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• F ~ s w t~- 1 l - t? ::-x=k~r.% . .- 4 - . . ..- .;:> ....:~ . ...+ _ _ DEBENTURE PURCHASE ACREEifEilT This DEBENTURE PURCIiASE AGREErIENT ("this-.Agree4.ent") ent~ ered intoJ the 2'7 L"'day of July 1977 by and between CETUS CORPORATION, a Delaware corporation having its e::ecutive offices at 600 Bancroft Way, Berkeley, California 94710 (referred to herein as "Cetus") and STANDARD OIL COAiPARTY, an Indiana corporation having its executive offices'at 200 East~Randolph Drive, Chicago, Illinois 60601 (referred to herein as "Standard") ~ : ~.., r...,~j Cetus will authorize the"issuanc : e and• rsale to Stand d f i s 7. Section 1. The Debentures ge etu an Standard agre ,e~ asoows fll 1JITNESSETH T, y v.tr'' y'~ t •: ,t 7.•. , fa . 1' t,,,.., '^4f~~t,; ` In consid.eration of the `m'utual covenants Yierein contained and other ,`,~, w ~ good and valuable consideration receipt'and sufficiency of which is hereby~t ~ acknowled d C s d ' ar o t 5$ ?r'~`'t Convertible Debentures due August 1, 1992 (the."Debenturessuch term to include any Debenture ' or Debentures issued in exchange •therefor or + ~~ replacement thereof pursuant to Section 18 of the Debentures)) in ther~~''~ ~ 9 ~ ~, aggregate principal amount of $5,000,000. The Debentures shall be ~?~ ~ .. ~ { .N ~ dated the date of issuance and delivery, shall bear interest at the'rate ;;YW4 ~Ak:. f 7 S% o . ~ per annum on the unpaid amount thereof from the date~ of issuance ' ' . to the maturit date • ~ shall be ' , ,,~~ ~ Y , payable `semi-annually beginnin on ~.". , g y ~.- tysok~ J Februar 1, '1978; and ' on r each August 1 and February I' thereafter to and ~~ ~z~'. incl di A a u ng ugust 1 1992,hlle Augt ,;' , sa matur onus 1;1992 shall be ` convertible on or before July 26, 1992,' into shares of the $0 0375 er~ , . p ,F '" AA F '~~ l. share par value Common Stock of Cetus in accordance with, the provisions of Section 6 of the D b ` e entures, and shallthi b subtaill„y oerwseesntayin the form attached `' hereto as Exhibit A. Section 2 Sale ~~b ~ and Purchase of Debentures' Yt~ ~. .~ `~?~Z . ?a, ;- ,. ~ ~ `~. f, 7~~ f- Cetus will issue _and sell to Standard and sub j ect to the terms ' and conditions and in reliance on the representations and warranties of Cetus ` contained herein,' Standard will purchase and ~ pay for the Debentures in the z-< principal -amounts of (a) -$•2,000,000 on the First Closing Date and (b)' $3,000,000 on the Second Closing Date. :1.•SJ ~ t t_ ~ ~. Section 3. Use of Proceeds "~s~ ) Cetus will apply tlie`"proceeds of the.sale of the Debenturesy to fund its`ongoing research efforts including purchase of laboratory equipment, laboratory or production facilities, and the acquisition`of'n'ew technology, ~k Pending the application of the proceeds ~ to such use, Cetus-may invest j~ R3 1. c ,~ :~ l.1 FfS ' 1',.. vf s~ r t/.r ci :.o.^Tr:3»`}i~l itl'43~~3Nl~L~Xq~.,~ q :- 0 t , 1. ,.9r~~` ... .,... -... >~r :f. .~4?.- a..-n.. i i: ^ "A„+~ }7 ~.f _~ 4 Q.

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~ t > Income E'oting Preferred Stock dated April 28, 1972 ('"Series x unissued_ or~ treasury shares of Common Stock or- Preferred Stock ~, except as set ~€orth.in such exhibit; have any authorized but :. S Y Convertible Income Voting Preferred Stock dated November 29, - 1976 ("Preferred Stock") and are outst3nding , The~re are no shares of the preferred shares issued pursuant to a Certificate of Determination of Preferences of Series A Convertible .~._ t . ` A Preferred Stock") now outstanding, the 20,000 such shares f.L... .. .. bY`:3vu ~ originally issued having been returned to Cetus for exchange °° either for Preferred Stock or Common Stock,. Cetus intends : '1;11`~wpU~') to amend its Certificate of Incorporation to increase the " number of authorized shares of $0.0375 per share par value co;nmo*i s tock to 4, 000, 000 shares prior to the First Closing Except as set, forth in Exhibit B hereto, there are no out- ,~ d~ 03 standing warrants or options to purchase the Common Stock or . Preferred Stock of Cetus granted or issued by Cetus, nor, ^ ~ :`~ been 'reserved for,issuance at some future time or on the K . ... . ~ .~ happening of some event. '"S( o ~J4`~S`J~~s3y.`_~~!'rf~ ` (e), _ Government Approval. No approval, authorization,- consent -: a overnmental authorit is re uired b Cetus for the e ti xe o g Y s{f' ~, or orider of, or designation or declaration with,`any- +Y. n, ,., cu q Y :' delivery, or carrying out by Cetus of this Agreement, the ~-_ ..:~ x y~~ S . . .. ,. .,. - Y x3~ii ~ Debentures, or any,of the acts or transactions contemplated _ ... by this Agreement or the Debentures, other than qualification of sale of the Debentures with the Commissioner of Corporations of the State" of California and the acceptance of_ the Secretary of State of the State of Delaware of the filing of an amend h- ditr~~.c~ ~:`'~~~;' ment' to the Certificate of Incorporation of Cetus . increasing the:.:.umb - ..er. . ..ofu ..a... _nthorized shares..; The sale of the Debentures ~ has not beenJ 'qualified with the Commissioner of Corporations ,,,'s of the State of California and the issuance of the Debentures t"~,a yF_. F '- y e payment.,or receipt of any part.of the consideration "'` or th . ~~`' '`~ ' 1 > ,~' ~~ `' therefor prioro to such qualification is unlawful:-: The rights ,. t;r+~~~Man~ ~,... of the+parties are expressly conditioned upon such qualifi= t cation being obtained. (4-a '0"r;f.q~ t3~~ ji ~~}`i ~ ~(f) Non-contravention, Neither the execution'nor the delivery this Agreement or the Debentures;..the consummation of re the transactions contemplated in any of ,them, nor--compliance with the terms-and provisions of any of such ins-truments " z~7~"'~4rwill conflictrwith or result in_a breach of any of the , ~+terms; conditions or provisions of any law or of JV any order, 4xw writ, injunction or decree of any, court. or governmental ~ • ~ . 'instrumentalityj, or of any agreement or'ins'trument, to rr.. ~ . s. Y v' ~ , ... ,~jlia . ,...,.. :.... . . , which Cetus is a party or by which.it is bound or to ~_ ~~ss ^ ~2xt3 3zrL~r ~ which it is subject, or constitute.a default thereunder " U or will result in the creation or imposition of any lien, svi~;~• charge or encumbrance of any nature whatsoever upon any of the property of Cetus pursuant to the terms of any such agree- ~ ment or instrument, except as provided in this Agreement. ,'~f~f 2 { a1~~ a ~ -) ~ k1 .. 4 .. ~..YL-. -d ,

Z3.i!aI`~ "TrI !1, _ (g) Financial Statements:" Attached hereto as Exhibit C are the financial statements of Cetus for the fiscal years ended ...~~1_ x-: June 30,' 1975, and June 30, 1976; together with the report . ; dtd Jl 16 1976f -~aeuy,, o Arthur Young & Company, Certified : n~jya;#a r:DPublic Accountants as to such financial statements. Cetus represents that since the end of the last period covered by ~"- ' r--such reports nothing has come to the attention of Cetus which ,-flf: causes its martagement to questioii the aceuracy `of the state- 4u ~Z4 - '_;: ments; either in whole or in `any part,,° as of the time such ut.iurD ;~a statements were given:' There have been no inaterial adverse . changes in the financial conditioa of the company since the . '': dtefh 's," except isae beri i a o sucreport . hvenade known to Standard in -writing priof` to the "execu*ion-of this Agreement . rg f+,~~ ` j~,~u ~.t_ o: Prior. to the First Closing Date;wCeti~s will cause financial ~ statements covering the fiscal year'~ended' June 30, 1977, to be ' tz~; furnished to Standard in`substantially' the sage`-format and containing substantially tlie' same ~detail~as" for' the precdng`' ei two years, such reports to be certified by Arthur Young W ~ ~~, Company.;~ At Standard's 'request; Cetus will iiistri~ct Arthur.: V,Young & Cqiapany to meet with Standard's~representatives to aaw tn:~1- discuss the procedures employed in'preparing its audit, all results of such procedures; and to furnish Standard's repre a'~ ~~~r~`~,t ~ sentativesa with' copif its dldke es oetaie wor shets and schedules ct~3~~ti~xYt~ . backing up such audited statements '~ '~~' ~' ; 1~1 Y-].+.'~'7~ (h) ;'Litigation j. There' is' no material~~ litigation or proceedin Ts, pending or to' the bt kldfet ,esnowege o, managmen threatened, RK, "Z against Cetus or involving any of its husiness`; operations; ' ~ Iat:l R:5 t~0properties or assets;° including"without reservation claims of patent or trademark infringement.'""`' a'`! ar~ yo~~ ro '2F ~;35 zsr,.;.~~ i) Offering of the Debentures.` Cetus has not', directly or ; 6mT throughntffdh any age, oere te Debentures or any part thereof A D'A ~ir,Wr, or any similar securities for sale to, or solicited any offers to buy any thf fhwio ereorom or oterseti , negated in respect;t thereof with, any person or persons other than Standard. Neither it nor ariy agent on its behalf will, directly or „ ' o indirectly, sell or offer to sell, or attempt to offer to tq~„dispose of, the Debentures or any substantially similar vaja.~- ,: securities to_~; or solicit any 'offers to buy the-Debentures _ or any substantially similar securities from~ or'otherwise , F approach or negotiate in' respect thereof with, any others or take any other action that will bring the issue and sale of , 5': the Debentures under the provisions of Section S of the Securities Act of 1933 (the "Securities Act"), without first x!9L,g obtaining the consent of Standard. ``` ~" ~~ `,, " }. tt~res_oiL~+.

