Document:

Ex-10.1 Executive Employment Agreement

 

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

(the “Agreement”)

between

O’CHARLEY’S INC.

(the “Company”)

and

Gregory L. Burns

(“Executive”)

March 10, 2008

BACKGROUND

	A.	 	Executive is currently employed as the Company’s Chief Executive Officer and President and is
party to an Amended and Restated Severance Compensation Agreement dated February 22, 2007 (the
“Change in Control Agreement”).

	B.	 	The Company and Executive desire to incorporate the terms of Executive’s employment in a
single agreement that replaces and supersedes any and all existing employment-related
agreements, including the Change in Control Agreement.

ARTICLE I.

EMPLOYMENT, DUTIES AND TERM

     1.1 Employment. Upon the terms and condition set forth in this Agreement, the
Company hereby employs Executive as the Chief Executive Officer and President, and Executive
accepts such employment.

     1.2 Duties. Executive shall devote his full-time and best efforts to the Company
and to fulfilling the duties of his position, which shall include such duties as may from time to
time be assigned to him by the Company. The Executive may devote reasonable time and attention to
civic, charitable, business and social organizations so long as such activities do not interfere
with the performance of Executive’s responsibilities under this Agreement and provided, that
Executive shall obtain the prior approval of the Company’s Nominating and Corporate Governance
Committee prior to joining the board of directors or other governing body of any such civic,
charitable, business or social organization in addition to any such board of directors or governing
body on which Executive serves as of the date of this Agreement. Executive shall comply with the
Company’s policies and procedures to the extent they are not inconsistent with this Agreement, in
which case the provisions of this Agreement shall prevail. The Executive agrees to serve without
any additional compensation as a member of the board of directors of the Company and as an officer
and/or director of the board of directors of any subsidiary of the Company as requested. If the
Executive’s employment terminates for any reason, the Executive shall resign as an officer and
director of the Company and all of its subsidiaries, such resignation to be effective no later than
the Date of Termination (as hereinafter defined) of the Executive’s employment with the Company.

 

 

     1.3 Term. Subject to the provisions of Articles III, IV and
V herein, this Agreement and Executive’s employment shall continue until August 29, 2010
(the “Initial Term”) and shall automatically renew for successive one year periods (each, a
“Renewal Term”) upon all terms, conditions and obligations set forth herein unless either party
shall provide written notice to the other not less than ninety (90) days prior to the expiration of
the Initial Term or any Renewal Term, as applicable. For purposes hereof, the Initial Term,
together with any Renewal Term, are hereinafter referred to as the “Term.”

ARTICLE II.

COMPENSATION AND EXPENSES

     2.1 Base Salary. For services rendered under this Agreement during the Term, the
Company shall pay Executive a base salary at the rate in effect on the date hereof. Executive’s
base salary shall be reviewed annually by the Compensation and Human Resources Committee (the
“Committee”) and may be increased in the sole discretion of the Committee (such base salary, as it
may be increased from time to time during the Term, is hereinafter referred to as the “Base
Salary”).

     2.2 Bonus and Incentive. The Executive shall be eligible to participate in such
bonus and incentive plans during the Term as the Committee may determine appropriate.

     2.3 Business Expenses. The Company shall, consistent with its policies in effect
from time to time, bear all ordinary and necessary business expenses incurred by Executive in
performing Executive’s duties as an employee of the Company, provided, that Executive
incurs and accounts promptly for such expenses to the Company in the manner prescribed by the
Company.

     2.4 Benefits. During the Term, the Company shall provide Executive with those
benefits provided generally to members of senior management, including a car allowance in an amount
at least equal to the amount as in effect on the date hereof.

ARTICLE III.

SEVERANCE PRIOR TO CHANGE IN CONTROL

     3.1 Severance. This Article III shall not apply to termination following a
Change in Control (as hereinafter defined), which is governed solely by Article IV.

     3.2 Severance Obligations.

          (a) It is understood and agreed that if Executive’s employment with the Company
should be terminated at any time prior to the expiration of the Term as a result of a Termination
Without Cause (defined below) or a Termination for Good Reason (defined below), and if Executive is
not then or thereafter in material breach of this Agreement, and upon the execution and delivery to
the Company by Executive of an agreement, in a form presented by the Company and accepted by
Executive, which acceptance shall not be unreasonably withheld or delayed, releasing all claims
which Executive may have against the Company (other than claims for indemnification pursuant to
Section 6.7 hereunder and claims under this Agreement), Executive shall receive, in full
and complete settlement of any claims for compensation which Executive may have, and in lieu of any
severance pay under any policy of the Company or otherwise, the following:

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               (i) an amount, payable in a lump sum in cash on the fifth day following the
Date of Termination, equal to the sum of (x) 200% of the Base Salary and (y) 200% of the
average bonus paid (or earned with respect to any bonus earned, but not yet paid, for the
fiscal year immediately preceding the fiscal year in which the Date of Termination occurs)
to Executive in respect of the three fiscal years immediately preceding the fiscal year in
which Executive’s employment terminates hereunder;

               (ii) health insurance benefits substantially commensurate with the Company’s
standard health insurance benefits for the Executive and the Executive’s spouse and
dependents through the second anniversary of the Date of Termination; provided,
however, that such continued benefits shall terminate on the date or dates Executive
receives substantially similar coverage and benefits, without waiting period or pre-existing
condition limitations, under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis);

               (iii) any other unpaid benefits to which the Executive is otherwise entitled under any
plan, policy or program of the Company applicable to the Executive as of the Date of
Termination (including any bonus earned, but not yet paid, for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs); and

               (iv) notwithstanding any provisions to the contrary contained in any agreements
evidencing equity awards granted to the Executive outstanding at the Date of Termination
under the Company’s 1990 Employee Stock Plan or 2000 Stock Incentive Plan or any successor
plan (collectively, the “Company’s Equity Incentive Plans”), in the event Executive is
entitled to receipt of payments under this Section 3.2, immediately prior to the
Date of Termination all awards granted to Executive and then outstanding under the Company’s
Equity Incentive Plans shall be amended to provide as follows:

(A) any award which provides for time based vesting shall vest in full on the Date
of Termination and shall be exercisable for the lesser of one year from the Date of
Termination and the expiration of the remaining term of such award, whichever first
occurs; and

(B) any award which provides for performance-based vesting shall vest in an amount
equal to the product of (x) the number of shares available for vesting under the
award on the Date of Termination and (y) a fraction, the denominator of which is the
number of months in the remaining vesting period contained in the award, and the
numerator of which is the number of months that has elapsed between the start of
such remaining vesting period and the Date of Termination. The portion of such
award which is exercisable on the Date of Termination shall remain exercisable for
the lesser of one year from the Date of Termination and the expiration of the term
of such award, whichever first occurs.

          (b) As used in this Article III, “Termination Without Cause” means any
termination of Executive’s employment by the Company other than a Termination With Cause (defined
below).

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          (c) As used in this Article III, “Termination With Cause” means
termination by the Company of Executive’s employment at any time after the Company believes in good
faith it has actual knowledge of the occurrence of any of the following events: gross neglect of
duty, material breach of this Agreement, a material act of dishonesty or disloyalty, the inability
by Executive to discharge Executive’s duties due to alcohol or drug addiction, or gross misconduct
inimical to the best interests of the Company; provided, however, that termination
of employment solely due to unsatisfactory job performance shall not be considered a Termination
With Cause; and, provided further, that a “Termination With Cause” shall not be
deemed existing unless and until there has been delivered to Executive a copy of a resolution duly
adopted by the Company’s Board of Directors at a meeting of the Board (after reasonable notice to
Executive and an opportunity for Executive, together with Executive’s counsel, to be heard before
the Board), finding that in the good faith opinion of the Board, Executive had engaged in the
conduct described above in this Section 3.2(c) and specifying the particulars thereof in
reasonable detail.

          (d) As used in this Article III, “Termination for Good Reason” means
Executive’s termination of employment following expiration of the Term by reason of the Company
providing notice of non-renewal in accordance with Section 1.3 or at any time within the
earlier of two (2) years after Executive has actual knowledge of the occurrence, without
Executive’s written consent, of one of the following events: (i) a material reduction in
Executive’s Base Salary or a material reduction in the health and welfare insurance, retirement and
other benefits available to Executive as of the commencement of employment, except for reductions
in such benefits as shall become in effect for senior executive employees of the Company generally;
(ii) the reassignment of Executive to a position resulting in Executive not being the Company’s
Chief Executive Officer and resulting in a material diminution in Executive’s authority, duties or
responsibilities, or a reporting relationship other than to the Company’s Board of Directors; or
(iii) the relocation of Executive’s principal office to a location more than fifty (50) miles from
Nashville, Tennessee; provided that Executive shall have notified the Company of the existence of a
condition described in items (i), (ii) or (iii) within ninety (90) days of Executive’s actual
knowledge of the initial existence of the condition, and the Company shall have failed to remedy
the condition within thirty (30) days of receiving such notice. For the avoidance of doubt,
subsequent occurrences of these events shall start new time periods described in this paragraph.

          (e) The amounts payable to Executive under this Article III are not eligible
earnings under any pension, savings, deferred compensation, bonus, incentive, supplemental
retirement benefit or other benefit plan of the Company.

          (f) Date of Termination. As used in this Article III, “Date of
Termination” means (a) if Executive’s employment is terminated by the Company, the date on which a
notice of termination is given, or (b) in the event of a Termination for Good Reason, the
expiration of the thirty (30) day cure period without the Company remedying the applicable
condition described in Section 3.2(d)(i) to (iii).

ARTICLE IV.

CHANGE IN CONTROL

     4.1 Change In Control. No compensation shall be payable under this Article
IV unless and until (a) there shall have been a Change in Control of the Company during the
Term and (b) Executive’s employment by the Company thereafter shall have been terminated in

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accordance with Section 4.2. For purposes of this Agreement, a Change in Control
means the happening of any of the following:

          (a) any person or entity, including a “group” as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than the Company, a wholly-owned subsidiary thereof, any
employee benefit plan of the Company or any of its Subsidiaries becomes the beneficial owner of the
Company’s securities having 30% or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of directors of the Company (other than
as a result of an issuance of securities initiated by the Company in the ordinary course of
business); or

          (b) as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, or any combination of
the foregoing transactions, less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor corporation or entity entitled to vote
generally in the election of the directors of the Company or such other corporation or entity after
such transaction are held in the aggregate by the holders of the Company’s securities entitled to
vote generally in the election of directors of the Company immediately prior to such transaction;
or

          (c) during any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the Company’s shareholders, of each
director of the Company first elected during such period was approved by a vote of at least
two-thirds of the directors of the Company then still in office who were directors of the Company
at the beginning of any such period.

     4.2 Termination. If a Change in Control of the Company shall have occurred during
the Term, Executive shall be entitled to the compensation provided in Section 4.3 upon the
subsequent termination of Executive’s employment with the Company by Executive or by the Company
within twenty-four (24) months of the Change in Control of the Company unless such termination is
as a result of (i) Executive’s death; (ii) Termination by Reason of Disability (as defined in
Section 4.2(a)); (iii) Termination by Reason of Retirement (as defined in Section
4.2(b); (iv) Termination With Cause (as defined in Section 4.2(c)); or (v) termination
by the Executive other than a Termination for Good Reason (as defined in Section 4.2(d)).

