shares
outstanding immediately after such event; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of one-thousandths (0.001) of a
Preferred Share (or shares of such

                                      -21-
<PAGE>

other capital stock) issuable upon the exercise of each Right outstanding after
such event shall equal the number of one-thousandths (0.001) of a Preferred
Share (or shares of such other capital stock) as were issuable with respect to
one Right immediately prior to such event. Each Common Share that shall become
outstanding after an adjustment has been made pursuant to this Section 11(n)
shall have associated with it the number of Rights, exercisable at the Exercise
Price and for the number of one-thousandths (0.001) of a Preferred Share (or
shares of such other capital stock) as one Common Share has associated with it
immediately following the adjustment made pursuant to this Section 11(n). If an
event occurs which would require an adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.

        Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or give such
notice shall not affect the validity of such adjustment or the force or effect
of the requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of such adjustment unless and
until it shall have received such certificate.

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

            (a) In the event that, following a Triggering Event, directly or
indirectly:

                (i) the Company shall consolidate with, or merge with and into,
any other Person (other than a wholly-owned Subsidiary of the Company in a
transaction the principal purpose of which is to change the state of
incorporation of the Company and which complies with Section 11(m) hereof);

                (ii) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such merger,
all or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other person (or the Company); or

                (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating fifty percent (50%) or more 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 or one or more of
its wholly owned Subsidiaries in one or more transactions, each of which
individually (and together) complies with Section 11(m) hereof),

                      then, concurrent with and in each such case,

                                      -22-
<PAGE>

                      (A) each holder of a Right (except as provided in Section
7(e) hereof) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the Total Exercise Price applicable immediately
prior to the occurrence of the Section 13 Event in accordance with the terms of
this Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party (as
hereinafter defined), free of any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by dividing
such Total Exercise Price by an amount equal to fifty percent (50%) of the
Current Per Share Market Price of the Common Shares of such Principal Party on
the date of consummation of such Section 13 Event, provided, however, that the
Exercise Price and the number of Common Shares of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof;

                      (B) 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;

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

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

                      (E) upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Total Exercise Price as
provided in this Section 13(a), such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had such holder,
at the time of such transaction, owned the Common Shares of the Principal Party
receivable upon the exercise of such Right pursuant to this Section 13(a), and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

                      (F) For purposes hereof, the "earning power" of the
Company and its Subsidiaries shall be determined in good faith by the Company's
Board of Directors on the basis of the operating income of each business
operated by the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any business not
operated by the Company or any Subsidiary during three full fiscal years
preceding such date, during the period such business was operated by the Company
or any Subsidiary).

            (b) For purposes of this Agreement, the term "PRINCIPAL PARTY" shall
mean:

                                      -23-
<PAGE>

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

                (ii) in the case of any transaction described in clause (iii) of
Section 13(a) hereof, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if more than one Person that is a party to such transaction
or transactions receives the same portion of the assets or earning power so
transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so
transferred, or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;
provided that in any such case described in the foregoing clause (b)(i) or
(b)(ii), if the Common Shares of such Person are not at such time or have not
been continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary
of another Person the Common Shares of which are and have been so registered,
the term "Principal Party" shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of Common Shares
having the greatest aggregate market value of shares outstanding, or (3) if such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly by the same Person, the
rules set forth in clauses (1) and (2) above shall apply to each of the owners
having an interest in the venture as if the Person owned by the joint venture
was a Subsidiary of both or all of such joint venturers, and the Principal Party
in each such case shall bear the obligations set forth in this Section 13 in the
same ration as its interest in such Person bears 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 Common Shares that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon
consummation of such Section 13 Event, assume this Agreement in accordance with
Sections 13(a) and 13(b) hereof, that all rights of first refusal or preemptive
rights in respect of the issuance of Common Shares of such Principal Party upon
exercise of outstanding Rights have been waived, that there are no rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights and that such transaction

                                      -24-
<PAGE>

shall not result in a default by such Principal Party under this Agreement, and
further providing that, as soon as practicable after the date of such Section 13
Event, such Principal Party will:

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

                (ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq and list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on Nasdaq; and

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

        In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).