Section'5. Fepresentations of Standard . ". __, .. .. Standard represents and warrants that: ,. ,~- `-(a) Purchase for Investment.. The Debentures are being purchased for its own account and not with a present view or intention t th ditibtio or resale throf subject to the fact oesrunee , that at some future date Standard may determine to dispose of such securities. - - ' Restricted Securities. Standard acknowledg2s that the Debentures and the Common Stock issuable upon conversion of such Deures have not been registered under the Securities " Act and are"restricted securities" a5 defined in the Securitiesl . nd Exchange'Commission's Rule 144 under the Securities Act,:` that the_effect,of such non-registration is that the Debentures and the Coriinon Stock issuable upon conversion of such Debentures must b e held indefinitely unless subsequently registered under... the Securities.Act or an exemption from such registration is ; available at the time of any proposed sale or other transfer thereof , Section 6 Closings . The closings for the sale and'purchase of the Debentures (the "Closings") shall take place at the offices of Standard at 200 East Randolph Drive, Chicago, Illinois 60601 at 10:00 A.M. on S~psa~ab~; 1977, ("the First Closing Date") and on January 17, 1978, ("the Second Closing :". Date").' Cetus reserves the right to delay either of the Closings to a date certain by delivery of notice of such delay no less than 5 business days prior to the date of such closing, provided that the First Closing ' s+. ,.. ~y shall not be delayed to a date later than October 1, 1977, and that .: the Second Closing shall not be delayed more than once nor to a date later than January 31, 1978, without Standard's consent. At the Closings, Cetus will deliver the Debentures to be issued and dated as of the dates of such closings, in the aggregate principal amount of $5,000,000, aYable to Standard's order against payment of the P P urchase price therefor .r~~ ~ ... , . , by check payable to Cetus." If Cetus shall, at either closing, fail to '' ~`"tender the Debentures as herein'provided or the conditions specified in ; Section 7 shall not have been fu1fi11ed.to Standard's satisfaction, Standard may elect to be relieved of its obligations hereunder, or to waive said condition an&proceed to consummate the purchase. _. . .: ss Section 7. Closing Condition ~ 16 7.1 Conditions for First Closinh , •. r d r s ria . ~ ,:.. ,~f ,-- u. ... .,_.. . _.. . .. . . . Standard's obligations to purchase and~pay,for $2,000,000 principal amount of the Debentures on the First Closing Date shall be subject to ~ the accuracy of the representations and warranties of Cetus contained herein, to the performarice by Cetus of all its agreements contained herein to be performed by it at or prior to the First Closing Date, and to the satisfaction of the following conditions precedent on or prior to the First Closing Date:.

F } L1 r. - 6 - s a , x s " - ,r . '~M!lg+~Fsw~'!~*ttl'A't:'+~ilf'Sdt~f1~~M*4¢~!~t'?~"~. ,.. ... . .. ;~h . ~<'., . . . .) D-_ . . 4.. a`_ . . .

~'~~~~~..;. +'_',"..f' Wtl~- ;;,..--: : k such counsel :~ (vi) Certificate of_an officer of_Cetus dated`as „ of the and' warranties contained in this Agreement; whether ;• " t in Section 4 or elsewhere, or in the Debentures as of :.. Y 1 .Y. "1. »a~ , <Y`R;J > '' (iv) Ir~ c.•;CA l"i 4 + 4r ~ . k! S z';'f 1'•'t s fT: - 3 r ^a `, r The Debentures in such denominatiozs'as Standard may request each properly executed by the authorized representatives of Cetus and dated the date of such closing. . (v) An opinion.of counsel to Cetus.dated the First Closing Date to the effect that each of the representations and ~-hl warranties of Cetus set forth in Sections 4 and 8, except for Section 4(g) as to which such counsel. need _`,1 i~'a~ :.' express no opiniori, • is true and correct as of the date of such 'opinion to the best knowledge and belief of :' r .` ~ .. . First Closing Date reaffirming the representations ,.: . ` such date, representing that there have been no ,:~ a,dverse 'changes in the business,` properties;~ or~~ ` ~ 3,r~:~~,4 financial condition of Cetus since the end" of the ~ last fiscal year for which audited finaucial state tr,, xf{ri= ments have been furnished• to Standard'except `as has :; been made known to S tandard in writing prior to the 0 execution of this Agreement.. ; ia Q N4 9 {s+? Rr~• i.JY (b) Successful Tender for 0utstanding Securities t sirr, ,.r ,~'*At at least 100,000 shares of Common Stock from'the holders of such shares pursuant to Section 8 of this Agreement u ~- (c) Necessary APProvals ~r~~,lc~ ; Standard shall have been successful iii its``efforts to` purchase at least 10,000 shares of Preferred Stock and w` . .. . .. . _ . .. . -~ >. > df, ~rg~ L i~.f.a ..l_.~ consents as set forth in Section 5(e) hereof to permit consummation of *the transactions being provided for hereiii:f"'" _ ,.....,. .,. .. - „ Cetus shall have obtained aLl necessaryapprovals and .. Krr 7 2 Conditions for Second Closzng „. 4A~~ 1r. ~ < - Standard's obligations to purchase and pay for $3,000,000 principal ` amount of the Debentures on the Second Closing Date sliall be subject to: 8'3~filip The First Closing under Section 7.1 shall have occurred, :i~ ' Z * ~~~;;.(b) Standard shall have received closing documents substantially as required by Sections 7.1(a)(ii), 7.1(a)(iii), and .• 7.1(a)(iv) dated as of--the Second Closing Date except with` respect to the Good Standing telegranis required by Section 7.1(a)(ii) which shall be dated the day prior to the Second . Closing Date. 1 l~• . :. - . . . . . . . • .. ' .. . .-,. . . .. ._ . . . . ... ., L .. .. l w}' 1 Y 1 ti 7ys~+~ ~r J t7.

.43 I I •.i y }. .. . J.: { _. ~" (c) Standard shall have received an opinion of counsel to Cetus ~' to the effect that the Debentures being delivered at the . 11I Second Closing have been duly authorized, properly issued, ~,..~ and when paid for will be the enforceable obligations of -,'; _'~"' = _ =. Cetus, subject to the laws governing the enforceability of creditor's rights generally. - ' . ; :•. . t , . . . .• '•f :...,. .• , : ..•.._ ...,;. . . . .. ..' . .. ,- .... ..: _..: : (d) Standard shall have received a certificate dated the' date 4= r of such Closin g from an officer of Cetus to the effect that as of such date and without reflecting the proceeds of the F~ ~ sale of the Debentures to be sold at the Second Closing the~~`x r total assets of Cetus exceed its total liabilities and con- t~r~` . '' 3~ ~w ;, firming that the proceeds of such sale will be applied iQ ;~`:~ accordance with Section 3 of this Agreement. Sv - Section 8. Purchase of 0utstanding Securities of Cetus Y # t ~ i T Y , ~- } . ::. ~. R Standard proposes to offer tospurchase for cash directly from theT~i,, holders thereof the following securities f of Cetus -Crt~-• ,. (a) 10,000 shares of the outstanding Preferred Stock issued~piir f-^? suant to a Certificate of Determination of Preferences of 14 ~~ Series B Convertible Income Voting Preferred Stock dated `i' November 29, 1976, for . a price of $330.00 per share.. ~;s;F ~.yV (b) 100,000 shares of the~outstanding Common Stock, for a price of $15 00 per share. k 4li{ f c 4Y~'i, /S3 r'Jtti 4~ "'S b~`;s d~~fG~ sri rfs`i[! .~Cl~lFVC "S~ ~~ 1lCr~~ a~t. r~M Cetus agrees that it will not oppose Stanaard's o.^.ffer and will not r ,~3,.,' i "_ t'a. ~} discourage any shareholder who wishes to accept Standard's offer. Cetus 'y~~ " will furnish to Standard a list of the holders of s ecurzties for which ~, j Standard wishes to extend an offer to purchase together with the number of shares held and each holder's last known address. Should any person +t seek to exercise a conversion right or to exercise an option in order to make a timely acceptance of Standard's offer Cetus will not obstruct or V~~i dela ~,,.~ y the issuance of the stock issuable on such exercise.' r- i.'Sk 11..1 ir F i It is understood that• while Standard intends 'to offer to purchase only the number of shares of each security as is set forth above if more shares are submitted in response to its offer than it solicited, Standard will either accept all shares tendered or will select from the shares 4y y,. tendered -except that Standard may elect to purchase all shares of any Sft~~,~Q}` : tender consisting of 50 shares or less of Preferred Stock or 1,000 shares s~ ?,' or less of Common Stock. 4+~j" ~'.t~' F Cetus represents and warrants to Standard that the Preferred Shares 's now outstanding and the Common Shares now outstanding have been duly and ~ " properly issued for a consideration at least equal to the 0 '* ~ par value of sach shares when issued, are fully paid and not subject"to assessment ~ ~xf > ` . r#a! J ~ ~~ ~~ R l~tuCj~s *~F. ! ~7 a T~~ )4 ~ ~',. t'0 ~j3 t T.~LfY .2..Y rt ~ 8 y"`4ryk ~,~', ~'1'~,. -~ ~,` 5.i ~~ ~y , 4 4s~ ° rvt' . ~ ,t =tiwCr'.,: d - qp Nr~ ' -

' that eachPreferred Share is convertible into 22 Common Shares, and that the holders of the Preferred Shares voting as a class have the right to elect four directors of Cetus. Cetus agrees that no additional shares n..J, r...: . of Series A or Series B Preferred Stock will be issued without the approval of a majority of the shares of the Preferred Stock ' - Section 9. Sale or Transfer of the Shares; Compliance with the Securities Act of 1933, etc. Standard shall be entitled to have the shares acquired by it in the transactions contemplated by this Agreement or on conversion of the Preferred Stock or debentures (the "Shares"). W: registered for sale under the terms and conditions of this Section 9. " .- _ 1 Certain Definitions.~ As used th Sti 9 Th 9. inisecon,e fvllowing terms shall have the following respective meanings: [y) ~ "Commission" means the Securities and Ekchange Comnission,` } or any otherFederal agency at the time administering the Securities'Act. 4 = "Securities Act" means the Securities Act of 1933 oi`any ,r" similar Federal Statute, and the rules and regulations of the Commission . . .: issued under that Act, as they each'may, fr=time to time, be in effect. - .. . ~x ~... ~ , " : . "Transfer" means any deposition of any shares of Common ~: Stock or-rights to purchase shares of Common Stock or of any interest'in'; shares of Common Stock that would constitute a sale of such stock within the meaning of the Securities Act:~ ~ t{ fA:+~ w~~!Y~' "'' ~t, ' "Prs" idiidlri; a~parner eons means annvua, a corpoatont ship,•a trust, an unincorporated organization, and a government or atly department, agency, or political subdivision thereof, 11 Registration StatementIf means a registratioJn statement Y.y; ~ (other than on Forms S-8, or Form S-14) filed by Cetus with'the Commission ~=for an underwritten public offering and sale of securities of Cetus.`; "Registration Expense" means the e~,-penses described in ..~?~.. C:....~ ..--_... ... . ._. ... ...:..: ..: .. 1....-.. ..l~-r ..~~ .,..; Section • 9.7. ;-.r. s~:i~ 3r, e 9,2 ' Sale or Transfer of the Share's.' On the basisT of the representations set forth in Section 5 the Shares'are not being` , registered-under the Secu•rities Act. The Shares shall•not be sold or_.,, transferred unless either (i) they first shall have'been registered under the Securities Act or (ii) Cetus first shall have"been•, furnished witli an opinion of legal counsel reasonably satisfactory to'it stating that'such sale or transfer is an exempted transaction under the Securities Act and, unless such opinion states that the Shares may be"transferred by the transferee immediately after acquisition without registration under the Securities Act, a written agreement by the transferee of the Shares not '."u;' to again sell or transfer the Shares without complying with the require- ments provided for in this Section 9.2. ,"