          (a) As used in this Article IV, “Termination by Reason of Disability” means
a termination of the Executive by the Company by reason of Executive’s inability, as determined by
the Board, to perform his regular duties and responsibilities due to physical or mental illness
which has lasted for six months and within thirty (30) days after written notice of termination is
thereafter given by the Company, Executive shall not have returned to the full-time performance of
Executive’s duties.

          (b) As used in this Article IV, “Termination by Reason of Retirement” means
a termination by the Company or Executive of Executive’s employment based on Executive’s having
reached age 65 or such other age as shall have been fixed in any arrangement established with
Executive’s consent with respect to Executive.

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          (c) As used in this Article IV, “Termination With Cause” means the
termination of the Executive’s employment on the basis of fraud, misappropriation or embezzlement
on the part of Executive. Notwithstanding the foregoing, the termination of Executive’s employment
shall not be deemed to have been a Termination With Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the membership of the Company’s Board of Directors (excluding Executive if
Executive is then a member of the Board of Directors) at a meeting of the Board (after reasonable
notice to Executive and an opportunity for Executive, together with Executive’s counsel, to be
heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty
of conduct set forth in the first sentence of this Section 4(c) and specifying the
particulars thereof in detail.

          (d) As used in this Article IV, “Termination for Good Reason” means a
termination by the Executive upon the occurrence of any of the following (without Executive’s
express written consent):

               (i) the assignment to Executive by the Company of duties that constitute a
material diminution of Executive’s position, duties, responsibilities and status with the
Company immediately prior to a Change in Control of the Company, or a change in Executive’s
titles or offices as in effect immediately prior to a Change in Control of the Company, or
any removal of Executive from or any failure to reelect Executive to any of such positions,
except in connection with a Termination by Reason of Disability, a Termination by Reason of
Retirement, a Termination With Cause, a termination by the Executive other than a
Termination for Good Reason or as a result of Executive’s death (each as defined in this
Article IV);

               (ii) a material reduction by the Company in Executive’s Base Salary or a
material reduction in the health and welfare insurance, retirement and other benefits
available to Executive as of immediately prior to the Change in Control, except for
reductions in such benefits as shall become in effect for senior executive employees of the
Company generally;

               (iii) a relocation of the Company’s principal executive offices to a location
more than fifty (50) miles from Nashville, Tennessee, or Executive’s relocation to any place
other than the location at which Executive performed Executive’s duties prior to a Change in
Control of the Company, except for required travel by Executive on the Company’s business to
an extent substantially consistent with Executive’s business travel obligations at the time
of a Change in Control of the Company;

               (iv) any material breach by the Company of any provision of this Agreement;
or

               (v) any failure by the Company to obtain the assumption of this Agreement by
any successor or assign of the Company;

provided that Executive shall have notified the Company of the existence of a condition described
in items (i), (ii) or (iii), within ninety (90) days of Executive’s actual knowledge of the initial
existence of the condition, and the Company shall have failed to remedy the condition

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within thirty (30) days of receiving such notice. For the avoidance of doubt, subsequent
occurrences of these events shall start new time periods described in this paragraph.

          (e) Notice of Termination. Any termination by the Company under this
Article IV shall be communicated by a Notice of Termination. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which indicates those specific
termination provisions in this Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Executive’s employment under
the provisions so indicated. For purposes of this Agreement, no such purported termination by the
Company shall be effective without such Notice of Termination.

          (f) Date of Termination. For purposes of this Article IV, “Date of
Termination” shall mean (a) if Executive’s employment is terminated by the Company, the date on
which a Notice of Termination is given, or (b) if Executive terminates his employment pursuant to
Section 4.2(d), the date of termination or, if applicable, the expiration of the thirty
(30) day cure period without the Company remedying the applicable condition described in
Section 4.2(d)(i) to (iii).

     4.3 Compensation Upon Termination of Employment.

          (a) If the Company shall terminate Executive’s employment within twenty-four (24)
months following a Change in Control other than pursuant to Section 4.2(a), 4.2(b)
or 4.2(c) or if Executive shall terminate his employment within twenty-four (24) months
following a Change in Control by reason of a Termination for Good Reason, then the Company shall
pay to Executive as severance pay in a lump sum, in cash, on the fifth day following the Date of
Termination, an amount equal to the sum of (i) 300% of the average of the Base Salary paid to
Executive by the Company during the three calendar years preceding the Change in Control and (ii)
300% of the highest bonus compensation paid to Executive for any of the three calendar years
preceding the Change in Control; provided, however, that if the lump sum severance
payment under this Section 4.3, either alone or together with other payments which
Executive has the right to receive from the Company, would constitute a “parachute payment” (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), such lump
sum severance payment shall be reduced to the largest amount as shall result in no portion of the
lump sum severance payment under this Section 4.3 being subject to the excise tax imposed
by Section 4999 of the Code.

          (b) In addition to the lump sum payment provided in Section 4.3(a), if the
Company shall terminate Executive’s employment within twenty-four (24) months following a Change in
Control other than pursuant to Section 4.2(a), 4.2(b) or 4.2(c) or if
Executive shall terminate his employment within twenty-four (24) months following a Change in
Control by reason of a Termination for Good Reason, then the Company shall provide to Executive:

               (i) health insurance equivalent to that provided to Executive immediately prior
to the Date of Termination until the earlier of: (i) twenty-four months following
the Date of Termination or (ii) such time as Executive is employed by another
employer and is covered or permitted to be covered by benefit plans of another
employer providing substantially similar coverage; and

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               (ii) any other unpaid benefits to which the Executive is otherwise entitled
under any plan, policy or program of the Company applicable to the Executive as of
the Date of Termination (including any bonus earned, but not yet paid, for the
fiscal year immediately preceding the fiscal year in which the Date of Termination
occurs), provided, however, that, notwithstanding any other
provisions of this Agreement or of any of the Company’s Equity Incentive Plans, upon
a Change in Control, regardless of whether the Executive is terminated, all of
Executive’s then unvested options and stock awards issued prior to the date of this
Agreement pursuant to the Company’s Equity Incentive Plans (whether time-base vested
or performance-base vested) shall immediately vest and be exercisable for the lesser
of one year following the Date of Termination and the expiration of the remaining
term of such award, whichever first occurs.

ARTICLE V.

NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY

     5.1 Noncompetition.

          (a) So long as Executive remains employed by the Company, Executive shall not
compete, directly or indirectly, with the Company. In accordance with this restriction, but without
limiting its terms, Executive shall not:

               (i) enter into or engage in any business which competes with the business of
the Company; or

               (ii) promote or assist, financially or otherwise, any person, firm,
association or corporation or any other entity engaged in any business which competes with
the business of the Company.

          (b) For a period of twelve (12) months following termination of Executive’s
employment with the Company (the “Non-compete Period”), Executive shall not enter into or engage in
any business that competes with the Company’s business.

          (c) During the Non-compete Period, Executive shall not promote or assist financially
or otherwise, any person, firm, association, partnership, corporation, or any other entity engaged
in any business which competes with the Company’s business.

          (d) For the purposes of this Section 5.1, Executive understands that he
shall be competing if he engages in any or all of the activities set forth herein directly as an
individual on his own account, or indirectly as a partner, joint venturer, employee, agent,
consultant, officer and/or director of any firm, association, corporation, or other entity, or as a
stockholder of any corporation in which Executive owns, directly or indirectly, individually or in
the aggregate, more than one percent (1%) of the outstanding stock; provided,
however, that at such time as he is no longer employed by the Company, Executive’s direct
or indirect ownership as a stockholder of less than five percent (5%) of the outstanding stock of
any publicly traded corporation shall not by itself constitute a violation of this Section
5.1.

          (e) For the purposes of this Section 5.1, the Company’s business is defined
as owning, operating and/or franchising restaurants in the casual dining segment of the restaurant
industry and such other segments of the restaurant industry in which the Company shall own,

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operate or franchise restaurants during the Term and as of the Date of Termination of
Executive’s employment. Executive understands that the activities described in this Section
5.1, shall be prohibited only within the United States. If it shall be judicially determined
that Executive has violated any of his obligations under this Section 5.1, then the period
applicable to the obligation which Executive shall have been determined to have violated shall
automatically be extended by a period of time equal in length to the period during which said
violation(s) occurred.

     5.2 Nonsolicitation. Executive agrees that he shall not directly or indirectly at
any time solicit or induce or attempt to solicit or induce any employee(s) (at the level of
director or above) of the Company or any of its parent, subsidiary or affiliate entities to
terminate their employment with the Company or such entity.

     5.3 Confidentiality.

          (a) During the Term and at any time thereafter, Executive shall not disclose,
furnish, disseminate, make available or, except in the ordinary course of performing his duties on
behalf of the Company, use any trade secrets or confidential business and technical information of
the Company, or its parent, subsidiaries or affiliated entities without limitation as to when it
was acquired by Executive or whether it was compiled or obtained by, or furnished to Executive
while he was employed by the Company. Such trade secrets and confidential business and technical
information are considered to include, without limitation, development plans, financial statistics,
research data, or any other statistics and plans contained in monthly and annual review books,
profit plans, capital plans, critical issues plans, strategic plans, or marketing, real estate, or
store operations plans. Executive specifically acknowledges that all such information, whether
reduced to writing or maintained in Executive’s mind or memory and whether compiled by the Company
and/or Executive derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value from its disclosure or use,
that reasonable efforts have been put forth by the Company to maintain the secrecy of such
information, that such information is and shall remain the sole property of the Company and that
any retention and use of such information during or after the termination of Executive’s
relationship with the Company (except in the course of Executive’s performance of his duties) shall
constitute a misappropriation of the Company’s trade secrets.

          (b) The above restrictions on disclosure and use of confidential information shall
not prevent Executive from: (i) using or disclosing information in the good faith performance of
his duties on behalf of the Company; (ii) using or disclosing information to another employee to
whom disclosure is required to perform in good faith the duties of either person on behalf of the
Company; (iii) using or disclosing information to another person or entity bound by a duty or an
agreement of confidentiality as part of the performance in good faith of Executive’s duties on
behalf of the Company or as authorized in writing by the Company; (iv) at any time after the period
of Executive’s employment using or disclosing information to the extent such information is,
through no fault or disclosure of Executive, generally known to the public; (v) using or disclosing
information which was not disclosed to Executive by the Company or otherwise during the period of
Executive’s employment which is then disclosed to Executive after termination of Executive’s
employment with the Company by a third party who is under no duty or obligation not to disclose
such information; or (vi) disclosing information as required by law. If Executive becomes legally
compelled to disclose any of the confidential information, Executive shall (i) provide the Company
with reasonable prior written notice of the need for such disclosure such that the Company may
obtain a protective order; (ii) if disclosure is

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required, furnish only that portion of the confidential information which, in the written
opinion of Executive’s counsel delivered to the Company, is legally required; and (iii) exercise
reasonable efforts to obtain reliable assurances that confidential treatment shall be accorded to
the confidential information.

          (c) Executive expressly agrees and understands that the remedy at law for any breach
by Executive of this Article V will be inadequate and that the damages flowing from such
breach are not readily susceptible to being measured in monetary terms. Accordingly, it is
acknowledged that upon any violation of any provision of this Article V, the Company will
be entitled to immediate injunctive relief and may obtain a temporary order restraining any
threatened or further breach without the necessity of proof of actual damage. Nothing in this
Agreement shall be deemed to limit the Company’s remedies at law or in equity for any further
breach by Executive of any of the provisions of this Agreement which may be pursued or availed of
by the Company.

ARTICLE VI.

MISCELLANEOUS

     6.1 Notice. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as
follows:

	 	 	 
	If to the Company:

	 	O’Charley’s Inc.
	 