            (d) In case the "Principal Party" for purposes of Section 13(b)
hereof has provision in any of its authorized securities or in its certificate
of incorporation or by-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to Section 13 hereof), in
connection with, or as a consequence of, the consummation of a Section 13 Event,
Common Shares or Equivalent Shares of such Principal Party at less than the then
Current Per Share Market Price thereof or securities exercisable for, or
convertible into, Common Shares or Equivalent Shares of such Principal Party at
less than such then Current Per Share Market Price, or (ii) providing for any
special payment, tax or similar provision in connection with the issuance of the
Common Shares of such Principal Party pursuant to the provisions of Section 13
hereof, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with or as a consequence of, the consummation of
the proposed transaction.

            (e) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Section 13 Event, if
(i) at the time or immediately

                                      -25-
<PAGE>

after such Section 13 Event there are any rights, warrants or other instruments
or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (ii) prior to, simultaneously with or immediately after such Section 13
Event, the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(b) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates or (iii) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights.

            (f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

        Section 14. Fractional Rights and Fractional Shares.

            (a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of the
Rights 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 the 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, as determined pursuant to the second sentence of
Section 1(j) hereof.

            (b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth (0.001) of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth (0.001) of a
Preferred Share). Interests in fractions of Preferred Shares in integral
multiples of one one-thousandth (0.001) of a Preferred Share may, at the
election of the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depository selected by it;
provided, that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth (0.001) of a Preferred Share, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share shall be (x) one
thousand multiplied by (y) the closing price of a Common Share (as determined
pursuant to the second sentence of Section 1(j) hereof) for the Trading Day
immediately prior to the date of such exercise.

            (c) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares
upon the exercise or exchange of

                                      -26-
<PAGE>

Rights. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a Common Share. For purposes of this Section 14(c), the current
market value of a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 1(j) hereof) for the
Trading Day immediately prior to the date of such exercise.

            (d) The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any fractional
shares (other than fractions that are integral multiples of one one-thousandth
(0.001) of a Preferred Share) upon exercise of a Right.

        Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

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

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

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

            (c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or

                                      -27-
<PAGE>

the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.

        Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose to be the holder of the Preferred Shares
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights 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 specifically provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights 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 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 or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done 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 in the premises. In no event will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of such
loss or damage.

            (b) The Rights Agent 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 Rights
Certificate or certificate for the Preferred Shares or Common Shares 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 reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.

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

            (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger

                                      -28-
<PAGE>

or consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation succeeding to the corporate trust 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, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights 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 Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights 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 Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

        Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights 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 opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such 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 or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

                                      -29-
<PAGE>

            (c) The Rights Agent shall be liable hereunder to the Company and
any other Person 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 Rights
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 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 Rights 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 Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of a certificate furnished
pursuant to Section 12 describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.

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

            (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date on which any officer of the Company actually receives such

                                      -30-
<PAGE>

application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

            (h) The Rights Agent and any stockholder, 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 legal entity.

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

            (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
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.

            (k) If, with respect to any Rights 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.

        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 Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights 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 Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30)

                                      -31-
<PAGE>

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 Rights Certificate (who shall, with such
notice, submit his or her Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. 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 Preferred Shares and the
Common Shares, and mail a notice thereof in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

        Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company outstanding at the
date hereof or 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 the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Rights
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.

            (a) The Company may, at its option and with the approval of the
Board of Directors, at any time prior to the Close of Business on the earlier of
(i) the fifth day following the Shares Acquisition Date (or such later date as
may be determined by action of the Company's Board of Directors and publicly
announced by the Company) and (ii) the Final Expiration Date, redeem all

                                      -32-
<PAGE>

but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being herein referred to as the "REDEMPTION PRICE") and the Company may,
at its option, pay the Redemption Price either in Common Shares (based on the
Current Per Share Market Price thereof at the time of redemption) or cash. Such
redemption of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. The date on which the Board of Directors elects to
make the redemption effective shall be referred to as the "REDEMPTION DATE."