. . .. .. . .. . . _l'_ _ . ..' _ .. ~' _ .~~ .. ... .. . - , , . - .. ... . . , . . .. . - . . ... .. 9.3. Restrictive Legend. Until the Shares have been registered under the Securities Act or until Cetus shall have received an o of counsel pursuant to the preceding section stating thnt the Shares may ,~ `}?srbe transferred by the transferee thereof immediately after the acquisition ; f 'without registration of the Shares under the Securities Act, each cer- tificate tificate representing the Shares shall bear the following legend: s: 614 "The shares represented by this certificate have ~.,4~ riot been regis tered under the Securities Act of ~ T 1 "t '• . 1933 as a~aended and may not be transferred in ~~~:~~ the absence of an effective registration state- ment relating thereto under• the Securities Act of 1933, as amended, or an opinion of counsel satis- ~~~~~` factory to Cetus to the effect that such regis ~~ fA,* tration is not required under such Act." q r ~ i<.n.~rs"F r Y•r:ry e•h +S:Y ~ m t_ s' an the d Cetus Shares is shall sub'notify its transfer agent, if any, that the transfer of { .a~1,. ect to the rest ~~~~ ~ ricti ons, and instrLct ' ~,mpositions J M stop orders, imposed pursuant to this A reement _ , r ', P ~ .~ r' rti..? ' f 9.4 Re iiired Reoistration. If, after Pfarch 1, 1978, Cetus "5 ryshall be~requested by Standard to register not less than 100,000 shares (provided however that if such registration is the first public offering ,,, z; ,~~<<"'ts : = of the common stock of Cetus the minimu,-n number to be registered shall ,; be 2.50,000) of Restricted Stock under the Securities Act, Cetus shall, : Ji as exP editiouslY as possible, use its best efforts to re-ister under the Securities Act the shares of Restricted Stock which Standard has requested '` Cetus to register to the extent necessary to permit the sale or other r-t disposition of such shares in accordance with the intended method of;;~ disposition specified in such request; provided,hot•zever, that Cetusr~r shall not be required to effect a registration under this Section 9.4 if ~'~.T}~~l it_ has filed and caused to become effective a Regstration Statement ~~ i t- #~,~ pursuant to Section 9. 5 within six months of the date a request is ~". submitted pursuant to this Section 9.4.. Standard's right to request and obtain registration pursuant to this Section 9. 4 shall. (i) be limited to , 4,:` two such registrations and to not more than one such.registration in an twelve-month period and (ii) terminate on August 31, 1992. . . .. , '.. 9.5 Incidental Registration.. Whenever Cetus proposes to file a Registration Statement, it will give written notice to Standard of its intention to do so if Standard then holds Restricted Stock, and, upon ~ Standard's written request; given within 10 days after receipt of any} G~Ir such notice (whieh' request shall state Standard's intended method of dispositioii of such Restricted Stock), Cetus shall use its best efforts ~to cause all Restricted Stock, so held by Standard and for which Standard r~Q~w ~y , has requested registration, to be registered under the Securities Act to the'extent necessary,to permit the sale or other disposition in accordance7 with~.the intended method of distribution specified in Standard's request;' pTrovided, however, that Standard's right to request and obtain registration -~"' *-~ ~- 5 pursuant to this Section 9.5 shall terminate on August 31 1992. x f , P t . . . > f~'IL\5~~~~~ yl ~ 5 q'•..:~., . .... .... 'Z:•- . . f Y 7, ;L7

F .. F ~ .. •_aar~ 1 ~~ ..f...._ .~ ' ..>.. s.y.~~ . r " managing underwriter shall request, that it will not sell or offer for agrees now, and agrees to sign such supplemental agreements that the~z offering and Standard shall have declined to accept such offer, Standard . .,.. . ... ...- .. . ... ..... . .. . - . . - - .. .. ... . , _ .i . . ,... .. ....- _ .,' /. , ... .;'.' .1"n ... '.'.. •_-L;...- `.. .. .. _. .; ..~ ..~, . . . . . : ~= - In the event that Cetus proposes to register any shares of. c Common Stock for the purpose of:an underwritten public offering and-.; shall have offered to include as a part of such offering Restricted r Stock as to which registration shall have been requested by Standard~ ;'fpursuant to this Section 9.5 on the same terms as shares of Common Stock ,.,.; are to be sold by Cetus'`and/or by other selling stockholders in such~~ W a'":u.-, . .. . . .. . ~ 4 sale any Restricted Stock pursuant to the Registration Statemen`t covering ~~~~~r Rx such offering until 90 days after the effective date of the Registration ;~,:' ~t Statement ~-p.l,~. .~ 'S~? a.f • ~ •' t ~ 4~} : 'F ~ Y''N Vc..~+' A. S.. : a • .. . . f 1" E ' '' . ..: - . . . ... ... .' _ . ... . . . . .{ }~~. 4.~.T.T.N...`.fq'4~ If"tlie offeririz to which the proposed re2istration und~eir t is ! ~Section 9.5 relates is to be distributed by or through an underwriter` ~: or undert~rriters Standard •if requested by such 'under.oriters`r, shallr agree '. , to sell its Res tricted Stock that is sub j ect to the Registratiori State ment to or throu g h such, underwriters at the same price . to be paid to Cetus or selling stockholders if Cetus or selling stockholders offering Common Stock; provided, however, if in the opinion•of the ,.~ . ` managing under~oriter the registration of all the Restricted Stock which : Standard has requested 'to be included would materially- aiid adversely affect such public offering," then Cetus shall be required to register~ only that number of shares of Restricted Stock, if any; which the . , . ._ , , . . <'.. ~.. ._ . i~ „ managing underwriter believes may be sold without causing such adverse e c pim t a 1' ffe ,~ y- ,i r i ~ 9, 6- R~istration Procedures , n If and whenever Cetus is required by the provisions of this Section 9 to use its best efforts to effect the R~ registration of any of the Restricted Stock under the Securities.Act ~ ~ . ... .. kT^~ ~.. ~ Cetus shall r d A ~s r c >J ~. +e. O ~",~t7 .Ll~ Jial ? 5 ' f thti 961:ithi 90f Ct .. wn days oeuss receipt oe noce specified in Sections 9.4 and 9.5, file with the Commission a Registration Statement with respect to such Restricted Stock and use its best efforts 't'aaJ . i.+. to cause that Registration Statement to become and remain effective for thirty days, if necessary, following its effective date, n~L P~ ..~! *?'i, l.a.+..c,~.:r.:'I.E.J f~'2~'S~y{Y -. ~ ,`:4 s_t~ ~- _.. 9.6.2. as expeditiously as possible prepare and file •?.with b.the Commission any amendments and supplements to the Registration State- ' ment and the prospectus included in the Registration Statement-as~may be ' : necessary to keep the Registration Statement effective and to.comply with the provisions of the Securities Act with respect to the' sale ortother ^ ..;,Act, and. such other documents as Standard may reasonably request in order to facilitate the public sale or other disposition of the Restricted ~~ Stock owned by Standard; tr ~-. ~ . ... . .. _ . . . . .. . . , .. . • .. + .. . . .. . , . -. . : ~,5~ . ~ ~ c:'.>e , . ~Cit~Y4. 9.6.3. as expeditiously as possible furnish to Standard such reasonable numbers of copies of the prospectus,"including a pre-l,~ ;,~,`~ ~, ~r,.,l+iminary prospectus, in conformity with the •requirements of theSecurities ; disposition of all securities covered by the Registration,Statement for . ! ,...a- ..~,..., ~,.a period of not more than thirty days after its effective date;, . t Y - 11 - ~ I !ff~ t , 4- ..,..., ...... .: -..qi::~•~

-. . . ., . ,....~_.. .... . . _ ....x.,P,~`.t•.•.,.__.. . . ~' ' - rxY~~-=;~ . ..= ..~ . .. . • . ., . .. . .:.: .. .. . . y .. .:. -..., , .... ... . .. 9.6.4. as expeditiously as possible use its best efforts F~ however, tha•t Cetus shall not be required in connection with this Section .~ 9.6.4. to qualify as a foreign corporation or execute a general consent "';:n to service of process in any jurisdiction. Xt; ~A i d d ng done so the prospectus shoul be amen Standard and after hav ed to comply with the requirements of the Securities Act, •the company shall " w r* r jurisdictions as Standard shall reasonably request, and to do any and , all other acts and_ things that may be necessary or desirable to enable `" ` Standard to consummate the public saleor"other disposition in such,- t jurisdictions of'the Restricted Stock owned by Standard; provided,a~~~ to register or qualify the Restricted Stock covered by the Registration Statement under the securities or Blue Sky laws of such states , . `- "~3~~3 r~ ~3 `"'z~" If Cetus has delivered prelir..inary or final prospectuses to , = ~promptlynotify Standard and, if.requested,:Standard shall immediately '~ cease making offers~of Restricted Stock and return all prospectuses-to , Cetus:f:Cetus shall'promptly provide Standard,with revised prospectuses ~..z{ ~ • and, following}receipt of the.revised ,prospectuses , Standard shall be : ~ J ~• j ~.:.,... .: . 4 .. . .. .. ~ r ~ . , free to resur e making offers of the Restricted Stock. t where the Shares are to be offered requires some other, allocation of ~ fees and expenses, and theexpense of any special audits incident.to or a ,r,~w expenses,„fees and disbursements of coun•sel for Cetus, State Blue Sky " including, without limitation, all registration and filing fees, printing . ~ , , ~9 7;; Allocation of Experises.: ;""Registration Expenses" shall '~`~ inean alI'expenses incurred by Cetus in complying with this Section 9,9 t--- ..' ~~ l~`r0 ~~rii n , and selling commissions. Unless the Blue Sky Couniissioner of any state ~ f ,_ .. ~ : required by any such registration but excluding underwriting discounts =~*A 'expenses Cets willay'all Registration Expenses in connection with,a bo`u p ~ ra`a q~ registration pursuant to Section 9.4 and 9. 5, except (i) those of ,:gd'~ " nt ha hd ty bt frtheritti expenese cmpanwouoveao pauo..egsraon ;. 's thoyld registration fees payable to the Commission_~ T~ Standard's counsel', (ii) with respect to Standard's Restricted Stock, (iii) additional registration and NASD fees based_upon Standard's shares, and (iv) similar additional ~i :. ~ "" ' ~ . .. r i ,. ,~ ..~ . ~ ~ of Standard!~s~ shares. If; in *connection"with a registration under Section 9.4; the 'Co:umission shall-require Cetus to submit audited financial statements for a period subsequent to-Cetus's most recent fiscal year, Cetus shall M1 ~^ f , [ with a Registration-Statement initially filed pursuant to•Section 9.4 4.:;~ unless it shall have received written assurances• from Standardd that : it '.;:. " " notify Standard of that fact`.,. Cetus shall have no obligation to proceed 4 a:~~~ if any, who controls Standardwithin the meaning of the Securities Act~ ~ of"the Restricted Stock under the Securities Act pursuant to this Section* 9;.Cetus will_indemnify and hoZd harmless Standard and each other:person, 9.8" Indemnifieation. In ths event ofany registration ation of any exceed $25,000. ' "''' :' ' ~ ~' :hll reibuseese csts fihdid ficil samr Ctu for thoo preparng suc autenana ,: statements; provided, however, that the maximum amount"of such costs : . which•Standard would be obligated,to reimburse Cetus hereunder shall not,>:' u ~ ar a I:? , r ;,. :,-