	 	3038 Sidco Drive
	 

	 	Nashville, Tennessee 37204
	 

	 	Attention: Chair, Compensation and
	 

	 	                  Human Resources Committee
	 
	 	 
	If to Executive:

	 	Gregory L. Burns
	 

	 	3038 Sidco Drive
	 

	 	Nashville, Tennessee 37204

or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

     6.2 Modification. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a writing signed by
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by either party that
are not set forth expressly in this Agreement.

     6.3 Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

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     6.4 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall constitute one and the
same instrument.

     6.5 Legal Fees and Expenses. In the event either party hereto shall institute
litigation against the other party hereto relating to the interpretation or enforcement of this
Agreement, the prevailing party in such litigation shall be entitled to recover from the other
party any and all attorneys’ and related fees and expenses incurred by the prevailing party in such
litigation.

     6.6 No Obligation to Mitigate Damages; No Effect on Other Contractual Rights.
Executive shall not be required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by Executive as the result
of employment by another employer after the Term, or otherwise.

     6.7 Indemnification. It is understood and agreed that the Company will indemnify
Executive (including advancing expenses) to the fullest extent permitted by Tennessee law and the
Company’s Charter and Bylaws for any judgments, amounts paid in settlement and reasonable expenses,
including reasonable attorneys’ fees, incurred by Executive in connection with the defense of any
lawsuit or other claim to which Executive is made a party by reason of being (or having been) an
officer, director or employee of the Company, its parent (if applicable) or any of its
subsidiaries.

     6.8 Assignment; Successor to the Company. This Agreement is not assignable by
either party without the prior written consent of the other except that the Company may assign it
without such consent in connection with any sale, transfer or other disposition of all or
substantially all of its business and assets. The Company may also assign this Agreement without
Executive’s consent to any parent, subsidiary or affiliated entity, and upon such entity’s
assumption of the Company’s duties and obligations hereunder, such entity shall succeed to each of
the Company’s rights hereunder, provided, however, that no such assignment to any
parent, subsidiary or affiliated entity of the Company shall relieve the Company of its obligations
for the due performance of all of the terms, covenants and conditions of this Agreement to be
complied with and performed by the Company. In the event of any such assignment, the term
“Company” when used in a section of this Agreement shall mean the entity that actually employs
Employee. Upon such assignment and assumption, Executive agrees to and becomes an employee of such
entity, subject to Executive’s rights under Article IV hereof if such assignment shall be
incident to a Change of Control under Section 4.1(b) hereof, and all references to the
Company in this Agreement shall, as the context requires, be deemed to be to the entity to which
such assignment, assumption and employment relate. The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the Company would be required
to perform it if no such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or assignment shall be a
material breach of this Agreement and shall entitle the Executive to terminate the Executive’s
employment and such termination shall constitute a Termination for Good Reason under Article
IV. As used in this Agreement, “Company” shall mean the Company

11

 

as hereinbefore defined and any successor or assign to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 6.8 or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
Notwithstanding anything to the contrary herein, this Agreement, in the event of the death of
Executive, shall inure to the benefit of and be enforceable by Executive’s personal and legal
representatives, executors, administrators, successors, heirs, distributes, devisees and legatees.
If Executive should die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to
Executive’s devisee, legatee, or other designee or, if there be no such designee, to Executive’s
estate.

     6.9 Governing Law; Jurisdiction. This Agreement and any amendments thereto shall
become and shall be governed by, and construed in accordance with, the internal, substantive laws
of the State of Tennessee. Executive agrees that the state and federal courts located in the State
of Tennessee shall have jurisdiction in any action, suite or proceeding against Executive arising
out of this Agreement and Executive hereby: (a) submits to the personal jurisdiction of such
courts; (b) consents to service of process in connection with any action, suite or proceeding
against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court
or otherwise) with respect to personal jurisdiction, venue or service of process.

     6.10 Section 409A Provisions. It is intended that (i) each payment or installment
of payments provided under this Agreement is a separate “payment” for purposes of Section 409A of
the Code and (ii) that the payments satisfy, to the greatest extent possible, the exemptions from
the application of Code Section 409A, including those provided under Treasury Regulations
1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two
year exception), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay).
Notwithstanding anything to the contrary in this Agreement, if the Company determines (i) that on
the date of Executive’s termination of employment or at such other time that the Company determines
to be relevant, the Executive is a “specified employee” (as such term is defined under Treasury
Regulation 1.409A-1(i)(1)) of the Company and (ii) that any payments to be provided to the
Executive pursuant to this Agreement are or may become subject to the additional tax under Code
Section 409A(a)(1)(B) or any other taxes or penalties imposed under Code Section 409A (“Section
409A Taxes”) if provided at the time otherwise required under this Agreement, then (A) such
payments shall be delayed until the date that is six (6) months after the date of the Executive’s
termination of employment with the Company, or such shorter period that, as determined by the
Company, is sufficient to avoid the imposition of Section 409A Taxes (the “Payment Delay Period”).
Any payments delayed pursuant to this Section 6.10 shall be made in a lump sum on the first
day of the seventh month following the Executive’s termination of employment, or such earlier date
that, as determined by the Company, is sufficient to avoid the imposition of any Section 409A
Taxes.

     6.11 Entire Agreement. This Agreement supersedes the provisions of each and every
other agreement or understanding, whether oral or written, between the undersigned and the Company
relating to the subject matter contained herein, including the Change in Control Agreement, and any
such agreement or understanding shall be of no further force and effect, provided, the
provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish Executive’s existing rights, or rights which would accrue
solely as a result of the passage of time, under any benefit plan,

12

 

incentive plan or stock option plan or agreement. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially unenforceable
provision, to the extent enforceable in any jurisdiction, shall, nevertheless, be binding and
enforceable. The parties hereto agree that when fully executed, the foregoing shall constitute a
legally enforceable agreement between the parties, which also shall inure the benefit of the
Company’s successors and assigns.

     6.12 Review of Agreement by Executive. Executive represents that prior to signing
this Agreement, he has read, fully understood and voluntarily agrees to the terms and conditions as
stated above, that he was not coerced to sign this agreement, that Executive was not under duress
at the time he signed this Agreement and that, prior to signing this Agreement, Executive had
adequate time to consider entering into this Agreement, including without limitation, the
opportunity to discuss the terms and conditions of this Agreement, as well as its legal
consequences, with an attorney of his choice. This Agreement shall become effective as of the date
hereof.

[Signature Page Follows]

13

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	O’CHARLEY’S INC.

 	 
	 	By:  	/s/ Richard Reiss, Jr.
 	 
	 	 	Name:  	Richard Reiss, Jr. 	 
	 	 	Title:  	Chair, Compensation and Human
Resources Committee 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Gregory L. Burns
 	 
	 	Name:  	Gregory L. Burns 	 
	 	Title:  	Chief Executive Officer and President 	 
	 

14EX-4.1 FORM OF STOCKHOLDERS PROTECTION RIGHTS AGRM

 

Exhibit 4.1

STOCKHOLDER PROTECTION RIGHTS AGREEMENT

     THIS STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time, this
“Agreement”) is made and entered into as of March 10, 2008, between LHC Group, Inc., a
Delaware corporation (the “Company”), and Computershare Trust Company, N.A., as rights
agent (the “Rights Agent,” which term shall include any successor rights agent hereunder).

W I T N E S S E T H:

     WHEREAS, on March 10, 2008, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right (“Right”) in respect of each share of Common Stock (as
hereinafter defined) held of record as of the Close of Business (as hereinafter defined) on March
10, 2008 (the “Record Time”) and (b) as provided in Section 2.4, authorized the issuance of
one Right in respect of each share of Common Stock issued after the Record Time and prior to the
Separation Time (as hereinafter defined);

     WHEREAS, subject to Sections 3.1, 5.1 and 5.10, each Right entitles the holder thereof, after
the Separation Time, to purchase securities of the Company (or, in certain cases, of certain other
entities) pursuant to the terms and subject to the conditions set forth herein; and

     WHEREAS, the Company desires to appoint the Rights Agent to act on behalf of the Company, and
the Rights Agent is willing so to act, in connection with the issuance, transfer, exchange and
replacement of Rights Certificates (as hereinafter defined), the exercise of Rights and other
matters referred to herein;

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

ARTICLE I

CERTAIN DEFINITIONS

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

     “Acquiring Person” shall mean any Person who is a Beneficial Owner of 20% or more of
the outstanding shares of Common Stock; provided, however, that the term “Acquiring Person” shall
not include any Person (i) who is the Beneficial Owner of 20% or more of the outstanding shares of
Common Stock on the date of this Agreement or who shall become the Beneficial Owner of 20% or more
of the outstanding shares of Common Stock solely as a result of an acquisition by the Company of
shares of Common Stock, until such time hereafter or thereafter as any such Person shall become the
Beneficial Owner (other than by means of a stock dividend or stock split) of any additional shares
of Common Stock, excluding shares of additional Common Stock (i) obtained by such Person from the
issuance of options, restricted stock or other equity incentive awards approved by the Board of
Directors or Compensation Committee of the Company, or (ii) acquired by such person if such
purchase is approved by the Board of Directors of the Company, (ii) who is the Beneficial Owner of
20% or more of the outstanding shares of Common Stock but who acquired Beneficial Ownership of
shares of Common Stock without any plan or intention to seek or affect control of the Company, if
such Person promptly enters into an irrevocable commitment promptly to divest, and thereafter
promptly divests (without exercising or retaining any power, including voting power, with respect
to such shares), sufficient shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock) so that such Person ceases to be the Beneficial Owner of 20%
or more of the outstanding shares of Common Stock or (iii) who Beneficially Owns shares of Common
Stock consisting solely of one or more of (A) shares of Common Stock Beneficially Owned pursuant to
the grant or exercise of an option granted to such Person by the Company in connection with an
agreement to merge with, or acquire, the Company entered into prior to a Flip-In Date, (B) shares
of Common Stock (or securities convertible into, exchangeable into or exercisable for Common Stock)
Beneficially Owned by such Person or its Affiliates or Associates at the time of grant of such
option or (C) shares of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock) acquired by Affiliates or Associates of such Person after the time of
such grant which, in the

 

 

aggregate, amount to less than 1% of the outstanding shares of Common Stock. In addition, the
Company, any wholly owned Subsidiary of the Company and any employee stock ownership or other
employee benefit plan of the Company or a wholly owned Subsidiary of the Company shall not be an
Acquiring Person.

     “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”), as such Rule is in effect on the date of this Agreement.

     A Person shall be deemed the “Beneficial Owner” of, and to have “Beneficial
Ownership” of, and to “Beneficially Own,” any securities of which such Person or any of
such Person’s Affiliates or Associates is or may be deemed to be the beneficial owner pursuant to
Rule 13d-3 and 13d-5 under the Securities Exchange Act, as such Rules are in effect on the date of
this Agreement as well as any securities as to which such Person or any of such Person’s Affiliates
or Associates has the right to become Beneficial Owner (whether such right is exercisable
immediately or only after the passage of time or the occurrence of conditions) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange
rights, other rights (other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to have “Beneficial Ownership” of,
or to “Beneficially Own,” any security (i) solely because such security has been tendered pursuant
to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates
until such tendered security is accepted for payment or exchange or (ii) solely because such Person
or any of such Person’s Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a public proxy or
consent solicitation made to more than ten holders of shares of a class of stock of the Company
registered under Section 12 of the Securities Exchange Act and pursuant to, and in accordance with,
the applicable rules and regulations under the Securities Exchange Act, except if such power (or
the arrangements relating thereto) is then reportable under Item 6 of Schedule 13D under the
Securities Exchange Act (or any similar provision of a comparable or successor report).
Notwithstanding the foregoing, no officer or director of the Company shall be deemed to
Beneficially Own any securities of any other Person by virtue of any actions such officer or
director takes in such capacity. For purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any time, including for purposes of determining the
percentage of the outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, shall be made in accordance with the provisions of Rule 13d-3(d)(1) under the
Securities Exchange Act.