            (b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after the 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
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.

        Section 24. Exchange.

            (a) Subject to applicable laws, rules and regulations, and subject
to subsection 24(c) below, the Company may, at its option, by action of the
Board of Directors, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

                                      -33-
<PAGE>

            (b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection 24(a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company 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
Common Shares 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 void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.

            (c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by majority vote of the Board of Directors, or
(iii) deliver any combination of cash, property, Common Shares and/or other
securities having a value equal to the Current Value in exchange for each Right.
For purposes of this Section 24(c) only, the Current Value shall mean the
product of the Current Per Share Market Price of Common Shares on the date of
the occurrence of the event described above in subsection (a), multiplied by the
number of Common Shares for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision 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.

            (d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable, an amount in cash equal to the same

                                      -34-
<PAGE>

fraction of the current market value of a whole Common Share (as determined
pursuant to the second sentence of Section 1(j) hereof).

            (e) The Company may, at its option, by majority vote of the Board of
Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors based upon the advice of one or more nationally recognized investment
banking firms.

            (f) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection 24(e) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection 24(e) above.
The Company shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company 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 transfer agent for the Common Shares of the Company.
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 Rights will be effected.

        Section 25. Notice of Certain Events.

            (a) In case the Company shall propose to effect or permit to occur
any Triggering Event or Section 13 Event, the Company shall give notice thereof
to each holder of Rights in accordance with Section 26 hereof at least twenty
(20) days prior to occurrence of such Triggering Event or such Section 13 Event.

            (b) In case any Triggering Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.

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

                      Sybase, Inc.

                                      -35-
<PAGE>

                      5000 Hacienda Drive
                      Dublin, CA 94568
                      Attention:  President

                      with a copy to its General Counsel at the same address

                      and

                      Wilson Sonsini Goodrich & Rosati
                      Professional Corporation
                      650 Page Mill Road
                      Palo Alto, California 94304-1050
                      Attention:  David J. Berger

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

                      American Stock Transfer and Trust Company
                      59 Maiden Lane/Plaza Level
                      New York, NY 10038
                      Attention: Shareholder Services Division

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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 occurrence of a
Distribution Date, the Company may supplement or amend this Agreement in any
respect without the approval of any holders of Rights and the Rights Agent
shall, if the Company so directs, execute such supplement or amendment. From and
after the occurrence of a Distribution Date, the Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Rights in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
that the Company may deem necessary or desirable and that shall not adversely
affect the interests of the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person); provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) 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 an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of

                                      -36-

<PAGE>

the Company that states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.

        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 Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to 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). 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
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties and
(y) with respect to claims specifically arising from the Agreement, not subject
the Board to any liability to the holders of the Rights.

        Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim pursuant to 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 Rights Certificates (and, prior to the Distribution Date, the Common
Shares).

        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 of the Company 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 hereof
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.

                                      -37-
<PAGE>

        Section 32. Governing Law. This Agreement and each Right and each Rights
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.

        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 as of the day and year first above written.

"COMPANY"                          SYBASE, INC.

                                   By:    /s/ DANIEL R. CARL
                                          --------------------------------
                                   Name:  Daniel R. Carl
                                          --------------------------------
                                   Title: Vice President, General Counsel
                                          --------------------------------
                                          and Secretary
                                          --------------------------------

"RIGHTS AGENT"                     AMERICAN STOCK TRANSFER AND
                                   TRUST COMPANY

                                   By:    /s/ HERBERT LEMMER
                                          --------------------------------
                                   Name:  Herbert Lemmer
                                          --------------------------------
                                   Title: Vice President
                                          --------------------------------

                                      -38-
<PAGE>

                                    EXHIBIT A

           AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF RIGHTS,
                          PREFERENCES AND PRIVILEGES OF
             SERIES A PARTICIPATING PREFERRED STOCK OF SYBASE, INC.