against any losses, claims, damages, or liabilities, joint or several, to which Standard or such controlling person~may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of any material fact contained in any Registration Statement under which such Restricted Stock was registered under the Securities Act, any preliminary prospectus or final prospectus contained in the Registration Statement, or any at:endr~ent or supplement w~ to the Registration Statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated in the Registration Statement or necessary to make the statements in the Registration Statement not misleading; andCetus will reimburse Standard, and each such controlling person for any legal or any other ~ expenses reasonably incurred by Standard or such controlling person in ~~ ~connection with investigating or defending any such loss; claim, damage, ~ ,or liability; provided,'however, that Cetus will not be liable in any ;such case to the extent that any"such loss, claim, damage; or liability arises out of or is based upon any untrue statement or alleged untrue - statement"or omission'_or alleged omission made in the Registration State- __.. ._. ._ ~u ment, preliminary prospectus or prospectus, or the amendment or supplement in reliance upon and in conformity with written information furnished to Cetus through an•instrument duly executed by Standard or any underwriter of such shares specifically for use in the preparation thereof. ~:T ~ _.. --Y{-_. . . _ . .. _ . .. . . _, _.. . _. 3H In the event of any registration of any of the Restricted Stock .under the Securities Act pursuant to this Section 9, Standard will indemnify and hold harmless Cetus, each of its directors and officers an&each person, if any who controls Cetus within the meaning of the ~ Securities Act, and each underwriter, with respect to any statement in or omission from any Registration Statement or preliminary or final prospectus, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to Cetus by Standard or on its behalf specifically for use in connection with the preparation of the Registration Statement or prospectus. !.V 9.9 Opinion Letter. Notwithstanding any of the foregoing pro- visions of this Section 9 to the contrary, Cetus shall have no obligation to file a Registration Statement on Standard's behalf or to notify Standard of the filing of any Registration Statement on its own behalf at any time after Cetus receives and delivers to Standard an opinion of Cetus' counsel, reasonably satisfactory to StandardIs counsel,*to the effect that the offer and'sale of the shares of Restricted Stock, in the manner in which Standard proposes to dispose of such shares as described in its request, are not required to be registered under the Securities Act. I , •r , s <, ~ :rJ } z 1•,> i' .. t7 Section 10. Additional Financing by Cetus ~Z! =.:~:1T•; Cri .. .,~~;. - Should Cetus hereafter determine to raise additional capital for the '-... purposes set forth in Section 3 it shall afford Standard the first right 'f 4, to be the purchaser of such securities on the terms and conditions set f'" ~ forth in this Section 10. ,: <=:~s - 13 - - AN r

tr -,10.I Type of Securities to be Sold ;. Except for the first $5,000,000 of debt instruments given by ~.Ce tus in consideration of_ the purchase by it of laboratory_ ~',.,_ ~ equipment, laboratory or production facilities, or new t.s•• c fi~Y technology, Cetuss agrees that the first $6,000,000 of se-,;;a:: . curities, other than the Debentures, to be sold by it during :'r~ ~ u3x Y~,_ the period beginning on the date of this Agreement andending ,ijj on December 31, 1982, shall be offered to Standard in'the form of Cetus'. $0.0375 per share par value Common Stock, and that the next $3,000,000 of securities to be sold during such:'^J~.;•~~; period shall be offered to Standard in the form of debt con `~r ~f4u1 Common Stockof Cetus.- : After a tota- - securitil of , curities shall hav $9OOO000nof ,es , ~~~e been sold during the indicated period, or upon expiration of the indicated period,` Cetus shall be s..s at,liberty~ to : sell whatever form of additional fi.a T~ :. . ___~._.__. .. .-___....,..._ _ securities it may electwitho t u reference to this Section 10 '~ •.. t' ~ p i :'3Ll7vf;S:~..?~sl?'. Notice to Standard of Cetus Determination to Sell Securitie s.1 Durin t ~ ~ ~ g he periodsifid i Sti 101 if C „pecenecon.etus elects ; to sell the securities contemplated.in.such section it shall :''~ ~ notify Standard of such fact in writing specifying the type "" and total amount of securities' to be sold and an estir,:ated '~ . date of sale. No more than two such notices shall be served 4~~ ~x+ ~~~•j~, on Standard during any twelve month period and no"notice shall specify an amount of securities to be sold ' of less than $1, 000, 000 nor more than $5,000,000.,; No notice may be served prior to ; the Second Closing Date. : After receipt of the notice Standard :Y shall have 30 days in which to elect to purchase such securities, r~ s, *::a' k'hich election shall be communicated to Cetus in writing.'c A: failure to respond within 30 days •after Standard's receipt of .'{ notice shall be, considered a refusal to purchase the securities. fne 103 Terms of Sale of Common Stock . (~' e ' c. cs~?t.~s r~~ :. If Cetus notifies Standard of its intent to sell shares W, , ._ of its Common Stock and Standard exercises its right to I ~-; purchase such shares the price of such shares shall be' oti; $15.00 per share (the "Stock Purchase Price"); provided~ ~ , however, that the Stock Purchase Price shall be adjusted hereaf ter. in the same manner as the Conversion Price is '~' ; adjusted pursuant to Section 6 of the Debentures.:',I rt Zoizvi -i`_ r3Pr?ti 10.4 Terms of Sale of Convertible Debt ~ ~ . - . . . - ~ . . . - . .. ~ ~ . . . 4 . . . If Cetus notifies Standard of its intent to sell con-::~2 vertible debt and Standard exercises its right to purchase' ;~,;, ,. such securities, the convertible debt will, be sold on terms jL F_-.substantially the same -as the Debentures, including a:~~ ~~ '~^ql1C~ i;b f3v: (a) the maturity shall be 15 years from the date*of issue,

r (ti) the interest rate shall be the same nuzber of percentage points above or below the Prime Rate as quoted by The First National Bank of Chicago <: on the 5th day preceding the date of closing as the interest rate on the Debentures is*above .or below such prime rate on the First Closing r-: Date, but in no event shall such rate be less than 6.0% per annum nor greater than 10.0% per annum; provided, however that if such rate is ~I c4 :a .c, . : higher than the highest rate permitted by g governing law then such highest lawf ul rate"~: shall apply.'~`.~~:d~ i.~fi3 '~0 `.~J'in.ls.~'~, r iz :YC li' '~~- • ~ .~ ~ ~. ', '~e~ ~'- .~. ~ , ~':: _. .. . . .... v -.~ :. . ~..'' . ... ....~ , ... .r. •. ....:... ..... . . . . (c) the conversion price shall be $15:00'per share subject to adjustments in such price from the First Closing Date in the same manner"and for the same occurrences as specified in Section 6 of the Debentures ; ~ ~d the debt shall be convertible for'a period endin g*" ~ on the 5th day preceding tlie date'd "` of maturity, an ~ SiU r} tr i . (e) such other provisions for-prepayment,'conversion, registration, etc. as shall make such debt sub- '` stantially equivalent to the Debentures. c } 10'.5 Cetus Right to Sell Securities to Third Parties ".., w ,: If Standard shall refuse or fail to~exercise'its~right to purchase the shares offered pursuant'to Section 10.3 or thei~ debt offered pursuant to Section 10.4-after having been e:.,_ given the opportunity to do so, then Cetus will be at liberty for a period of 180 days after such refusal or failure to complete a sale of such securities•to another party; provided, that (a) such sale may not be for a price for Common Stock less,than Standard would have been required to pay unless ' Standard shall again have been offered the election to pur- chase such Common.Stock at such lesser price in accordance with the procedures set forth in Sections 10.2 and 10.3, (b) no convertible debt sold shall have 'a `conversion price } -'less than Standard would have been'requ 'Zixed to pay unless d~ Standard shall again have been offered the election to' purchase such convertible debentures in accordance with the r procedures set forth in Sections 10.2 and I04 and (c) except , ., N_ 000 of any debt sold`,' for the first $5,000,to third persons, `: all such debt shall be unsecured and rank equally with the ~ Debentures. -Standard agrees to execute 'such documents as a third party lender may reasonably require to`subordinate the liens of the Debentures to the first $5000000 of sh ,,uc subsequent f inancing. 7~ (:': ~xr4,.is.F~ A T 17rC( i~~SJa4 :3a ~tl .. ~i}~ert~ J~J"w :0 a4~'iiJl.t...~Y.:.7L ~M T _ ' r L l.< r.~~~~ x _ 15

10.6 Effect of a Refusal by Standard to Purchase Securities If Cetus, within the period specified in Section 10.1 and before Standard has been offered the election to purchase a total of $9,000,000 of Common Stock and convertible debt under Section 10, makes a•bona fide offer to Standard to sell Common Stock pursuant to Sections 10.2 and 10.3 or convertible deventures pursuant to Sections-10.2 and 10.4 in order to fund a written research.or development program which has been approved by the Board of Directors of Cetus and Standard, being free to accept such offer, refuses to purchase such securities then the Conversion Price set forth in Section 6.4 of the Debentures.shall be increased in accordance with the following Z'i4y „ NCP =^ CP (1 + 0 075) where: "NCP" is the New Conversion_Price; and CP is the Conversion Price in effect oa the day Cetus makes the offer to Standard. . ..,. ,. 10.7 Limitation on Other Financir_gs ,;,o~ Cetus agrees that until the earlier of (a) Common Stock and Convertible Debenture offerings to Standard in the aggregate of $9,000,000 have been made by Cetus or E, (b) August 1, 1982, Cetus will not erigage in any other .? S sale of securities without first offering to Standard the right of first refusal to purchase such securities. The ' ._, provisions of this Section shall not apply to the sale of Common Stock upon the exercise of stock options now out ;_~. standing or hereafter granted pursuant to any stock ogtioa program now existing or hereafter approved by the•share- ., • holders of Cetus- r ° 4 ~~ A Section 11. y Appointment of Dirertors Cetus agrees that for so long as Standard;`or any subsidiary of Standard, owns at least 143,000 shares of Common Stock, or securities convertible into at least that number of shares of Common Stock, of Cetus, Standard shall have the right to designate two individuals, who may be employees of.;-•' Standard, for nomination.to be elected as Directors of"Cetus, and the management will recommend to Cetus shareholders that such designees be elected and will cast sufficient discretionary proxies required for the election of such persons, in excess of the number of votes which Standard or its subsidiaries may be entitled to cast by virtue of its`ownership of. Preferred Stock or Common Stock. So long as Standard;"or any sub- sidiary of Standard oums at least 50% of the Debentures, the Board of Directors of Cetus will not adopt any plan or agreement of merger, reorganization, or consolidation or recommend to Cetus shareholders the adoption of any such plan or agreement unless such plan or agreement has first been approved in writing by the directors elected pursuant to'this Section 11.