     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in Boston, Massachusetts are generally authorized or obligated by law or
executive order to close.

     “Close of Business” on any given date shall mean 5:00 p.m. Boston, Massachusetts time
on such date (or, if such date is not a Business Day, 5:00 p.m. Boston, Massachusetts time on the
next succeeding Business Day).

     “Common Stock” shall mean the shares of Common Stock, par value $0.01 per share, of
the Company.

     “Definitive Acquisition Agreement” shall mean any agreement entered into by the
Company that is conditioned on the approval by the holders of not less than a majority of the
outstanding shares of Common Shock at a meeting of stockholders with respect to (i) a merger,
consolidation, recapitalization, reorganization, share exchange, business combination or similar
transaction involving the Company or (ii) the acquisition in any manner, directly or indirectly, of
more than 50% of the consolidated total assets (including, without limitation, equity securities of
its subsidiaries) of the Company.

     “Exchange Time” shall mean the time at which the right to exercise the Rights shall
terminate pursuant to Section 3.1(c).

     “Exercise Price” shall mean, as of any date, the price at which a holder may purchase
the securities issuable upon exercise of one whole Right. Until adjustment thereof in accordance
with the terms hereof, the Exercise Price shall equal $60.

-2-

 

     “Expiration Time” shall mean the earliest of (i) the Exchange Time, (ii)  the
Redemption Time, (iii) March 10, 2011, and (iv) the time of a merger of the Company into another
corporation pursuant to an agreement entered into prior to a Flip-In Date.

     “Flip-In Date” shall mean the tenth Business Day after any Stock Acquisition Date or
such earlier or later date as the Board of Directors of the Company may from time to time fix by
resolution adopted prior to the Flip-In Date that would otherwise have occurred.

     “Flip-Over Entity” for purposes of Section 3.2, shall mean (i) in the case of a
Flip-Over Transaction or Event described in clause (i) of the definition thereof, the Person
issuing any securities into which shares of Common Stock are being converted or exchanged and, if
no such securities are being issued, any other party to such Flip-Over Transaction or Event and
(ii) in the case of a Flip-Over Transaction or Event referred to in clause (ii) of the definition
thereof, the Person receiving the greatest portion of the assets or earning power being transferred
in such Flip-Over Transaction or Event; provided in all cases if such Person is a subsidiary of
another Person, the ultimate controlling Person that is not an individual shall be the Flip-Over
Entity.

     “Flip-Over Stock” shall mean the capital stock (or similar equity interest) with the
greatest voting power in respect of the election of directors (or other Persons similarly
responsible for direction of the business and affairs) of the Flip-Over Entity.

     “Flip-Over Transaction or Event” shall mean a transaction or series of transactions
after a Flip-In Date in which, directly or indirectly, (i) the Company shall consolidate or merge
or participate in a share exchange with any other Person if, at the time of the consolidation,
merger or share exchange or at the time the Company enters into any agreement with respect to any
such consolidation, merger or share exchange, the Acquiring Person is the Beneficial Owner of 90%
or more of the outstanding Common Stock or Controls the Board of Directors of the Company and
either (A) any term of or arrangement concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the Acquiring Person is not identical to the
terms and arrangements relating to other holders of the Common Stock or (B) the Person with whom
the transaction or series of transactions occurs is the Acquiring Person or an Affiliate or
Associate of the Acquiring Person or (ii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than 50% of
the assets (measured by either book value or fair market value) or (B) generating more than 50% of
the operating income or cash flow, of the Company and its Subsidiaries (taken as a whole) to any
Person (other than the Company or one or more of its wholly owned Subsidiaries) or to two or more
such Persons which are Affiliates or Associates or otherwise acting in concert, if, at the time of
the entry by the Company (or any such Subsidiary) into an agreement with respect to such sale or
transfer of assets, the Acquiring Person is the Beneficial Owner of 90% or more of the outstanding
Common Stock or Controls the Board of Directors of the Company. An Acquiring Person shall be
deemed to “Control” the Company’s Board of Directors when, following a Flip-In Date, the Persons
who were directors of the Company before the Flip-In Date shall cease to constitute a majority of
the Company’s Board of Directors.

     “Market Price” per share of any securities on any date shall mean the average of the
daily closing prices per share of such securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day immediately preceding such date;
provided, however, that if an event of a type analogous to any of the events described in Section
2.4 shall have caused the closing prices used to determine the Market Price on any Trading Days
during such period of 20 Trading Days not to be fully comparable with the closing price on such
date, each such closing price so used shall be appropriately adjusted in order to make it fully
comparable with the closing price on such date. The closing price of any security on any given day
shall be the last sale price, regular way, of such security or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, on the principal trading
market on which such security is traded.

     “Outside Directors” shall mean members of the Board of Directors of the Company who
are not officers of the Company or any of its Subsidiaries and who are not Acquiring Persons or
representatives, nominees, Affiliates or Associates of Acquiring Persons.

-3-

 

     “Person” shall mean any individual, firm, partnership, limited liability company,
association, group (as such term is used in Rule 13d-5 under the Securities Exchange Act, as such
Rule is in effect on the date of this Agreement), corporation or other entity, and shall include
any successor (by merger or otherwise) thereof or thereto.

     “Preferred Stock” shall mean the Series A Junior Participating Preferred Stock, par
value $0.01 per share, of the Company created by the Certificate of Designation, Preferences and
Rights in substantially the form set forth in Exhibit B hereto, appropriately completed.

     “Qualified Offer” shall mean an offer determined by a majority of the Outside
Directors to have each of the following characteristics:

     (a) a fully-financed, all-cash tender offer, or an exchange offer offering shares of common
stock of the offeror, or a combination thereof, in each such case for all of the outstanding shares
of Common Stock at the same per-share consideration;

     (b) an offer that has commenced within the meaning of Rule 14d-2(a) under the Securities
Exchange Act;

     (c) an offer whose per-share offer price is greater than the highest reported market price for
the Common Stock in the immediately preceding 24 months, with, in the case of an offer that
includes shares of common stock of the offeror, such per-share offer price being determined using
the lowest reported market price for common stock of the offeror during the five trading days
immediately preceding and the five trading days immediately following the commencement of such
offer within the meaning of Rule 14d-2(a) under the Securities Exchange Act;

     (d) an offer that, within twenty Business Days after the commencement date of the offer (or
within ten Business Days after any increase in the offer consideration), does not result in a
nationally recognized investment banking firm retained by the Board of Directors of the Company
rendering an opinion to the Board of Directors of the Company that the consideration being offered
to the stockholders of the Company is either unfair or inadequate;

     (e) if the offer includes shares of common stock of the offeror, an offer pursuant to which
(A) the offeror shall permit representatives of the Company (including a nationally-recognized
investment banking firm retained by the Board of Directors of the Company and legal counsel and an
accounting firm designated by the Company) to have access to such offeror’s books, records,
management, accountants and other appropriate outside advisors for the purposes of permitting such
representatives to conduct a due diligence review of the offeror in order to permit the Board of
Directors of the Company to evaluate the offer and make an informed decision and, if requested by
the Board of Directors of the Company, to permit such investment banking firm (relying as
appropriate on the advice of such legal counsel) to be able to render an opinion to the Board of
Directors of the Company with respect to whether the consideration being offered to the
stockholders of the Company is fair from a financial point of view and (B) within ten Business Days
after such representatives of the Company (including a nationally-recognized investment banking
firm retained by the Board of Directors of the Company and legal counsel and an accounting firm
designated by the Company) shall have notified the Company and the offeror that it had completed
such due diligence review to its satisfaction (or, following completion of such due diligence
review, within ten Business Days after any increase in the consideration being offered), such
investment banking firm does not render an opinion to the Board of Directors of the Company that
the consideration being offered to the stockholders of the Company is either unfair or inadequate
and such investment banking firm does not, after the expiration of such ten Business Day period,
render an opinion to the Board of Directors of the Company that the consideration being offered to
the stockholders of the Company has become either unfair or inadequate based on a subsequent
disclosure or discovery of a development or developments that have had or are reasonably likely to
have a material adverse effect on the value of the common stock of the offeror;

     (f) an offer that is subject to only the minimum tender condition described in clause (i)
below and other customary terms and conditions, which conditions shall not include any financing,
funding or similar conditions or any requirements with respect to the offeror or its agents being
permitted any due diligence with respect to the books, records, management, accountants or other
outside advisors of the Company;

-4-

 

     (g) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offer will remain open for at least 120 Business Days and, if a Special
Meeting is duly requested in accordance with Section 5.1(c), for at least ten Business Days after
the date of the Special Meeting or, if no Special Meeting is held within ninety Business Days
following receipt of the Special Meeting Notice in accordance with Section 5.1(c), for at least ten
Business Days following such ninety Business Day period;

     (h) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror that, in addition to the minimum time periods specified in clause (g) above, the offer,
if it is otherwise to expire prior thereto, will be extended for at least twenty Business Days
after any increase in the consideration being offered or after any bona fide alternative offer is
commenced within the meaning of Rule 14d-2(a) under the Securities Exchange Act; provided, however,
that such offer need not remain open, as a result of clause (g) above and this clause (h), beyond
(A) the time that any other offer satisfying the criteria for a Qualified Offer is then required to
be kept open under such clause (g) above and this clause (h) or (B) the expiration date, as such
date may be extended by public announcement (with prompt written notice to the Rights Agent) in
compliance with Rule 14e—1 under the Securities Exchange Act, of any other tender offer for the
Common Stock with respect to which the Board of Directors of the Company has agreed to redeem the
Rights immediately prior to acceptance for payment of Common Stock thereunder (unless such other
offer is terminated prior to its expiration without any Common Stock having been purchased
thereunder) or (C) one Business Day after the stockholder vote with respect to approval of any
Definitive Acquisition Agreement has been officially determined and certified by the inspectors of
elections;

     (i) an offer that is conditioned on a minimum of at least two-thirds of the outstanding shares
of the Common Stock not held by the Person making such offer (and such Person’s Affiliates and
Associates) being tendered and not withdrawn as of the offer’s expiration date, which condition
shall not be waivable;

     (j) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror to consummate, as promptly as practicable upon successful completion of the offer, a
second step transaction whereby all shares of the Common Stock not tendered into the offer will be
acquired at the same consideration per share actually paid pursuant to the offer, subject to
stockholders’ statutory appraisal rights, if any;

     (k) an offer pursuant to which the Company and its stockholders have received an irrevocable
written commitment of the offeror that no amendments will be made to the offer to reduce the
consideration being offered or to otherwise change the terms of the offer in a way that is adverse
to a tendering stockholder;

     (l) an offer (other than an offer consisting solely of cash consideration) pursuant to which
the Company has received the written representation and certification of the offeror and, in their
individual capacities, the written representations and certifications of the offeror’s Chief
Executive Officer and Chief Financial Officer, that (A) all facts about the offeror that would be
material to making an investor’s decision to accept the offer have been fully and accurately
disclosed as of the date of the commencement of the offer within the meaning of Rule 14d-2(a) under
the Securities Exchange Act, (B) all such new facts will be fully and accurately disclosed on a
prompt basis during the entire period during which the offer remains open, and (C) all required
Securities Exchange Act reports will be filed by the offeror in a timely manner during such period;
and

     (m) if the offer includes non-cash consideration, (A) the non-cash portion of the
consideration offered must consist solely of common stock of a Person that is a publicly-owned
United States corporation, (B) such common stock must be freely tradable and listed or admitted to
trading on either the New York Stock Exchange or NASDAQ, (C) no stockholder approval of the issuer
of such common stock is required to issue such common stock, or, if such approval required, such
approval has already been obtained, (D) no Person (including such Person’s Affiliates and
Associates) beneficially owns more than 15% of the voting stock of the issuer of such common stock
at the time of commencement of the offer or at any time during the term of the offer, (E) no other
class of voting stock of the issuer of such common stock is outstanding and (F) the issuer of such
common stock meets the registrant eligibility requirements for use of Form S-3 for registering
securities under the Securities Act, including the filing of all required Securities Exchange Act
reports in a timely manner during the twelve calendar months prior to the date of commencement of
such offer.