        The undersigned, Daniel R. Carl, does hereby certify:

        1. That he/she is duly elected and acting Secretary of Sybase, Inc., a
Delaware corporation (the "CORPORATION").

        2. That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors of the Corporation on July 31, 2002 adopted the following
resolutions creating a series of 200,000 shares of Preferred Stock designated as
Series A Participating Preferred Stock:

        "RESOLVED, that pursuant to the authority vested in the Board of
Directors of the corporation by the Restated Certificate of Incorporation, the
Board of Directors does hereby provide for the issue of a series of Preferred
Stock of the Corporation and does hereby fix and herein state and express the
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:

        Section 1. Designation and Amount. The shares of such series shall be
designated as "SERIES A PARTICIPATING PREFERRED STOCK." The Series A
Participating Preferred Stock shall have a par value of $0.001 per share, and
the number of shares constituting such series shall be 200,000.

        Section 2. Proportional Adjustment. In the event that the Corporation
shall at any time after the issuance of any share or shares of Series A
Participating Preferred Stock (i) declare any dividend on Common Stock of the
Corporation ("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 Corporation shall
simultaneously effect a proportional adjustment to the number of outstanding
shares of Series A Participating Preferred Stock.

        Section 3. Dividends and Distributions.

            (a) Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Participating Preferred Stock with respect to dividends, the holders
of shares of Series A 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 January, April, July, and October 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

                                      -1-
<PAGE>

of a share or fraction of a share of Series A Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock.

            (b) The Corporation shall declare a dividend or distribution on the
Series A 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).

            (c) Dividends shall begin to accrue on outstanding shares of Series
A Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A 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 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 from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
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 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 4. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:

               (a) Each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation.

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

                                      -2-
<PAGE>

        Section 5. Certain Restrictions.

               (a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Participating Preferred Stock as
required by Section 3 hereof.

               (b) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 3 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
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 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 Participating
Preferred Stock, except dividends paid ratably on the Series A 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 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 Participating Preferred
Stock;

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

               (c) 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 5, purchase or otherwise acquire such shares at such time and in
such manner.

                                      -3-
<PAGE>

        Section 6. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein and in the Restated Certificate of Incorporation, as then amended.

        Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Participating Preferred Stock shall be entitled to receive an aggregate amount
per share equal to 1,000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock plus an amount equal to any accrued and
unpaid dividends on such shares of Series A Participating Preferred Stock.

        Section 8. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.

        Section 9. No Redemption. The shares of Series A Participating Preferred
Stock shall not be redeemable.

        Section 10. Ranking. The Series A 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 11. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Participating Preferred Stock, voting separately as a series.

        Section 12. Fractional Shares. Series A 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 Participating Preferred Stock.

                                      -4-
<PAGE>

        RESOLVED FURTHER, that the President, Chief Executive Officer or any
Vice President and the Secretary or any Assistant Secretary of this corporation
be, and they hereby are, authorized and directed to prepare and file a
Certificate of Designation of Rights, Preferences and Privileges in accordance
with the foregoing resolution and the provisions of Delaware law and to take
such actions as they may deem necessary or appropriate to carry out the intent
of the foregoing resolution."

        I further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Designation are true and correct of my own
knowledge.

        Executed at Dublin, California on July 31, 2002.

                                      /s/ DANIEL R. CARL
                                      ---------------------------------------
                                      NAME: Daniel R. Carl
                                      TITLE: Vice President, General Counsel
                                             and Secretary

                                      -5-
<PAGE>

                                    EXHIBIT B

                           FORM OF RIGHTS CERTIFICATE

Certificate No. R-                                              _________ Rights

        NOT EXERCISABLE AFTER THE EARLIER OF (i) AUGUST 15, 2012, (ii) THE DATE
        TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE
        RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
        REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE
        TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
        RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
        ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
        RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
        NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS 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 RIGHTS
        CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
        IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
        AGREEMENT.]*