® ® ® .; 'x~ ca~ ~'Y~w'~t 4 `~ ` ~ . ys:Section 12. Survival of A greenents ~~ ~" -s,A11 agreements, representations and warrantias made herein and ia any certificates delivered pursuant hereto shall survive the delivery of „ ± ; the Debentures hereunder and payment therefor an&sha1L continue in fulli ~ y:force and;effect so lono as the Debentures are outstanding, or if the ; " a "Debenturesare converted into Common Stock then with respect to Sections j~.,. 9, 10, and I,.~l; hereof to and including August 31, 1992 ° ~~hj ~~ '" ' ' L * t ei 5 5" ~~r z Section 13 Notices A~~j 1 notices and other couuhunications hereunder shall be in wniting, g~ E --and shall be delivered or mailed by first class registered or cerpified aail ostage re aid addressed (a) if to Standard at 200 East k s p o P P a a s ~~ Randolph Drive,; Chicago, Illinois 60601, Attention J. C. Vredenburgh, _- y~,ss Treasurer, or at such other address as Standard from time to time may 'Y 'have designated by notice to Cetus, or (b)~ if to Cetus, at 600 Bancroft ~ ~ Way, Berkeley,"California 94710, Attention Dr. Ronald Cape, President, or at such other address as Cetus from time to time may have designated by notice to Standard. ~ ~ Se'Tc tion 14Y.: Miscellaneous '' ~ This Agreement or any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. All the terms of this Agreement shall be binding upon the r~ successors and assigns of the parties hereof. Any agreement or other `-4 „:docu:aent required by any provision hereof to be in the form of an Exhibit attached hereto shall be substantially in such form, with such changes therefrom, if any, as may be approved by the party to whom it is to be delivered. The headings in this Agreement are for convenience of ~; reference only and shall not define or limit the provisions hereof. This Agreement shall be construed in accordance with and governed by the laws of the State of California. ~r:. . - .. . . . . .. . ' . - ., ._ . . -. .. i ,- %*r F Witness Witness By Tiile: CETUS C0RP02ATI0N A/1 STANDARD OIL COMPANY By !5. Vice President In Witness k•hereof the parties hereto have caused this document to ..be executed by their duly authorized representatives as of the date first above written. c- .> U .. xs-? a r:.

EMBIT A _ .. . , i . . - ....r.. ~ _... __ . . .• _- r-- _ _. . .. i ; 7.5% Convertible Debentures Due August 1, 1992 C ;_ This Debenture and the Common Stock issuable on conversion of this . Tln}~ont..~rn 'kntvo -nt s,en.. en~~fo.-ed,+A-t1+e A..t ..F 1A7'1 _.1 .,{..;5. registration statement under the Securities Act of 1933 and an indenture ~ sold, transferred or otherwise disposed of in the absence of'an effective -Indenture Act of 1939. These securities may.iiot be pledged, hypothecated, an indenture has not been qualified with respect thereto under the Trust except under circumstances under which such registration and qualification qualified under the Trust Indenture Act of;1939 relating to the Debentures, . •e.l ,-. .._. 4 . ~ - 44 - r u:T ,., ,- . .~, are not required. a,.A..A . ..._iJ . .... , . ' ` - . ~' - . - . .. CETUS CORPORATION - ,:..~~:a.-. --,... ......... .. . _.. -r.. , ~... -~_2 the rate of 7.5% per annum, payable semiannually on August 1 and February 1 on the unpaid balance of such principal amount from the date hereof at amount of $,_.. .... .. (subject to prepayment as provided in ,.,.Section 2), and to pay interest (subject to the provisions of Section 8) :,:.~'~..... :....... - . .~c. - . :<'j' : . . .. .:_.:.. ,. ,. ..- .v : . . . .-L.. -, . .. - '~~: - . ~ . -a . ... 1.. .. .. . t _ ..v. . -.. .,.. ... _ . . . , .. . . _ .-. . . - . . .. - , . -. ~ .J . ... CETUS CORPORATION (the "Company"), a Delaware corporation, for value received, hereby promises to pay to STANDARD OIL CO:IFA:\'Y, an Indiana corporation ("Standard") or order, on August 1, 1992, the principal demand. All payments of principal, premium, if any, and interest shall . be made in lawful money of the United States of America by check mailed JwA on the second day preceding the due date to the holder of the Debenture, Q to 200 East Randolph Drive, Chicago, Illinois 60601 or such other address 0' in each year commencing February 1, 1978 until such principal amount shall become due and payable, (whether at the stated maturity or by ' required prepayment or notice of optional prepayment or declaration or otherwise), and on any overdue principal and premium, if any, payable semiannually as aforesaid or, at the option of the holder hereof, on O •5... 1,..1a.~.. ..f t1.o Te ?•%nnti.rc c1.~~l l. ...~n~tn to the in writin ~v~.~..u.a...~u~.... . . a~ u.~c iaviuca v~ ~.a~ ..~...~....~.~.. .,..u~ii g Company. '' Form of Debenture •~ N

1. Debentures. This Debenture is one of the Company's Debentures . due August 1, 1992 (the "Debentures", such term to include any Debentures issued in elchange therefor or in replacement thereof pursuant to Section 18, issued in the agoregate principal amount of $5,000,000 '. pursuant to the Debenture Purchase Agreement (the "Purchase Agreement"), dated July , 1977, between the Company and Standard. 2. Prepayment of Debentures. 2.1 Mandatory Prepa~-ments. The Company will prepay, as and for a fixed sin~:..ing fund:. (i) on Auo st =-~`Debentures at the time outstanding; such prepayment to be made at a 1, 1988 and on each August 1 thereafter to and including August 1, 1991, "'Two Hundred Fifty Thousand Dollars ($250,000) principal amount of the rice equal to 100% of the principal amount of the Debentures being prepaid without premium. All mandatory prepayments, and all optional = prepayments made during the period when mandatory prepayments are required 'shall be"without the payment of any accrued or past due interest, which ':~interest shall not thereafter be payable. Except as specifically provided in Section 2.2 below, no prepayment pursuant to any Section of this Debenture shall relieve the Company of its obligation to make the fixed prepayments provided for in this Section 2.1. ~:, '"2.2 Optional PrepaS-ment tdith Premium. On any Payment Date, the Company may, at its option, upon notice-as provided in Section 2.4, prepay the Debentures as a whole or in part from time to time, at a If Prepaid During 12-Month Period Ending August.1 , 1982. . . . . . . . . 4.50% . 1988. . : . .'. . ."": . 0.00% 1980. .' - . . . 6. 00% 1986. . . . ." . .:.: . . . 1.50% 1981. . . . . . 5.25% : _ 1987. . . . . . . . . 0.75% If Prepaid During : 12-Month Period Ending August l "" Premium 1978. . . . . 7.50% ;•. .1984. . . . . . : . . .'3.00% 1979. . .,'. ~ . ~ .`. 6.75% e 1985. . . . . . . 2,25% ... r,. _ . . t~ r 1983. . . . . 3.75% provided that prior to August 1, 1988, no prepayment pursuant to this Section 2.2 may be made directly or indirectly from or in anticipation of any proceeds of any indebtedness directly or indirectly created or incurred by the Company if such indebtedness has an interest rate or an ~ effective interest cost to maturity (determined in accordance with ~ generally accepted financial practice) to the obligor of less than 7.5% ~ per annum. A holder receiving notice that a Debenture is to be prepaid ~ price equal to 100% of the principal amount thereof being prepaid plus interest accrued thereon to the prepayment date, and plus the premium (percentage of such principal amount) applicable to such prepayre.^.t in • accordance with the folloi-jing, dependir•g.upon the 12-month period in `' %-- which such prepayment is made: ~fi.

r .. . . . ., z ... . . _ .. _ , i '.a3`~•.,~. provided in Section 6 hereof provided the notice of election to convert the Debenture is delivered to the Company not later than the fifth d.ay ''may nevertheless elect to present such DeSenture for conversion as preceding the date set for repayment; partial prepayment of the Debentures the aggregate principal amount of "'` 2.3 Application of Partial Prepay;aents.-~-:In the case of each the Debentures to be prepaid shall be allocated (in units of $1,000 or ...multip3es thereof) among the holders of all the Debentures at the time . outstandinR, in proportion, as nearly as practicable, to the respective unpaid aggregate principal amounts of the Debentures then held by thes, •,:;,,,4L p y2 J ~ ~ - _ $ . 4 ~ ..,4,: res ectivel with ad'ustnents to the ertent- practicable to e u-lize `' " 2,4 Notice of Prepayments...-In the case of each prepayment of the ~ ...,. ,.~,,. ,. ,~ ... ,... , ....~_.• ~, ~,r.. , 1.r,~ .. .. -~ ~ •. _._., ._ .. ..._._. . .. . . or any prior prepayments no exac y n suc propor t ion. r._.-.~ ~ ,.. ~ -`f t tl i h ' ` - '"1=60 days prior to the date on which such prepayment is required to be = notice thereof to each holder of the Debentures to be prepaid at least Debentures pursuant to Section 2 the Company will give written . the provisions of Section to Section 2.2 shall certify that such prepayment is not prohibited by Each notice of a prepayment to be made prior to Auoust 1, 1988, pursuant "=`on such date and the premium if any, applicable to such prepayment. •1 the Debentures, or portions thereof, held by such holder to be prepaid or portions thereof, to be prepaid on such date, the principal amount of -`case specifying such date, the aggregate principal amount of the Debentures, made or the date fixed for such prepayment, as the case may be, in each 2.7 No Reissue. All Debentures prepaid in full or presented for ~.i otherwise provided herein, and together with the premium, if any, applic- able to such prepayment. . , ... r, notation thereon as to the date and amount of.such partial prepayment. .. '3ac y t :, l :.. 2.6 Maturity of Prepayments. In the case of each prepayment of the Debentures, the principal amount of the Debentures, or portions thereof, to be prepaid shall mature and become due and payable on the date on which such prepayment is required to be made or on the date fixed in the notice of such prepayment, as the case may be, together with interest accrued to such date on such principal amount, except as " 2.5 Notations of Partial Prepayr•ients. Upon any partial prepayment of this Debenture, unless the Company shall have otherwise agreed in writing, the holder hereof shall present this Debenture to the Company at its address designated pursuant to Section 21 (or to such other representative as the Company may have authorized), for endorsement of a 0 to the Company f or cancellation and shall not thereafter be reissued. 0 conversion into Common Stock pursuant to Section 6 shall be surrendered - 3 - rP

3. Corporate E.~cistence; Legal Requirements. The Company will maintain and keep in full force its corporate existence and its rights Lj,necessary or desirable in the conduct of its business. .,-_ and franchises which in the judgment of its Board of Directors are 4. Accounts. The Company will at all times keep complete and correct books of record and account in accordance with generally accepted ~F o ompary .. -s T 3 f the C ;-tion or supervisory authority over the books of record and accounts ,-,-..be prescribed by any governmental authority at the time having jurisdic- ~ ons a o a A accoun ing prin s, , y, m may c ip s -4 11-F., ' le with such variati n therefr if t ' ' , . x ~.. ..,. Reports and"Other Information. If ` Financial Statements 5. t-1~.'3.~J • . . . . . . ., . . . ..~~~ or more in principal amount of the Debentures at the time outstanding: ~;,requested, the-Company will deliver the following to each holder of 10: ."~47.;W •a~ ./ . ..... . ( a ~ ~ i'- T' - ~ ~ . .... . ~.._. . .. -..- .--....a. . ..~. e., 1 ; a ~...-~..~f .. a;,'~J... . r~. -,. . rpl•. ~j_t~ . . .. .r.,. ..- . . 5.1 Annual Reports and Financial Statements. -;As soon as practic- rable after the close of each fiscal year of the Company, and in any event A4 _.: setting forth in comparative form the corresponding figures as at the end -; of the Company and its Subsidiaries) as at the end of such fiscal year, ,the Company shall have any Subsidiaries,~the consolidated balance sheet ~ within 120 days therea.Lter, (i) the balance sheet or the Company (or, if 2$ Company only for such fiscal year. Such balance sheets and statements shall be prepared in reasonable detail in accordance with generally acceDted accountinQ nrincinles and shall be accompanied by a revort and Subsidiaries) for such fiscal year, setting forth in comparative form the corresponding figures for the previous fiscal year, and (ii) if the • Company shall have any Subsidiaries and any such holder of the Debentures ,.shall so request, the balance sheet of the Company only as at the end of such fiscal year, and the profit and loss and surplus statements of the "~->-solidated profit and loss and surplus statements of the Company and its of the Company (or, if the Company shall have any Subsidiaries, the con- :=of the preceding fiscal year, and the profit and loss and surplus statements opinion of independent public accountants of recognized standing selected by the Company, prepared in accordance with generally accepted auditing . atS standards relating to reporting. Such report shall also include such other reports as may be furnished in connection with such examination. ,r__ . ~ ~ : -- - . .. : .. ... ... , 5.2 Annual Certificate. `= Together with the financial statements specifying the nature and duration thereof and the action taken or pro- ~A posed to be taken by the Company in respect thereof. 0 referred to in paragraph (a) above, a certificate of an authorized finan- cial officer of the Co,..pany-to the effect that there exists no Event of Default (as defined in Section 13) or any condition or event which, after notice or lapse of time or both, would constitute such an Event of Default, or, if any such Event of Default or condition or event exists, 4