-5-

 

     For the purposes of this definition of “Qualified Offer,” “fully financed” shall mean that the
offeror has sufficient funds for the offer and related expenses which shall be evidenced by (1)
firm, unqualified, written commitments from responsible financial institutions having the necessary
financial capacity, accepted by the offeror, to provide funds for such offer subject only to
customary terms and conditions, (2) cash or cash equivalents then available to the offeror, set
apart and maintained solely for the purpose of funding the offer with an irrevocable written
commitment being provided by the offeror to the Board of Directors of the Company to maintain such
availability until the offer is consummated or withdrawn or (3) a combination of the foregoing;
which evidence has been provided to the Company prior to, or upon, commencement of the offer. If an
offer becomes a Qualified Offer
in accordance with this definition, but subsequently ceases to be a Qualified Offer as a
result of the failure at a later date to continue to satisfy any of the requirements of this
definition, such offer shall cease to be a Qualified Offer and the provisions of Section 5.1(c)
shall no longer be applicable to such offer, provided that the actual redemption of the Rights
pursuant to Section 5.1(c) shall not have already occurred.

     “Redemption Time” shall mean the time at which the right to exercise the Rights shall
terminate pursuant to Section 5.1.

     “Separation Time” shall mean the Close of Business on the earlier of (i) the tenth
Business Day (or such later date as the Board of Directors of the Company may from time to time fix
by resolution adopted prior to the Separation Time that would otherwise have occurred) after the
date on which any Person commences a tender or exchange offer which, if consummated, would result
in such Person’s becoming an Acquiring Person and (ii) the Flip-In Date; provided, that if the
foregoing results in the Separation Time being prior to the Record Time, the Separation Time shall
be the Record Time and provided further, that if any tender or exchange offer referred to in clause
(i) of this paragraph is canceled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed,
for purposes of this paragraph, never to have been made.

     “Stock Acquisition Date” shall mean the first date of public announcement by the
Company (by any means) that an Acquiring Person has become such.

     “Subsidiary” of any specified Person shall mean any corporation or other entity of
which a majority of the voting power of the equity securities or a majority of the equity interests
is Beneficially Owned, directly or indirectly, by such Person.

     “Trading Day,” with respect to any security shall mean a day on which the principal
national securities exchange on which the security is listed or admitted to trading is open for the
transaction of business or, if the security is not listed or admitted to trading on any national
securities exchange, a Business Day.

ARTICLE II

THE RIGHTS

     2.1 Summary of Rights. As soon as practicable after the Record Time, the Company will
mail a letter summarizing the terms of the Rights to each holder of record of Common Stock as of
the Record Time, at such holder’s address as shown by the records of the Company.

     2.2 Issuance of Rights Certificates; Legend. (a) Certificates for the Common Stock
issued after the Record Time but prior to the Separation Time shall evidence, in addition to the
Common Stock represented by such certificate, one Right for each share of Common Stock represented
thereby and shall have impressed on, printed on, written on or otherwise affixed to them a legend
in substantially the following form:

“Until the Separation Time (as defined in the Rights Agreement referred to below),
this certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Stockholder Protection Rights Agreement, effective as of March 10,
2008 (as such may be amended from time to time, the “Rights Agreement”),
between LHC Group, Inc. (the “Company”) and Computershare Trust Company,
N.A., as Rights Agent, the terms of which are hereby incorporated herein by

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reference and a copy of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement, such
Rights may be terminated or redeemed, may become exercisable for securities or
assets of the Company or of another entity, may be exchanged for shares of Common
Stock or other securities or assets of the Company, may expire, may become void (if
they are “Beneficially Owned” by an “Acquiring Person” or an
Affiliate or Associate thereof, as such terms are defined in the Rights Agreement,
or by any transferee of any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this certificate. The Company will
mail or arrange for the mailing of a copy of
the Rights Agreement to the holder of this certificate without charge promptly after
the receipt of a written request therefor.”

Certificates representing shares of Common Stock that are issued and outstanding at the Record Time
shall evidence, in addition to the Common Stock represented by such certificate, one Right for each
share of Common Stock evidenced thereby notwithstanding the absence of the foregoing legend.

     (b) Subject to Sections 2.4 and 5.3, one Right shall be issued in respect of (i) each share of
Common Stock outstanding as of the Record Time and (ii) each additional share of Common Stock that
becomes outstanding (whether by original issuance or out of treasury, but other than in a
transaction contemplated by Section 2.4) after the Record Time but prior to the Separation Time.
To the extent provided in Section 5.3, Rights shall be issued by the Company in respect of shares
of Common Stock that are issued or sold by the Company after the Separation Time.

     2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections 3.1, 5.1 and
5.10 and subject to adjustment as herein set forth, each Right will entitle the holder thereof,
after the Separation Time and prior to the Expiration Time, to purchase, for the Exercise Price,
one ten-thousandth (1/10,000th) of a share of Preferred Stock.

     (b) Until the Separation Time, (i) no Right may be exercised and (ii) each Right will be
evidenced by the certificate that evidences the share of Common Stock with which it is associated
(together, in the case of certificates issued prior to the Record Time, with the letter or notice
mailed to the record holder thereof pursuant to Section 2.1) and will be transferable only together
with, and will be transferred by a transfer (whether with or without such letter or notice) of,
such associated share of Common Stock, and the surrender for transfer of any certificates
representing outstanding Common Stock will also constitute the surrender for transfer of the Rights
associated with the Common Stock represented by such certificate.

     (c) Subject to this Section 2.3 and to Sections 3.1, 5.1 and 5.10, after the Separation Time
and prior to the Expiration Time, the Rights (i) may be exercised and (ii) may be transferred
independently of shares of Common Stock. Promptly following the Separation Time and receipt of by
the Rights Agent of a written notification thereof, the Rights Agent will mail to each holder of
record of Common Stock as of the Separation Time (other than any Person whose Rights have become
void pursuant to Section 3.1(b)), at such holder’s address as shown by the records of the Company
(the Company hereby agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a certificate (a “Rights Certificate”) in substantially the form of
Exhibit A hereto appropriately completed, representing the number of Rights held by such
holder at the Separation Time and having such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or regulation of any
national securities exchange or quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage, and (y) a disclosure statement describing the Rights.

     (d) Subject to Sections 3.1, 5.1 and 5.10, Rights may be exercised on any Business Day after
the Separation Time and prior to the Expiration Time by submitting to the Rights Agent the Rights
Certificate evidencing such Rights with an Election to Exercise (an “Election to Exercise”)
substantially in the form attached to the Rights Certificate, duly executed and properly completed,
accompanied by payment by certified or official bank check or money order payable to the order of
the Company, of a sum equal to the Exercise Price multiplied by the number of Rights being
exercised and a sum sufficient to cover any transfer tax or charge that may be payable in respect
of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or
delivery of

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certificates for shares or depositary receipts (or both) in a name other than that of
the holder of the Rights being exercised.

     (e) Upon receipt of a Rights Certificate, with an Election to Exercise accompanied by payment
as set forth in Section 2.3(d), and subject to Sections 3.1, 5.1 and 5.10, the Rights Agent
promptly will (i)(A) requisition from the Company’s transfer agent(s) stock certificates
evidencing such number of shares or other securities to be purchased (the Company hereby
irrevocably authorizing its transfer agents to comply with all such requisitions) and (B) if the
Company elects pursuant to Section 5.5 not to issue certificates representing fractional shares,
requisition
from the depositary selected by the Company depositary receipts representing the fractional
shares to be purchased or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 and (ii) after receipt of such certificates,
depositary receipts and/or cash, deliver the same to or upon the order of the registered holder of
such Rights Certificate, registered (in the case of certificates or depositary receipts) in such
name or names as may be designated by such holder. In the event that the Company elects pursuant to
Section 3.1(e) to issue other securities and/or assets of the Company upon exercise of the Rights,
the Company will make all arrangements necessary so that such other securities and/or assets of the
Company are available for distribution by the Rights Agent, if and when necessary to comply with
this Agreement.

     (f) In case the holder of any Rights shall exercise less than all the Rights evidenced by such
holder’s Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised
will be issued by the Rights Agent to such holder or to such holder’s duly authorized assigns.

     (g) The Company covenants and agrees that it will (i) take all such action as may be necessary
to ensure that all shares delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable; (ii) take all such
action as may be necessary to comply with any applicable requirements of the Securities Act of
1933, as amended, or the Securities Securities Exchange Act, and the rules and regulations
thereunder, and any other applicable law, rule or regulation, in connection with the issuance of
any shares upon exercise of Rights; and (iii) pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the original issuance or
delivery of the Rights Certificates or of any shares issued upon the exercise of Rights, provided
that the Company shall not be required to pay any transfer tax or charge that may be payable in
respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance
or delivery of certificates for shares in a name other than that of the holder of the Rights being
transferred or exercised.

     2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the Company
shall at any time after the Record Time and prior to the Separation Time (i) declare or pay a
dividend on Common Stock payable in Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, (x) the
Exercise Price in effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common Stock (the
“Expansion Factor”) that a holder of one share of Common Stock immediately prior to such
dividend, subdivision or combination would hold thereafter as a result thereof (assuming for such
purpose that the Company would issue a fraction of a share of Common Stock, as applicable, and
without giving effect to any requirement that cash be paid in lieu of the issuance of any
fractional share interest) and (y) each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original Rights were
associated (if they remain outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will have exactly one Right
associated with it. Each adjustment made pursuant to this paragraph shall be made as of the
payment or effective date for the applicable dividend, subdivision or combination.

     (b) In the event the Company shall at any time after the Record Time and prior to the
Separation Time issue or distribute any securities or assets in respect of, in lieu of or in
exchange for Common Stock (other than pursuant to a regular periodic cash dividend or a dividend
paid solely in Common Stock) whether by dividend, in a reclassification or recapitalization
(including any such transaction involving a merger, consolidation or share exchange), or otherwise,
the Company shall make such adjustments, if any, in the Exercise Price, number of Rights and/or
securities or other property purchasable upon exercise of Rights as the Board of Directors of the
Company, in

-8-

 

its sole discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the Company and the Rights
Agent shall amend this Agreement as necessary to provide for such adjustments.