                               RIGHTS CERTIFICATE

                                  SYBASE, 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 July 31, 2002, (the "RIGHTS
AGREEMENT"), between Sybase, Inc., a Delaware corporation (the "COMPANY"), and
American Stock Transfer and 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 P.M., New York time, on August 15, 2012
at the office of the Rights Agent designated for such purpose, or at the office
of its successor as Rights Agent, one one-thousandth (0.001) of a fully paid

-------------

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

                                      -1-
<PAGE>

and non-assessable share of Series A Participating Preferred Stock, par value
$0.001 per share (the "PREFERRED SHARES"), of the Company, at an Exercise Price
of $90 per one-thousandth (0.001) of a Preferred Share (the "EXERCISE PRICE"),
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one-thousandths (0.001)
of a Preferred Share which may be purchased upon exercise hereof) set forth
above are the number and Exercise Price as of August 15, 2002 based on the
Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Exercise Price and the number and kind of Preferred Shares or
other securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.

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

        Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a redemption price of $0.001 per Right or (ii) may be exchanged by the Company
in whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.

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

        No fractional portion of less than one one-thousandth (0.001) of a
Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.

        No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until

                                      -2-
<PAGE>

the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

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

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

ATTEST:                                    SYBASE, INC.

                                           By:
--------------------------                    -------------------------------
Secretary

                                           Its:
                                               ------------------------------

Countersigned:

AMERICAN STOCK TRANSFER AND TRUST COMPANY
as Rights Agent

By:
    ------------------------------

Its:
    ------------------------------

                                      -3-
<PAGE>

                   FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate)

        FOR VALUE RECEIVED _________ hereby sells, assigns and transfers unto

-----------------------------------------------------------------------------
                (Please print name and address of transferee)

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

Dated: _______________, ____

                                               -------------------------------
                                               Signature

Signature Guaranteed:

        Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>

                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes that:

               (1) this Rights 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 Person (as such terms are
defined in the Rights Agreement);

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

Dated: _______________, ____

                                               --------------------------------
                                               Signature

Signature Guaranteed:

        Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>

             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Rights Certificate)

To:___________________________

               The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Rights Certificate to
purchase the number of one-thousandths (0.001) of a Preferred Share issuable
upon the exercise of such Rights and requests that certificates for such number
of one-thousandths (0.001) of a Preferred Share issued in the name of:

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

--------------------------------------------------------------------------------

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

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

--------------------------------------------------------------------------------

Dated: _______________, ____

                                                --------------------------------
                                                Signature

Signature Guaranteed:

        Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>

                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes that:

        (1) the Rights evidenced by this Rights 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 Person (as such terms are defined in the
Rights Agreement);

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

Dated: _______________, ____

                                                --------------------------------
                                                Signature

Signature Guaranteed:

        Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>

             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                                     NOTICE

               The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

                                      -1-
<PAGE>

                                    EXHIBIT C

                             STOCKHOLDER RIGHTS PLAN
                                  SYBASE, INC.

                                SUMMARY OF RIGHTS

<TABLE>
<S>                      <C>
DISTRIBUTION AND         The Board of Directors has declared a dividend of one
TRANSFER OF RIGHTS;      Right for each share of Common Stock of Sybase, Inc.
RIGHTS CERTIFICATE;      (the "COMPANY") outstanding.  Prior to the Distribution
                         Date referred to below, the Rights will be evidenced by
                         and trade with the certificates for the Common Stock.
                         After the Distribution Date, the Company will mail
                         Rights certificates to the Company's stockholders and
                         the Rights will become transferable apart from the
                         Common Stock.

DISTRIBUTION DATE:       Rights will separate from the Common Stock and become
                         exercisable following (a) the tenth day (or such later
                         date as may be determined by the Company's Board of
                         Directors) after a person or group acquires beneficial
                         ownership of 15% or more of the Company's Common Stock
                         or (b) the tenth business day (or such later date as
                         may be determined by the Company's Board of Directors)
                         after a person or group announces a tender or exchange
                         offer, the consummation of which would result in
                         ownership by a person or group of 15% or more of the
                         Company's Common Stock.