5.3 Reports of Accountants. _ Promptly after receipt thereof, copies of all detailed reports, if any, submitted to the Company by " ' , , , _ - - or any governmental "authority succeeding" to its functions. statements filed~by the Company with the Securities and Exchange Cor=ssion thereof, copies of all regular, periodic and special reports or registration. Other Reports and Statements. ., Promptly after the filing " by such accountants examination of the books of the Company or_ any of its Subsidiaries made independent public accountants in connection with any interim or special any such Debenture, or any portion of such principal amount which is the date fixed for such redemption) to convert:the principal araount of j. .... .. , . ... --.. including but not af ter the close of business on the fif th day prior to or prior to July 26, 1992 then in respect of such Debenture to and . .. ~ ~ of any Debenture shall have the'right,- at his optiori, at any time on or prior to.July 26,`1992 (or if such Debenture is called for redemption.on ;Conversion'of Debentures. ~;;,6.1.. Conversion Privilege. ,.:,Subject to and upon compliance with the provisions of-this Section 6,e the holder . .- ;: ~i assessable shares of Common Stock (calculated as to each conversion to $1,000 or a multiple thereof, into that number of fully paid and non- cates for the number of full shares into which such Debentures or portion ~ thereof may be converted in accordance with the provisions of this O Section and any fractional interest in respect of a share of Common 0 Stock arising upon such conversion shall be settled as provided in C N registration of such Debenture, be accompanied by instruments of transfer, in form satisfactory to the Company, duly executed by the holder or his duly authorized attorney. As promptly as practicable after the surrender of such Debentures, as aforesaid, the Company shall deliver at such office to such holder, or on his written order, a certificate or certifi- or portion thereof to be converted by (b) the Conversion Price and by surrender of the Debenture so to be converted in whole or in part, such surrender to be made in the manner provided in Section 6.2. , - - " ......_, . . . . _.£ ~.a..... "`6.2 Pianner of Exercise of^Conversion Privilege. . In order to exercise the conversion privilege, the holder of any Debenture to beconverted in whole or in part shall surrender such Debenture at the ; address of the Company set forth in Section 21, and sha11 give written notice to the Company at such office that.the holder elects to convert. such Debenture or the portion thereof specif ied in said notice. Such notice shall also state the name or names, together with address or ; addresses, in which the certificate or certificates for shares of Cotm:on Stock which shall be deliverable on such conversion shall be registered. Each Debenture surrendered for conversion shall, unless.the shares deliverable on conversion are to be registered in the same name as the Company obtained by dividing (a) the principal amount of the Debenture ~>: the nearest 1/100th of a share and sublect to'Section 8 hereof) of the 5

Section 6.3. In case any Debenture of a denomination greater than ='Debenture so surrender~d, without charge to such debenture holder, a'new 1`=esecute and deliver to'or upon the written order of the holder of the ` $1,000 shall be surrendered for partial conversion, the Cor,ipany shall Debenture or Debentures in authorized denominations in an aggregate ' 1 principal amount equal to the unconverted portion of the surrendered Debenture.~ Each conversion shall be deemed to have been effected on the ar4y,.'received by the Company as aforesaid, and the person or persons in whose r-` `s=date oirc which such Debenture shall have been surrendered and such notice -~~ name or names any certificate or certificates for shares of Co=mn Stock shall be registrable upon such conversion shall be deemed to have become ~on that date, in whichevent such person or persons shall be deemed to a'thereby unless the stock transfer books of the Company shall be closed =-'-on said date the holder or holders of record of- the shares represented ~Ihave become such holder or holders of record on the next succeeding day { on which such stock transfer books are open, but such conversion shall `be at the Conversion Price in effect on the date upon which such Debenture shall have been surrendered and such notice received by the Company. t:4~~ _ .~..ii~ . ..~ ~ µ 6.3 Pa3ment in Lie uofFractional Shares "" The ComDanv shall not be required to deliver fractional shares of stock upon conversion of . . ~ ,~ ~ . Debentures." If more than one Debenture shall be surrendered for conversion at one time by the same holder, the number of full shares deliverable upon conversion thereof shall be computed on the basis of the aggregate i'principal amount of the Debentures, or specified portions thereof to the extent permitted hereby, so surrendered. Any fractional interest in a share of Common Stock which arises incident to conversion of any Debenture or Debentures, or specified portions thereof, shall be computed to the nearest hundredth of a share. If any fractional interest in a share of -stock would be deliverable upon the conversion of any Debenture or Debentures, the Company shall make an adjustment therefor in cash at the current value thereof, computed on the basis of the last reported sale price of the Company's Common Stock on'the principal national securities exchange on which the Comnon Stock is then listed on the last business ".i '-"day before the conversion date or, if there was no reported sale on that - day, on the basis of the average of the last reported bid and asked quotations on such exchange on that day, or, if the Common Stock was not then listed on any national securities exchange on the basis of the, ,average ot the last reported bid and asked quotations in the over-the- counter market on that day as reported by the National Quotation Bureau, Inc. or a similar organization, or in lieu of the availability of any of the foregoing at the Conversion Price. 6.4 The Conversion Price. The original Conversion Price shall. be $17.50 per share of $0.0375 per share par value Common Stock which O price shall be adjusted from time to time as provided in Section 10 of O the Purchase Agreement, and Section 6.5 of the Debentures. 0

6.5 Adjustment of Conversion Price. :The Conversion Price shall adjusted from time to time and also as follows: (a) If and tyhenever the Company shall issue any Additional ---,. ~ - Stock without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of such Additional Stock, then the Conversion Price in =effect immediately prior to the issuance of such Additional Stock ''shall immediately, except as provided in paragraph (e) below, be `'adjusted to a'price, computed to the nearest cent, equal to the == uotient obtain dividin d b q g e y ..~, . -. '. ..r' ~ ~ (1) an amount equal to the, sum of (i) the number ( "-Y'-'-'the Conversion Price in effect at such date and (ii) Purchase Agreement set forth in Section 1 multiplied by "of shares of Common Stock outstanding on the date of *the for'all shares of Additional Stock issued since such ~the aggregate consideration received by the Company the number of all shares of Additional Stock issued 'since such date, increased or decreased to the extent that share's of Common Stock outstanding on the date of the Purchase Agreement set forth in Section 1 and (ii) an" amount 'equal to the sum of (i) the number of the number of such shares of Common Stock and Additional ~Stock, respectively, shall have been increased or decreased -by each subdivision or combination thereof; provided, however, that such adjustment shall be made only if the aforesaid quotient shall be less than the Conversion Price in effect immediately prior to the issuance of such Additional Stock. (b) For the purposes of any adjustment of the Conversion Price pursuant to this Section 6.5, the following provisions shall be applicable _- " (1) In the case of the issuance of shares for cash, the consideration shall be the amount of such cash, provided that in no case under this paragraph (b) shall any deduction be made for any commissions-or any expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith; tion in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors of the Company; (2) In the case of the issuance of shares for a considera- 7 , _ . . ,~ . .

~+'= :» -'shareholders entitled to receive the same; and + ' .. . ..k~i...l. ~ ~ ~ ;•-=,•- (3) In the case of shares issued as a stock dividend, no consideration shall be deemed to have been received therefor and such shares shall be deemed to have been issued at the ' As 't close of business on the record date for the deternination of - . r 1 ~, _ . ....-r.. ...~, .~ _. . .. _ .. .- ,.~ i ,.1,...F.,. .. .. '~!`~~-." _..~ . .~ ' • (4) In the case of the issuance of shares of Coccnon ~~Stock upon conversion or exchange of any obligations or of any Js shares of stock that shall be convertible into or exchangeable ~K~ f_V41 k or upon the exercise of rights or for shares of Common Stoc options to subscribe for or to purchase'shares of Corrmon Stock, the amount of the consideration received by the Company for =upon the original issuance of such obligations, shares, rights :, of (a) the amount of the,consideration received by the Company, such shares of Common Stock shall be deemed to be the total - received by the Company upon such conversion, exchange, or exercise except in adjustment of interest and dividends. The amount of the consideration so receivzdby the Company upon the original issuance of the obligations, shares, rights or other corporation'upon such conversion, elchange or exercise of the consideration, if any, other than such obligations, shares, rights or options so received by the Company or such 1 options so converted, exchanged or exercised and the amount or options, as the case may be, plus (b) the consideration, if any, other than such obligations, shares, rights or options, shall be determined in the same manner provided in subparagraphs (1) and (2) above with respect to the consideration received by the Company in case of the issuance of shares of Common Stock; if such obligations, shares, xights or options shall have been issued as a dividend, the amount of the consideration received by the Company upon the original issuance thereof shall be deemed to be zero. In case of the issuance of any obligations or any shares of stock convertible into or exchangeable..for shares of Common Stock, or any rights or options to subscribe =-for or purchase such convertible or exchangeable obligations or stock, or any rights or options to subscribe for or to purchase shares of Common Stock, no adjustment of the •of Common Stock actually issued upon the conversion or exchange of any such convertible or exchangeable obligations or stock or upon the exercise of any such rights or options to subscribe . for or to purchase shares of Common Stock. • 8 Y . ... ~ . ~ ' . . ..,: L; _ _ ' . . _ .i . , . . . .. . .Conversion Price shall be made except in respect of shares