     (c) Each adjustment to the Exercise Price made pursuant to this Section 2.4 shall be
calculated to the nearest cent. Whenever an adjustment to the Exercise Price is made pursuant to
this Section 2.4, the Company shall (i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such a certificate.

     Rights Certificates shall represent the right to purchase the securities purchasable under the
terms of this Agreement, including any adjustment or change in the securities purchasable upon
exercise of the Rights, even though such certificates may continue to express the right to purchase
the securities purchasable at the time of issuance of the initial Rights Certificates.

     2.5 Date on Which Exercise is Effective. Each person in whose name any certificate
for shares is issued upon the exercise of Rights shall for all purposes be deemed to have become
the holder of record of the shares represented thereby on the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price for such
Rights (and any applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and payment is a date
upon which the stock transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the stock transfer books of the Company are open.

     2.6 Execution, Authentication, Delivery and Dating of Rights Certificates. (a) The
Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President or one of its Executive Vice Presidents or Senior Vice Presidents,
under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates may be manual or
facsimile.

     Rights Certificates bearing the manual or facsimile signatures of individuals who were at the
time of such signature the proper officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to the countersignature
and delivery of such Rights Certificates.

     Promptly after the Separation Time, the Company will notify the Rights Agent of such
Separation Time and will deliver Rights Certificates executed by the Company to the Rights Agent
for countersignature, and, subject to Section 3.1(b), an authorized signatory of the Rights Agent
shall manually countersign and deliver such Rights Certificates to the holders of the Rights
pursuant to Section 2.3(c). No Rights Certificate shall be valid for any purpose unless manually
countersigned by an authorized signatory of the Rights Agent.

     (b) Each Rights Certificate shall be dated the date of countersignature thereof.

     2.7 Registration, Registration of Transfer and Exchange. (a) After the Separation
Time, the Company will cause to be kept a register (the “Rights Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company will provide for the
registration and transfer of Rights. The Rights Agent is hereby appointed “Rights
Registrar” for the purpose of maintaining the Rights Register for the Company and registering
Rights and transfers of Rights after the Separation Time as herein provided. In the event that the
Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.

     After the Separation Time and prior to the Expiration Time, upon surrender for registration of
transfer or exchange of any Rights Certificate, and subject to the provisions of this Section
2.7(a) and Sections 2.7(c) and 2.7(d), the Company will execute and the Rights Agent will
countersign and deliver, in the name of the holder or the

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designated transferee or transferees, as
required pursuant to the holder’s instructions, one or more new Rights Certificates evidencing the
same aggregate number of Rights as did the Rights Certificate so surrendered.

     (b) Except as otherwise provided in Section 3.1(b), all Rights issued upon any registration of
transfer or exchange of Rights Certificates shall be the valid obligations of the Company, and such
Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon
such registration of transfer or exchange.

     (c) Every Rights Certificate surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the
Company or the Rights Agent, as the case may be, duly executed by the holder thereof or such
holder’s attorney duly authorized in writing. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificates until the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof, or the Affiliates or Associates of such Beneficial Owner (or former Beneficial Owner), as
the Company shall reasonably request. As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.

     (d) The Company shall not be required to register the transfer or exchange of any Rights after
such Rights have become void under Section 3.1(b), been exchanged under Section 3.1(c) or been
terminated or redeemed under Section 5.1.

     2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any mutilated
Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, then, subject
to Sections 3.1(b), 3.1(c) and 5.1, the Company shall execute and the Rights Agent shall
countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so surrendered.

     (b) If there shall be delivered to the Company and the Rights Agent prior to the Expiration
Time (i) evidence to their satisfaction of the destruction, loss or theft of any Rights Certificate
and (ii) such security or indemnity as may be required by them to save each of them and any of
their agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the absence of
notice to the Company or the Rights Agent that such Rights Certificate has been acquired by a bona
fide purchaser, the Company shall execute and upon its request the Rights Agent shall countersign
and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost
or stolen.

     (c) As a condition to the issuance of any new Rights Certificate under this Section 2.8, the
Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Rights Agent) connected therewith.

     (d) Every new Rights Certificate issued pursuant to this Section 2.8 in lieu of any destroyed,
lost or stolen Rights Certificate shall evidence an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b), shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly issued hereunder.

     2.9 Persons Deemed Owners. Prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem and treat the person in whose name such Rights Certificate (or, prior to the Separation Time, such Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. As used in this Agreement, unless the context otherwise requires, the term “holde
r” of any Rights shall mean the registered holder of such Rights (or, prior to the Separation Time, the associated shares of Common Stock).

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     2.10 Delivery and Cancellation of Certificates. All Rights Certificates surrendered
upon exercise or for registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly
canceled by the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall
be promptly canceled by the Rights Agent. No Rights Certificates shall be countersigned in lieu of
or in exchange for any Rights Certificates canceled as provided in this Section 2.10, except as
expressly permitted by this Agreement. The Rights Agent shall return all canceled Rights
Certificates to the Company.

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

     (a) prior to the Separation Time, each Right will be transferable only together with, and will
be transferred by a transfer of, the associated share of Common Stock;

     (b) after the Separation Time, the Rights Certificates will be transferable only on the Rights
Register as provided herein;

     (c) prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the
associated Common Stock certificate) for registration of transfer, the Company, the Rights Agent
and any agent of the Company or the Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the
contrary;

     (d) Rights beneficially owned by certain Persons will, under the circumstances set forth in
Section 3.1(b), become void;

     (e) this Agreement may be supplemented or amended from time to time pursuant to Section 2.4(b)
or 5.4; and

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

ARTICLE III

ADJUSTMENTS TO THE RIGHTS IN

THE EVENT OF CERTAIN TRANSACTIONS

     3.1 Flip-In. (a) In the event that prior to the Expiration Time a Flip-In Date shall
occur, except as provided in this Section 3.1, each Right shall constitute the right to purchase
from the Company, upon exercise thereof in accordance with the terms hereof (but subject to Section
5.10), that number of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal to the Exercise
Price (such right to be appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that on or after such Stock Acquisition Date an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have occurred with respect
to the Common Stock).

     (b) Notwithstanding the foregoing, any Rights that are or were Beneficially Owned on or after
the Stock Acquisition Date by an Acquiring Person or an Affiliate or Associate thereof or by any
transferee, direct or

 -11- 

 

indirect, of any of the foregoing shall become void and any holder of such
Rights (including transferees) shall thereafter have no right to exercise or transfer such Rights
under any provision of this Agreement. If any Rights Certificate is presented for assignment or
exercise and the Person presenting the same will not complete the certification set forth at the
end of the form of assignment or notice of election to exercise and provide such additional
evidence of the identity of the Beneficial Owner and its Affiliates and Associates (or former
Beneficial Owners and their Affiliates and Associates) as the Company shall reasonably request,
then the Company shall be entitled conclusively to deem the Beneficial Owner thereof to be an
Acquiring Person or an Affiliate or Associate thereof or a transferee of any of the foregoing and
accordingly will deem the Rights evidenced thereby to be void and not transferable or exercisable.

     (c) The Board of Directors of the Company may, at its option, at any time after a Flip-In Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of more than 50% of the
outstanding shares of Common Stock, elect to exchange all (but not less than all) of the
then-outstanding Rights (other than Rights that have become void pursuant to the provisions of
Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of Common Stock per
Right (appropriately adjusted in order to protect the interests of holders of Rights generally in
the event that after the Separation Time an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to the Common Stock) (such
exchange ratio, as adjusted from time to time, being hereinafter referred to as the “Exchange
Ratio”).

     Immediately upon the action of the Board of Directors of the Company electing to exchange the
Rights, without any further action and without any notice, the right to exercise the Rights will
terminate and each Right (other than Rights that have become void pursuant to Section 3.1(b)) will
thereafter represent only the right to receive a number of shares of Common Stock equal to the
Exchange Ratio. Promptly after the action of the Board of Directors electing to exchange the
Rights, the Company shall give notice thereof (specifying the steps to be taken to receive shares
of Common Stock in exchange for Rights) to the Rights Agent and the holders of the Rights (other
than Rights that have become void pursuant to Section 3.1(b)) outstanding immediately prior thereto
by mailing such notice in accordance with Section 5.9.

     Each Person in whose name any certificate for shares is issued upon the exchange of Rights
pursuant to this Section 3.1(c) or Section 3.1(e) shall for all purposes be deemed to have become
the holder of record of the shares represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of
any applicable taxes and other governmental charges payable by the holder was made; provided,
however, that if the date of such surrender and payment is a date upon which the stock transfer
books of the Company are closed, such Person shall be deemed to have become the record holder of
such shares on, and such Certificate shall be dated, the next succeeding Business Day on which the
stock transfer books of the Company are open.

     (d) Whenever the Company shall become obligated under Section 3.1(a) or (c) to issue shares of
Common Stock upon exercise of or in exchange for Rights, the Company, at its option, may substitute
therefor shares of Preferred Stock, at a ratio of one ten-thousandth (1/10,000th) of a share of
Preferred Stock for each share of Common Stock so issuable.

     (e) In the event that there shall not be sufficient treasury shares or authorized but unissued
shares of Common Stock or Preferred Stock of the Company to permit the exercise or exchange in full
of the Rights in accordance with Section 3.1(a) or (c), the Company shall either (i) call a meeting
of stockholders seeking approval to cause sufficient additional shares to be authorized (provided
that if such approval is not obtained the Company will take the action specified in clause (ii) of
this sentence) or (ii) take such action as shall be necessary to ensure and provide, to the extent
permitted by applicable law and any agreements or instruments in effect on the Stock Acquisition
Date to which it is a party, that each Right shall thereafter constitute the right to receive, (x)
at the Company’s option, either (A) in return for the Exercise Price, cash, debt or equity
securities or other assets (or a combination thereof) having a fair value equal to twice the
Exercise Price, or (B) without payment of consideration (except as otherwise required by applicable
law), cash, debt or equity securities or other assets (or a combination thereof) having a fair
value equal to the Exercise Price, or (y) if the Board of Directors of the Company elects to
exchange the Rights in accordance with Section 3.1(c), debt or equity securities or other assets
(or a combination thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-In Date

 -12- 

 

times the Exchange Ratio in effect on the Flip-In Date, where
in any case set forth in (x) or (y) above the fair value of such debt or equity securities or other
assets shall be as determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm.

     3.2 Flip-Over. (a) Prior to the Expiration Time, the Company shall not enter into any
agreement with respect to, consummate or permit to occur any Flip-Over Transaction or Event unless
and until it shall have entered into a supplemental agreement with the Flip-Over Entity, for the
benefit of the holders of the Rights (other than holders of Rights that have become void pursuant
to Section 3.1(b)), providing that, upon consummation or occurrence of the Flip-Over Transaction or
Event (i) each Right (other than holders of Rights that have become void pursuant to Section
3.1(b)) shall thereafter constitute the right to purchase from the Flip-Over Entity, upon exercise
thereof in accordance with the terms hereof, that number of shares of Flip-Over Stock of the
Flip-Over Entity having an aggregate Market Price on the date of consummation or occurrence of such
Flip-Over Transaction or Event equal to twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in order to protect the interests of the
holders of Rights generally (other than holders of Rights that have become void pursuant to Section
3.1(b)) in the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have occurred with respect
to the Flip-Over Stock) and (ii) the Flip-Over Entity shall thereafter be liable for, and shall
assume, by virtue of such Flip-Over Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to this Agreement. The provisions of this Section
3.2 shall apply to successive Flip-Over Transactions or Events.