PREFERRED STOCK          After the Distribution Date, each Right will entitle
PURCHASABLE UPON         the holder to purchase for $90 (the "EXERCISE PRICE"),
EXERCISE OF RIGHTS:      a fraction of a share of the Company's Preferred Stock
                         with economic terms similar to that of one share of the
                         Company's Common Stock.

FLIP-IN:                 If an acquirer (an "ACQUIRING PERSON") obtains 15% or
                         more of the Company's Common Stock, then each Right
                         (other than Rights owned by an Acquiring Person or its
                         affiliates) will entitle the holder thereof to
                         purchase, for the Exercise Price, a number of shares of
                         the Company's Common Stock having a then-current market
                         value of twice the Exercise Price.

FLIP-OVER:               If, after an Acquiring Person obtains 15% or more of
                         the Company's Common Stock, (a) the Company merges into
                         another entity, (b) an acquiring entity merges into the
                         Company or (c) the Company sells more than 50% of the
                         Company's assets or earning power, then each Right
                         (other than Rights owned by an Acquiring Person or its
                         affiliates) will entitle the holder thereof to
                         purchase, for the Exercise Price, a number of shares of
                         Common Stock of the person engaging in the transaction
                         having a then current market value of twice the
                         Exercise Price.

EXCHANGE PROVISION:      At any time after the date on which an Acquiring Person
                         obtains 15% or  more of the Company's Common Stock and
                         prior to the acquisition by the Acquiring Person of 50%
                         of the outstanding Common Stock, the Board of Directors
                         of the Company may exchange the Rights (other than
                         Rights owned by the Acquiring Person or its
                         affiliates), in whole or in part, for shares of Common
                         Stock of the Company at an exchange ratio of one share
                         of Common Stock per Right (subject to adjustment).

</TABLE>

<PAGE>

<TABLE>
<S>                      <C>
REDEMPTION OF THE        Rights will be redeemable at the Company's option for $0.001
RIGHTS:                  per Right at any time on or prior to the fifth day (or such
                         later date as may be determined by the Company's Board of
                         Directors) after public announcement that a Person has
                         acquired beneficial ownership of 15% or more of the Company's
                         Common Stock (the "SHARES ACQUISITION DATE").

EXPIRATION OF THE        The Rights expire on the earliest of (a) August 15, 2012 or
RIGHTS:                  (b) exchange or redemption of the Rights as described above.

AMENDMENT OF TERMS       The terms of the Rights and the Rights Agreement may be
OF RIGHTS:               amended in any respect without the consent of the Rights
                         holders on or prior to the Distribution Date; thereafter, the
                         terms of the Rights and the Rights Agreement may be amended
                         without the consent of the Rights holders in order to cure
                         any ambiguities or to make changes which do not adversely
                         affect the interests of Rights holders (other than the
                         Acquiring Person).

VOTING RIGHTS:           Rights will not have any voting rights.

ANTI-DILUTION            Rights will have the benefit of certain customary
PROVISIONS:              anti-dilution provisions.

TAXES:                   The Rights distribution should not be taxable for federal
                         income tax purposes. However, following an event which
                         renders the Rights exercisable or upon redemption of the
                         Rights, stockholders may recognize taxable income.

</TABLE>

The foregoing is a summary of certain principal terms of the Stockholder Rights
Plan only and is qualified in its entirety by reference to the Preferred Stock
Rights Agreement dated as of July 31, 2002 between the Company and American
Stock Transfer and Trust Company as Rights Agent (the "RIGHTS AGREEMENT"). The
Rights Agreement may be amended from time to time. A copy of the Rights
Agreement was filed with the Securities and Exchange Commission as an Exhibit to
a Registration Statement on Form 8-A dated August 5, 2002. A copy of the Rights
Agreement is available free of charge from the Company.

                                      -2-

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