-(c) Iii case the shares of Co-,-,on Stock deliverable upon conversion ;of the Debentures shall be subdivided into a greater or combined into a ; . o o x•: or w oc er w t et out par - lesser nu f shares of C nber r saon St k ith h h i h .,value, the Conversion Price shall be decreased or increased, as the :i.combination as the total number of shares or Corsaon Stock outstanding '-case may be, to an amount which shall bear the same relation to the ;.f4~Conversion Price in effect immediately prior to such subdivision or iµ;;the total number of shares of Co=on Stock outstandin~ immediately _, immediately prior to such subdivision of combination shall bear to . fr (d) In case of any capital.reorganization, or of any reclassi- an entirety to any other corporation, each Debenture shall after such capital reorganization, reclassification of Co-,=on Stock, consolida- the properties and assets of the Company as, or substantially as, after such subdivision or combination. A stock dividend of 25°!% or (f)(3) of.this Section 6.5. of this paragraph and for the purposes of paragraphs (a), {d), and imore shall be considered a subdivision of shares for the purpose fication of the Co-,mon Stock, of the Company or in case of the con- solidation of the -Company with or the merger of the Company into :.:any other corporation (other than a consolidation or merger in y ;..which the Company is the continuing corporation) or of the sale of consolidation, merger or sale; and in any such case, if necessary, upon such capital reorganization, reclassification of Common Stock merger or sale) upon conversion of such Debenture would have been entitled reorganization, reclassification of Common Stock, consolidation, to which the Coam:on Stock deliverable (at the time of such capital tion, merger or sale be convertible into the number of shares of stock or other securities or property of the Company, or of the corporation resulting from such consolidation or surviving such merger or to which such sale shall be made, as the case may be, , shall be appropriately adjusted so as to be applicable as nearly as may the provisions set forth in this Section 6 with respect to the rights and interests thereafter of the holders of the Debentures lesser number of shares of Common Stock whether with or without par value shall not be deemed. to be a reclassification of the Common Stock of the Company for the purposes of this paragraph. conversion of the Debentures at any time outstanding into a greater or division or combination of shares of Coirmon Stock deliverable upon ;thereafter deliverable on the conversion of the Debentures. The sub- ..reasonably be, to any shares of stock or other securities or property (e) Anything in this Section 6 to the contrary notwithstanding, the Company shall not be requirea except as hereinafter in this para- graph provided,' to make any adjustment of the Conversion Price in . any case in which the amount by which such Conversion Price would be

i ~ t'next subsequent adjustment which, together with any and all such will be carried forward and made at the time and together with thg ;:case any adjustment that would otherwise be required then to be nade 16.5 would be less than $0.10 per share of Comor. Stock, but in such ...,areduced in accordance with the foregoino provisions of this Section p r , . adjustments so carried forn,7ard shall amount to $0 10 or more er share or increased by any previous subdivision or combination shall be .shares of Comznon Stock said amount of $0.10 as theretofore decreased c., of Common Stock. In the event of any subdivision or combination of p roportionateiy aecreasea or i.ncreasea. "M'~4,. _ . . . .. . ... .. . . . ~ . . .. __ -. . :(f) In the ev (1) The Company shall declare a dividend or any other distribution on its Cormon Stock payable otherwise than in cash out of its retained earnings; or _~ ' -' -.. ...•} . , ~` .~~z . < . , . .. _ `.:. . `c ._ . . '.. : _ (2) The Company shall authorize the granting to the , holders of its Common Stock of rights to subscribe for or to .-: purchase any shares of stock of any class or of any other . rights; or ; . ; 9.. ~.~. .~ . . . ~. . . ...+~ .~:.._ . ~~.~ . . ... .., ..,.. -' . ...... .. . , f .. . ., .~ . - . , ' : (3) There shall be any capital reorganization or reclassi- .fication of the Common Stock of the Company other than a sub- •.division or combination of its outstanding Cor.anon Stock, or any consolidation or merger to which the Company is a party and or which approval of any shareholders of the Company is required; or any sale or transfer of all or substantially all of the assets (4) There shall be a voluntary or involuntary dissolution liquidation or winding up of the Company, -- Common Stock of record sha1l be entitled to exchange their shares of . , o N transfer, dissolution, liquidation or winding up is expected to become effective and the date as of which it is expected that holders of least 60 days prior to the applicable record date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such dividend, distribution or rights, or, if a record is not to be taken,'the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, ,,at their addresses appearing on the registry books of the Company, at the Company shall cause to be mailed to the holders of Debentures,

Cormmon Stock for securities or other property deliverable upon such ~~ reorganization, reclassification, consolidation, mtroer, sale, transfer,i: i;. , . f f f f f . ,~,,.r :~i",consolidation merger sale transfer 'dissolution liquidation or any such dividend, distribution, right, reorganization, reclassification; di~ssoluti~~on, liauzdation or winding up. Failure to give such no_tice ,, ,~ or any defect therein shall not affect the legality or validity Qf ~ .-..winding up (g) As used in this Section 6, "Additional Stock" shall Y~t mean any Common Stock issued after the date of the Purchase Agreement set forth in Section 1 other than m n i - mo Stock Shares of Co ssued upon any conversion ! (1) =~ of Debentures in accordance with the provisions of this Section 6; (2) Shares of Common Stock issued upon any conversion t~r-''* of the Company's Preferred Stock outstanding on the date hereof; .s~t! :v _ _,,. .._. ... .._.. _. _.. ,t„~~! ( `Ii' z' -,`' (3) : Shares of Common Stock issued u on their urchasc~ b _~ _-~Standard pursuant to Section 10 of the Purchase Agreement; ~;:'~h• -aa . , . ' . . . - -. . . . ... _ . . . ,.. . . :~_ {~4x7~ (4) Shares of Common Stock issued upon conversion of any Sd+~~'i debt sold to Standard pursuant to Section 10 of the Purchase •`?';~~ t .Agreement; _; ~.. ' a v. ..... ~ .,. ~ (5) Shares of Common Stock issued upon the exercise of any right to purchase granted to Company shareholders generally provided such rights are also extended to the holders of the . Debentures based on the number of shares of Common Stock into which any Debenture is convertible at the time of the rights offer; y ... . - x.. .. ' (6) Shares of Common•Stock issued pursuant to any present stock option plan, stock option agreement, stock purchase plan, .employees' savings or profit-sharing plan or other incentive • or benefit plan for officers or-other employees, including former officers or employees, or any such plan hereafter approve& by the Company's shareholders of the Company or its Subsidiaries (including any such plan or agreement assum.ed by the Company or any Subsidiaryy in connection with the acquisition of going concern businesses), and shares of Common Stock issued on conversion of any security acquired pursuant to any such plan or agreement: (7) Shares of Common Stock issued by the Company in con- nection with the acquisition, either directly or through one or more Subsidiaries (or issued on conversion of any security or on exercise of any right or option, issued or assumed by ;: .

the Company in connection with the acquisition either directly or through one or more Subsidiaries) of property or assets of any character, real or personal, tangible or intangible (exclusive . other than cash included as a part of property or -- of cash , assets acquired in connection with the acquisition of a going concern business, and exclusive of outstanding stock or other securities of the Company, other than such stock or other .securities (i) included as a part of property or assets uisition of a oin ac uired in connection with the ac concern g y~,, ,t. q q g business. or (ii) surrendered to the Comoanv uDon anv conversion - recedin eferred to in the arenthetical clause ' exercise p g p r of this subparagraph (7)), includinQ but not limited to going concern businesses, stock or securities of other corporations " 'r othet whther such acquisition shall b e effetd oer propry,eceL by purchase, merger, consolidation, or otherv3.se; (8) Shares of Common Stock issued by the Company as a dividend on" shares of Common Stock excluded from the definition f d h f b h 1 ='Y'' '" "' h paragrap Ad e oregoing su s ( ) t o itional Stock by t rough (7) or this subparagraph (8) or on shares of Common Stock -resulting from any subdivision or.combination of shares of Common Stock so excluded. - 1' t . 6.6 Taxes on Conversions. , The issue or delivery of stock certi- verting holder for any transfer tax in respect of the issue or delivery thereof.. The Company shall not, however, be required to pay any tax ,w~hich may be payable in respect of any transfer involved in the issue or 'ficates on conversions of Debentures shall be made without charge to the con- ' E~;' of shares of Common Stock deliverable upon the conversion'of all outstand- of enabling it to satisfy any obligation to convert Debentures, the full number , > > or its issued Common Stock held in its treasury or both for the purpose :- ing Debentures. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Debentures, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Conversion Price. that it will at all times reserve and keep available, free from pre-emptive delivery of stock certificates in any name other than that of the holder of any Debenture converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue or delivery thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that,such tax has been paid. i . . . 6.7 Company to Reserve and' Provide Stock. The Company covenants rights, out of the aggregate of its authorized but unissued Common Stock ;~ AM.: ._:.

Prior to the delivery of any shares of Common Stock required to be however, that nothing in this Section 6.7 shall be deemed to affect in any way the obligation of the Company to convert Debentures as provided in this Section 6, consent to the delivery thereof by, any governmental authority; provided, delivered upon conversion of the Debentures, the Company will endeavor to comply with all Federal and State laws and reoulations thereunder requiring the registration of such shares with, or any approval of or~~ The Company covenants that all shares of Common Stock which may be `Debentures interestat the rate of 7.5% per annum on the unpaid principal ~ are outstanding the Company will cause to be paid to the holder of the '» and February 1 thereafter while the Debentures or any portion thereof 7. Payment of Interest. ,~,.On February 1, 1978 and on each August-1 from all taxes, liens, charges and security interests with respect to the issue thereof. ~ ~ . .. ~h'~.. .~ ~~.. ..t`... . . . . ' delivered upon conversion of Debentures will upon delivery be duly and validly issued and fully paid and non-assessab,l.e'by the Company and free to the last knotm address of the holder on the second day precedina the ~x amount of the Debentures. ';Payments will be made by check mailed by the Company _ . , . . .. _; ~ interes t payment date by first class mail postage prepaid. ., . . .. _. .~~ a~~; . . t .... . t 8. Failure to Make Interest Payments. Iiotwithstandino the C provisions of Sections 6 and 7, should the Company for any reason fail to make any payment of interest coming due during any period when the Debentures are convertible into Common Stock of the Company the number of shares into which the Debentures shall be convertible shall thereafter be obtained by dividing (a) the principal amount of the Debenture or portion thereof being converted plus the sum of all installments of interest on such principal amount which have come due but not been paid by (b) the Conversion Price in effect from~ tine _to time as adjusted - pursuant to Section 10 of the Purchase Agreement and Section 6.5 of the Debenture. Any failure to make an interest payment which gives rise to an adjustment of the number of shares into which a Debenture may convert shall not constitute an Event of Default under these Debentures. Should the Company subsequently make payments of past due interest the number of shares into which the Debenture shall be convertible shall not be reduced. At maturity, or on any prepayment made prior to August 1, 1988 or after August 1, 1991 the Company shall be obligated to pay for all unconverted Debentures at a price equal to their principal-amount plus accrued interest on such principal amount plus premium, if any. ~: - ~ < P, ~~ ~ ~ `..0..s~ ..