     (b) Prior to the Expiration Time, unless the Rights will be terminated or redeemed pursuant to
Section 5.1 in connection therewith, the Company shall not enter into any agreement with respect
to, consummate or permit to occur any Flip-Over Transaction or Event if at the time thereof there
are any rights, warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect the benefits
intended to be afforded by this Rights Agreement to the holders of Rights upon consummation of such
transaction.

ARTICLE IV

THE RIGHTS AGENT

     4.1 General. (a) The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent, its directors, officers, employees and agents for, and to hold each of them harmless
against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent or such other indemnified party, for anything done or
suffered or omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise or performance of its duties hereunder, including
the costs and expenses of defending against any claim of liability. The indemnity provided in this
Section 4.1(a) shall survive the expiration of the Rights and the termination of this Agreement.

     (b) The Rights Agent shall be fully protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its administration of this
Agreement or the exercise or performance of its duties hereunder in reliance upon any certificate
for securities purchasable upon exercise of Rights, Rights Certificate, certificate for other
securities of the Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.

     4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any Person into
which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent is

 -13- 

 

a party, or any corporation succeeding to the stockholder
services business of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 4.4. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have not been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates will have the full force provided in the Rights Certificates and in this
Agreement.

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

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

     (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken, suffered or omitted by it in good faith and
in accordance with such advice or opinion.

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it
necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board,
the Chief Executive Officer, the President or any Executive Vice President or Senior Vice President
and by the Chief Financial Officer, the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate will
be full authorization to the Rights Agent for any action taken, suffered or omitted in good faith
by it under the provisions of this Agreement in reliance upon such certificate.

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

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

     (e) The Rights Agent will not be under any responsibility in respect of the validity of any
provision of this Agreement or the execution and delivery hereof (except the due authorization,
execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of
any certificate for securities purchasable upon exercise of Rights or Rights Certificate (except
its countersignature thereof); nor will it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(b)) or any adjustment required under any provision of this Agreement or
responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights after receipt of the certificate contemplated by Section 2.4 describing any such
adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise of Rights or any
Rights or as to

 -14- 

 

whether any securities purchasable upon exercise of Rights will, when issued, be
duly and validly authorized, executed, issued and delivered and fully paid and nonassessable.

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

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

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

     (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct by the Rights Agent
in the selection and continued employment thereof.

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

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

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

     4.4 Change of Rights Agent. The Rights Agent may resign and be discharged from its
duties under this Agreement upon 90 days notice (or such lesser notice as is acceptable to the
Company) in writing mailed to the Company and to each transfer agent of Common Stock by registered
or certified mail, and to the holders of the Rights in accordance with Section 5.9. In the event
the transfer agency relationship in effect between the Company and the Rights Agent terminates, the
Rights Agent will be deemed to have resigned automatically and be discharged from its duties under
this Agreement as of the effective date of such termination, and the Company shall be responsible
for sending any required notice. The Company may remove the Rights Agent upon 30 days notice in

 -15- 

 

writing, mailed to the Rights Agent and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Rights in accordance with Section 5.9. If the Rights
Agent should resign or be removed or otherwise become incapable of acting, the Company will appoint
a successor to the Rights Agent. If the Company fails to make such appointment within a period of
30 days after such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of any Rights (which
holder shall, with such notice, submit such holder’s Rights Certificate for inspection by the
Company), then the holder of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under the laws of the
United States or of the State of Georgia or any other State of the United States, in good standing,
which is authorized under such laws to exercise the powers of the Rights Agent contemplated by this
Agreement and is subject to supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an Affiliate of a corporation described in the immediately preceding clause
(a). After appointment, the successor Rights Agent will be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

ARTICLE V

MISCELLANEOUS

     5.1 Redemption and Termination .

     (a) The Rights may be redeemed by action of the Board of Directors of the Company pursuant to
Section 5.1(b) or by shareholder action pursuant to Section 5.1(c) and shall not be redeemed in any
other manner. If at the Expiration Time, no Flip-In Date has occurred, the Board of Directors of
the Company may, at its option, elect to terminate the Rights without any payment to any holder
thereof. If this Agreement is not ratified by holders of a majority of the voting power of the
shares of Common Stock present and entitled to vote on that item of business at the Company’s first
annual meeting of stockholders following March 10, 2008, this Agreement and the Rights shall
terminate without any payment to any holder thereof unless prior to such annual meeting a Flip-In
Date has occurred
in which case this Agreement shall not terminate.

     (b) The Board of Directors of the Company may, at its option, at any time prior to 5:00 p.m.,
Boston, Massachusetts time, on the earlier of (i) the Flip-In Date or (ii) the Expiration Time,
redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter referred to as the
“Redemption Price”). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company in its sole discretion
may establish. The Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the current Market Price of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors of the Company, or any
combination thereof.

     (c) If the Company receives a Qualified Offer and the Board of Directors of the Company has
not redeemed the outstanding Rights or exempted such offer from the terms of this Agreement or
called a special meeting of stockholders for the purpose of voting on whether or not to exempt such
Qualified Offer from the terms of this Agreement, in each case by the end of the ninety Business
Days following the commencement of such Qualified Offer, and if the Company receives, not earlier
than ninety Business Days nor later than 120 Business Days following the commencement of such
Qualified Offer, a written notice complying with the terms of this Section 5.1(c) (the
“Special Meeting Notice”), properly executed by the holders of record (or their duly
authorized proxy) of ten percent (10%) or more of the shares of Common Stock then outstanding
(excluding shares of Common

 -16- 

 

Stock beneficially owned by the Person making the Qualified Offer and
such Person’s Affiliates and Associates), directing the Board of Directors of the Company to submit
to a vote of stockholders at a special meeting of the stockholders of the Company (a “Special
Meeting”) a resolution authorizing the redemption of all, but not less than all, of the then
outstanding Rights at the Redemption Price (the “Redemption Resolution”), then the Board of
Directors of the Company shall take such actions as are necessary or desirable to cause the
Redemption Resolution to be submitted to a vote of stockholders within ninety Business Days
following receipt by the Company of the Special Meeting Notice (the “Special Meeting
Period”), including by including a proposal relating to adoption of the Redemption Resolution
in the proxy materials of the Company for the Special Meeting; provided, however,
that if the Company, at any time during the Special Meeting Period and prior to a vote on the
Redemption Resolution, enters into a Definitive Acquisition Agreement, the Special Meeting Period
may be extended (and any Special Meeting called in connection therewith may be cancelled) if the
Redemption Resolution will be separately submitted to a vote at the same meeting as the Definitive
Acquisition Agreement. For purposes of a Special Meeting Notice, the record date for determining
eligible holders of record of the Common Stock shall be the ninetieth Business Day following the
commencement of a Qualified Offer. Any Special Meeting Notice must be delivered to the Secretary of
the Company at the principal executive offices of the Company and must set forth, as to the
stockholders of record executing such Special Meeting Notice, (i) the name and address of such
stockholders, as they appear on the Company’s books and records, (ii) the number of shares of
Common Stock that are owned of record by each of such stockholders and (iii) in the case of Common
Stock that is owned beneficially by another Person, an executed certification by the holder of
record that such holder has executed such Special Meeting Notice only after obtaining instructions
to do so from such beneficial owner. Subject to the requirements of applicable law, the Board of
Directors of the Company may take a position in favor of or opposed to the adoption of the
Redemption Resolution, or no position with respect to the Redemption Resolution, as it determines
to be appropriate in the exercise of its fiduciary duties. In the event that (A) no Person has
become an Acquiring Person prior to the effective date of redemption referred to below in this
sentence, (B) the Qualified Offer continues to be a Qualified Offer prior to the last day of the
Special Meeting Period (the “Outside Meeting Date”) and (C) either (1) the Special Meeting
is not held on or prior to the ninetieth Business Day following receipt of the Special Meeting
Notice or (2) at the Special Meeting at which a quorum is present, the holders of a majority of the
shares of Common Stock outstanding as of the record date for the Special Meeting selected by the
Board of Directors of the Company (excluding shares of Common Stock beneficially owned by the
Person making the Qualified Offer and such Person’s Affiliates and Associates), shall vote in favor
of the Redemption Resolution, then all of the Rights shall be deemed redeemed at the Redemption
Price by such failure to hold the Special Meeting or as a result of the adoption of the Redemption
Resolution by the stockholders of the Company (or the Board of Directors of the Company shall take
such other action as may be necessary to prevent the existence of the Rights from interfering with
the consummation of the Qualified Offer), such redemption to be effective, as the case may be, (x)
as of the close of business on the Outside Meeting Date if a Special Meeting is not held on or
prior to such date or (y) if a Special Meeting is held on or prior
to the Outside Meeting Date, as of the date on which the results of the vote adopting the
Redemption Resolution at the Special Meeting are certified as official by the appointed inspectors
of election for the Special Meeting.

(d) Immediately upon the action of the Board of Directors of the Company ordering the redemption of
the Rights pursuant to Section 5.1(b) or the effectiveness of a redemption of the Rights
pursuant to Section 5.1(c), in either case, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price. The Company shall promptly give public notice of
any such redemption and, within ten days after such action causing a redemption of the Rights
pursuant to Section 5.1(b) or Section 5.1(c), the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price will be made.
Notwithstanding the foregoing, the failure to give, or any defect in, any notice required to be
made or given pursuant to this Section 5.1(d) shall not affect the validity of the
redemption of the Rights.

     5.2 Expiration. The Rights and this Agreement shall expire at the Expiration Time and
no Person shall have any rights pursuant to this Agreement or any Right after the Expiration Time,
except, if the Rights are exchanged, as provided in Section 3.1.

 -17- 

 

     5.3 Issuance of New Rights Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the number or kind or class of shares of stock purchasable upon
exercise of Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the Company following the
Separation Time and prior to the Expiration Time pursuant to the terms of securities convertible or
redeemable into shares of Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of such shares of
Common Stock, Rights Certificates representing the appropriate number of Rights in connection with
the issuance or sale of such shares of Common Stock; provided, however, in each case, (i) no such
Rights Certificate shall be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse tax consequences to
the Company or to the Person to whom such Rights Certificates would be issued, (ii) no such Rights
Certificates shall be issued if, and to the extent that, appropriate adjustment shall have
otherwise been made in lieu of the issuance thereof, and (iii) the Company shall have no obligation
to distribute Rights Certificates to any Acquiring Person or Affiliate or Associate of an Acquiring
Person or any transferee of any of the foregoing.

     5.4 Supplements and Amendments. The Company (acting by at least a majority of the
Outside Directors) and the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Rights (i) prior to the Close of Business on the Flip-In
Date, in any respect and (ii) after the Close of Business on the Flip-In Date, to make any changes
that the Company may deem necessary or desirable and that shall not materially adversely affect the
interests of the holders of Rights generally (other than an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person) or in order to cure any ambiguity or to correct or supplement any
provision contained herein that may be inconsistent with any other provisions herein or otherwise
defective. The Rights Agent will duly execute and deliver any supplement or amendment hereto
requested by the Company (acting by at least a majority of the Outside Directors) upon receipt of a
certificate from the Company that such supplement or amendment satisfies the terms of the preceding
sentence. Notwithstanding anything contained in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this Agreement shall be
effective without the consent of the Rights Agent.