9. Notice of Change of Conversion Price. Whenever the Conversion Price shall be adjusted as required by the provisions of Section 10 of the Purchase Agreement or Section 6 of the Debentures, the Company shall forthwith cause a notice setting forth the adjusted Conversion •Price to be mailed to each holder of Debentures at his last known address. • ~ ~.'t 3 Y 10. Insoection 'f`The Company'will permit each holder of 25% or more in principal amount of the Debentures at the time outstanding, at the expense of such holder, to visit the Company, to examine its books :.-;and records, and to discuss its business and affairs with its officers, .;,a11 at such reasonable times as any such holder may request._., :l.r.+:.`~~ ~~~?' . ~~...~.'ti1 . ... ~+. , ..,.. _~7 .,.. _: .,...._.. .. ..c~ , . .. " . ,11. =•'=Consolidation,' rierger; Sale of Substantially All Assets. Company will not consolidate or merge with or into, or directly or indirectly sell or otherwise transfer all or substantially all of its _properties or assets to,'any other person, firin or corporation unless (a) the successor or transferee is a corporation incorporated under the laws .of the United States of America or any state thereof, (b) simultaneously such consolidation,' merger, sale or transfer, the successor or :-- ^'' t f h 11 1• d .-~,,, rans eree s a express S assume in wrzting the ue and punctual payment of the principal of and the premium, if any, and interest on the Debentures and the due and punctual performance of.and compliance with all of the terms and provisions of the Debentures, and (c) no condition or event shall exist immediately after such consolidation, merger, sale or transfer, which constitutes an Event of Default (as defined.in Section 13 or which, af ter notice or lapse of time or both, would constitute such an Event of Default. ,.. , - -. . -..._. _ ~ ....s . . . 12.. "Sale of Fixed Assets. Except in the ordinary course of business, the Company will not sell or otherwise transfer any material part (defined to be 50% or more of the assets of the Company) of its fixed properties or fixed assets (other than by way of a merger, consoli- dation, sale or transfer permitted by Section 11) without the prior - :written consent of the holders of at least 66-2/3% in principal amount of the Debentures at the time outstanding. ., . . . . ~ . , . . , .- . .:..._.._ . ..._..._ ._ . . .._.. , . s a ... . . ._. . . .. • ... .~... . . . .... ... . . „ , . _ . 13. ` Events of Default.. '"If any one or more of the following events ("Events of Default") shall occur: . . . t . . . . :. ... ,,.. .. , ti . .. . _ . . . .. ... . _ . . . . . - ' -. . . . .- - .. . „ , 13.1 If the Company shall fail to pay any principal of or premium, if any, on any Debenture, or portion thereof, when and as the same shall become due and payable, whether at the stated maturity or by required prepayment or notice of optional prepayment or declaration or otherwise; or

-13.2 If the Company shall fail to pay any interest on any Debenture , ment, demand, protest or notice, all of which are hereby waived. If at , . _ pay a e, an whereupon the same shall forthwith become due and payable without present- fail to perform or comply with any term or provision of any such obliga- ,.money beyond any grace period provided with respect thereto, or shall •` ~~- .._ . . .. . . . . . y:3.. if any, or interest on any oblioation (other than a Debenture) for borrowed 13.4 If the Company shall fail to pay any principal of or premium, ; .terms or provisions of Sections 11 or 12; or ~ Ji3 . 13.3 ;If the Company shall fail to perfornoic comply with any of the . ... . .._ .. . ~.. . , . J..:. . -... . ......._ .. -J~. . - - ~ l - .. ~ . - as provided for in Section 8; or for more than 10 days after such interest shall beccue due and payable except ..tion or any agreement securing or relating to"_the same beyond any Rrace period provided with respect thereto provided that the Company shall be ``MV grace period; or ; entitled to cure any such default within 30 days of the end of any such .;, . .. . .. 1. . within 60 days after its issue or levy; or stayed within 60 days; or suffer any judgment, writ of„attachment or execution or any similar process to be issued or levied against a substan- tial part of its property which is not released, stayed, bondedor vacated be instituted by or against it and, if contested by it, not to be dismissed to bankruptcy, insolvency or the reorganization or relief of debtors to be discharged within 60 days; or suffer proceedings under any law relating property to be appointed and, if appointed without its consent, not to debts; or suffer a receiver or trustee for it or substantially all of its . . ._,. , ; ; .,. . . . , j--- 13.5 If the Company shall admit in writing'its inability to pay its amount of the Debentures at the time outstanding may at any time (unless all then and in any such event any holder or holders of at least 50% in principal - Events of Default shall theretofore have been remedied), by written notice or notices to the Company declare all the Debertures to be d- d - bl :t'' ,:. so declared-due and payable, by written notice to the Company may rescind and annul such declaration and its consequences; but no rescission and annulment shall extend or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. case, the holders of 25% in. the aggregate principal amount of the Debentures declaration) shall have been made good or cured, then, and in every such ; o the princa.pal on the Debentures due and payable solely by reason of such .`~;O .._,.~, any time after the principal of the Debentures shall have been so declared due.,;: .and payable, and before any judgment or decree for the payment of the . - money due shall have been obtained or entered, all arrears of interest shall have been paid and every Event of Default (other than in the payment ~.~ - 15 - I- _ . .. _ .: ., . ... ' ..,i. . . _ .. .. . ,.., ., . : '. • .. ti 'r~., i~ '

:14. ,_, Remedies on Default. . If any one or more Events of Default ; grantesi hereby or by law. ' contained herein, or for an injunction against the violation of any of the terms or provisions hereof, or in aid of the exercise of any power ;;, extent permitted by law, for the specific performance of any agreement at law, suit in equity or other appropriate proceeding, whether, to thS proceed to protect and enforce the rights of such holder by an action t•:a.;.shall have occurred, the holder of any Debenture at the tine outstanding .. - . . . ~ .., , s. a _%;15. .: Costs of Col lection. default be made in the payment of will pay to the holder thereof such further ar.iount as shall be sufficient y.. . . ~any principal of or premium, if any, or interest on any Debenture, the Company C,. cover the reasonable cost and expense ot collection, including, but ' fees r~not lirzited to, reasonable a.ttorneys 16. Notices to Debentureholders of Defaults. If any holder of ~_.... ~~..~i.~~ .. ., _. . .,. . '3 ~.: l~r.:... ... . ~ _.S. .. ,,_ . ... ••_ __ .... .... t'~ ,. _ .~ . ..a. ~ .., . s ... _ , . . . . ,,: of the claimed default j;_;time outstanding, describing the notice, demand or action and the nature written notice thereof to all other holders of the Debentures at the _ any Debenture shall serve any notice or demand or take any other z action in respect of a claimed default, the Company will forthwith give 17. No jJaivers. •,-t`_%-.Teither failure nor delay on the part of any as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other.right, remedy, power or privilege. ;.holder of this Debenture to exercise any right, remedy, power or privilege .provi'ded for herein or by statute or at law or in equity shall operate 18. Transfer and Exchange of Debentures. The holder of this 1 at its address designated pursuant to Section 21, and, on payment of the ,.:.•reasonable costs of the Company incurred in effecting the exchange, _ Debenture may, at such holder's option, surrender the same to the Company or order, as such holder may request, if accompanied by appropriate instruments of transfer and payment of transfer taxes, if any. anount equal to the then aggregate unpaid principal amount of the Debenture or Debentures so surrendered,.and each payable to'such person or persons, ; any multiple thereof as such holder may request, for an aggregate principal dated as of the date to which interest has been paid on the Debenture or Debentures so surrendered, each in the principal amount of $200,000 or receive from the Company in exchange therefor a new Debenture or Debentures, c 19. Replacement of Debentures. -Upon receipt of evidence satisfactorp to the Company of the loss, theft, destruction or mutilation of any Debenture and, in the case of any such loss, theft or destruction, upon ~A delivery of a bond of indemnity satisfactory to the Company, or, in the 0 C ~ N Ar--) N V .CD

case of any such mutilation, upon surrender and cancellation of such Debenture, the Company will issue at the cost of the holder of the Debenture a new Debenture, of like tenor,'in lieu of such lost, stolen, destroyed or mutilated Debenture. 20. ° Certain Definitions. ;" As used in this Debenture, the follow- . . .a.... t , .. . _. .-... ... ,~ ... .f:7~.~ .. - ~ . . . `. _ _ ~ . . , . , .9..a., ,. . ,. , 4, . . ..., . . .. . ,.. . .,.,: ~ . .. . .. : ..._. _. ... ., . t:. . _ , _. . ing terms shall have the following meanings: ~. 20.1 Subsidiary: any corporation, association or other business " p'ersons performing similar functions) is at the time owned or controlled, entitled to vote for the"election of a majority of the directors (or entity a majority (by number of votes) of the stock of which at the time --irect y or indirectly,'by:the Company. _,: • ..... ~, .20.2 Payment Datec 'August 1 and February 1 in each year. .,~ Y-o-..S.` . . ' ' .._ ... . .i ,x:.., S.. J1'.... . _-• .. ._.... shares may be subdivided or,combinedr h,,r, ~ rt; . . . .- _ • • . , - 71 a 20.3 Common Stock: The Common Stock of the Company, $0.0375 par C value per share, or any Common Stock of the Company into which such, be in writing and shall be delivered or mailed by first class registered or certified mail, postage prepaid, addressed, (a) if to the Company, at 600 Bancrof t Way, Berkeley, California 94710, or at such other address as the Company from time to time may have designated by notice to the Debentureholders or (b) if to any holder of any Debenture, at such address as such holder from time to time may have designated by notice to the Company, or until an address is so designated, to and at the .address of the last holder so designating an address to the Company. Standard's address for the purpose of this section is: z1. Notices. All notices and other communications hereunder shall fixedifor the payment or prepayment of principal of, or any payment of or rate of interest payable on, any of the Debentures, or to postpone any date such consent shall be effective to reduce the principal of, or the premium e e en ures w o i not execute the same, provided, however, that no s of th D b h d'd t of the Debentures at the time outstanding their consent thereto in writin-`w °' and (ii) shall deliver copies of such consent in writing to an holder contrary notwithstanding, amendments to this-Debenture may be-made and/or compliance with any covenant or condition herein set forth may be omitted or waived (either generally or in a particular instance and either retro- actively oz prospectively),' if the Company (i) shall obtain from~the holder or holders of record of at least 50% in aggregate principal amount Standard Oil Company 200 East Randolph Drive Chicago, Illinois 60601 Attention: Treasurer ...'~ ~-. 22. Amendments and Ztiaivers. Any provision in this Debenture to the

.,,;:f+ -afa _ . .. . _ ~,.... ~..M:~ a not consented thereto. , , with this Section 22 shall be binding upon the Company and upon the including those holders who have --holders of all outstanding Debentures holders of such Debentures, or to reduce the percentage of the principal -amount of Debentures the consent of the holders of which shall be required under this Section 22. Any action taren pursuaat'to and in accordan=e . . .. . _.~.._. ... . .- . .. .. . . .. . interest on,`any of the Debentures, without the consent of each of the '= by the laws of the State of California.'If'the date of maturity of interest . liereof. This Debenture shall be construed.in accordance with and governed 23. `I `Miscneous: The headings in this Debenture are for -purposes of reference only and shall not define or limit the terms -; or any principal on the Debentures shall be a Saturday, Sunday or a legal holiday or a date on which banking institutions in the city of payment are authorized by law to close and•are closed, then payment of interest or principal (and premium, if any) may be made on the next succeeding day not a Saturday, Sunday or legal holiday or a date on •which banking institutions in such city are authorized by law to close with the same force and effect if made on such date of taatyrity, in which event no interest shall accrue for the period after such date of ° maturity. ,.- t ... ~ CETUS CORPOR•ATION .~ ~.~. . •~., . President ~'JA._`. By ~.+~' .. [Corporate Seal] Attest: - ..- _ . ~:. _.. _. , ~- :.i:`>~` ~.....r.~_, ..., tjq..•.... _... ,. ...''~1. ... , Secretary .. `1 ....Ji~-, __.. 0 C 0 N N CD ~ U1 ~ r -, _. .. .; uF

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