     5.5 Fractional Shares. If the Company elects not to issue certificates representing
fractional shares upon exercise of Rights, the Company shall, in lieu thereof, in the sole
discretion of the Board of Directors, either (a) evidence such fractional shares by depositary
receipts issued pursuant to an appropriate agreement between the Company and a depositary selected
by it, providing that each holder of a
depositary receipt shall have all of the rights, privileges and preferences to which such
holder would be entitled as a beneficial owner of such fractional share, or (b) sell such shares on
behalf of the holders of Rights and pay to the registered holder of such Rights the appropriate
fraction of price per share received upon such sale.

     5.6 Rights of Action. Subject to the terms of this Agreement (including Section
3.1(b)), rights of action in respect of this Agreement, other than rights of action vested solely
in the Rights Agent, are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other Rights, may, on such
holder’s own behalf and for such holder’s own benefit and the benefit of other holders of Rights,
enforce, and may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder’s right to exercise such holder’s Rights in
the manner provided in such holder’s Rights Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any Person subject to this
Agreement. Notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court or by a governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use reasonable efforts to have any such injunction, order,
judgment, decree or ruling lifted or otherwise overturned as soon as reasonably possible.

 -18- 

 

     5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of any Rights
shall be entitled to vote, receive dividends or be deemed for any purpose the holder of shares or
any other securities which may at any time be issuable on the exercise of such Rights, nor shall
anything contained herein or in any Rights Certificate be construed to confer upon the holder of
any Rights, as such, any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 5.8), or to receive dividends or subscription
rights, or otherwise, until such Rights shall have been exercised or exchanged in accordance with
the provisions hereof.

     5.8 Notice of Proposed Actions. In case the Company shall propose after the
Separation Time and prior to the Expiration Time (i) to effect or permit occurrence of any
Flip-Over Transaction or Event or (ii) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a Right, in accordance
with Section 5.9, a notice of such proposed action, which shall specify the date on which such
Flip-Over Transaction or Event, liquidation, dissolution, or winding up is to take place, and such
notice shall be so given at least 20 Business Days prior to the date of the taking of such proposed
action.

     5.9 Notices. Notices or demands authorized or required by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights to or on the Company shall be
sufficiently given or made if delivered or sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:

LHC Group, Inc.

420 West Pinhook Rd, Suite A

Lafayette, LA 70503

Attention: Chief Executive Officer

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

Computershare Trust Company, N.A.

730 Peachtree Street , Suite 840

Atlanta, GA 30308

     Notices or demands authorized or required by this Agreement to be given or made by the Company
or the Rights Agent to or on the holder of any Rights shall be sufficiently given or made if
delivered or sent by first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or, prior to the Separation
Time, on the registry books of the transfer agent for the Common Stock. Any notice that is mailed
in the manner herein provided shall be deemed given on the third Business Day after mailing,
whether or not the holder receives the notice. Failure to give a notice pursuant to the provisions
of this Agreement shall not affect the validity of any action taken hereunder.

     5.10 Suspension of Exercisability. To the extent that the Company determines in good
faith that some action will or need be taken pursuant to Section 2.3(g) or Section 3.1 or otherwise
to comply with federal or state securities laws, the Company may suspend the exercisability of the
Rights for 90 days and any additional period that may be reasonable in order to take such action or
comply with such laws. In the event of any such suspension, the Company shall issue as promptly as
practicable a public announcement stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall not be required.

     5.11 Costs of Enforcement. The Company agrees that if the Company or any other Person
the securities of which are purchasable upon exercise of Rights fails to fulfill any of its
obligations pursuant to this Agreement, then the Company or such Person will reimburse the holder
of any Rights for the costs and expenses (including legal fees) incurred by such holder in actions
to enforce such holder’s rights pursuant to any Rights or this Agreement.

 -19- 

 

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

     5.13 Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the holders of the Rights any legal or
equitable right, remedy or claim under this Agreement and this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of the Rights.

     5.14 Determination and Actions by the Board of Directors, etc. The Board of Directors
of the Company (where specifically provided for herein, acting by at least a majority of the
Outside Directors) shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (where specifically provided for
herein, acting by at least a majority of the Outside Directors) or to the Company (where
specifically provided for herein, acting by at least a majority of the Outside Directors), or as
may be necessary or advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by the Board (where
specifically provided for herein, acting by at least a majority of the Outside Directors) in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of the Company to any
liability to the holders of the Rights. Nothing contained herein shall be construed to suggest or
imply that the Board of Directors of the Company shall not be entitled to reject any Qualified
Offer or any other tender offer or other acquisition proposal, or to recommend that holders of
Common Stock reject any Qualified Offer or any other tender offer or other acquisition proposal, or
to take any other action (including, without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alternative offers or other
proposals) with respect to any Qualified Offer or any other tender offer or other acquisition
proposal that the Board of Directors of the Company believes is necessary or appropriate in the
exercise of such fiduciary duty.

     5.15 Annual Review by Outside Directors. A committee of Outside Directors (the
“Committee”), which shall be the Nominating and Corporate Governance Committee of the Board
of Directors of the Company (or any successor committee) as long as the members of such committee
meet such requirements, shall review and evaluate this Agreement at least annually in order to
consider whether the maintenance of this Agreement continues to be in the best interests of the
Company and the stockholders of the Company. Following each such review, the Committee shall
communicate its conclusions to the full Board of Directors of the Company, including any
recommendation in light thereof as to whether this Agreement should be modified.

     5.16 Descriptive Headings. Descriptive headings appear herein for convenience only
and shall not control or affect the meaning or construction of any of the provisions hereof.

     5.17 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND
PERFORMED ENTIRELY WITHIN SUCH STATE.

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

     5.19 Severability. If any term or provision of this Agreement or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of
such invalidity or unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such term or provision to circumstances other
than those as to which it is held invalid or unenforceable.

 -20- 

 

     5.20 Force Majeure. Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in performance resulting from acts
beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage
of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss
of data due to power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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

	 	 	 	 	 
	 	LHC GROUP, INC.

 	 
	 	By:  	/s/ Peter J. Roman
 	 
	 	 	Peter J. Roman 	 
	 	 	Senior Vice President and Chief
Financial Officer 	 
	 
	 	COMPUTERSHARE TRUST COMPANY, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 -1- 

 

EXHIBIT A

(Form of Rights Certificate)

			
	Certificate No. R-
	 	                     Rights          

THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT (AS DEFINED BELOW). RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.

Rights Certificate

LHC GROUP, INC.

This certifies that                                         , or registered assigns, is the registered holder of the
number of Rights set forth above, each of which entitles the registered holder thereof, subject to
the terms, provisions and conditions of the Stockholder Protection Rights Agreement, effective as
of March 10, 2008 (as amended from time to time, the “Rights Agreement”), between LHC
Group, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A.
as rights agent (the “Rights Agent,” which term shall include any successor rights agent
under the Rights Agreement), to purchase from the Company at any time after the Separation Time (as
such term is defined in the Rights Agreement) and prior to the Close of Business on March 10, 2008,
one ten-thousandth (1/10,000) of a fully paid share of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the “Preferred Stock”), of the Company (subject to
adjustment as provided in the Rights Agreement) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of Election to Exercise duly
executed at the principal office of the Rights Agent. The Exercise Price shall initially be $60
per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement.

In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may entitle
the registered holder thereof to purchase securities of an entity other than the Company or
securities or assets of the Company other than Preferred Stock, all as provided in the Rights
Agreement.

This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are
on file at the principal office of the Company and are available without cost upon written request.
Capitalized terms used in this Rights Certificate and not otherwise defined herein shall have the
meanings ascribed to such terms in the Rights Agreement.

This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of
the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be entitled to receive,
upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole
Rights not exercised.

Subject to the provisions of the Rights Agreement, each Right evidenced by this Certificate may be
(a) terminated by the Company under certain circumstances, at its option, (b) exchanged by the
Company under certain circumstances, at its option, for one share of Common Stock or one
ten-thousandth (1/10,000) of a share of Preferred Stock) per Right (or, in certain cases, other
securities or assets of the Company), subject in each case to adjustment in certain events as
provided in the Rights Agreement, or (c) redeemed by the Company under certain circumstances at its
option in consideration for value equal to $0.001 per Right.

No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of any securities which may at any time be issuable on the
exercise hereof, nor shall anything

 

contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by this Rights Certificate shall have
been exercised or exchanged as provided in the Rights Agreement.

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

WITNESS the facsimile signature of the proper officers of the Company.

	 	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	LHC GROUP, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Secretary	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Countersigned:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

Authorized Officer
	 	 	 	 	 	 	 	 

-2-

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer this Rights Certificate.)

FOR VALUE RECEIVED,                                          hereby sells, assigns and transfers unto

 

(Please print name and address of transferee)

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

Dated:                                         ,                     .

	 	 	 	 	 
	Signature Guaranteed:
	 	 	 	 
	 

	 	 	 	 
	 	 	Signature

(Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever)

Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings
and loan association or credit union with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934.

 

(To be completed if true)

The undersigned hereby represents, for the benefit of the Company and all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are not, and, to the
knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

 

NOTICE

In the event the certification set forth above is not completed in connection with a purported
assignment, the Company will deem the Beneficial Owner of the Rights evidenced by the enclosed
Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or exercisable.

 

[To be attached to each Rights Certificate]

FORM OF ELECTION TO EXERCISE

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

TO:     LHC GROUP, INC.

The undersigned hereby irrevocably elects to exercise                      whole Rights represented by
the attached Rights Certificate to purchase the shares of Series A Junior Participating Preferred
Stock issuable upon the exercise of such Rights and requests that certificates for such shares be
issued in the name of and delivered to:

	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Social Security or other Taxpayer ID No.:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

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

	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Social Security or other Taxpayer ID No.:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

Dated:                                         ,                     .

	 	 	 	 	 
	 

	 	 	 	 
	Signature Guaranteed:	 	Signature

(Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever)

Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings
and loan association or credit union with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934.

 

(to be completed if true)

The undersigned hereby represents, for the benefit of the Company and all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are not, and, to the
knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

 

NOTICE

In the event the certification set forth above is not completed in connection with a purported
assignment, the Company will deem the Beneficial Owner of the Rights evidenced by the enclosed
Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or exercisable.

 

Exhibit B

CERTIFICATE OF DESIGNATION,

PREFERENCES AND RIGHTS OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

LHC GROUP, INC.

Pursuant to Section 151 of the

Delaware General Corporation Law

     LHC Group, Inc., a corporation organized under the laws of the State of Delaware (the
“Corporation”), hereby certifies that, pursuant to the authority conferred upon the Board
of Directors by the Certificate of Incorporation, as amended, of the Corporation, the Board of
Directors on March 10, 2008, adopted the following resolution creating a series of one hundred
thousand (100,000) shares of Preferred Stock designated as Series A Junior Participating Preferred
Stock:

     RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Corporation (the “Board”) in accordance with the provisions of its Certificate of
Incorporation, as amended, a series of Preferred Stock of the Corporation be and it hereby is
created, and that the designation and amount thereof and the voting rights or powers, preferences
and relative, participating, optional and other special rights of the shares of such series, and
the qualifications, limitations or restrictions thereof are as follows:

     1. Series A Junior Participating Preferred Stock. There is hereby established a
series of Preferred Stock, par value $0.01 per share, of the Corporation, and the designation and
certain terms, powers, preferences and other rights of the shares of such series, and certain
qualifications, limitations and restrictions thereon, are hereby fixed as follows:

          (i) The distinctive serial designation of this series shall be “Series A Junior
Participating Preferred Stock” (hereinafter called “this Series”). Each share of this
Series shall be identical in all respects with the other shares of this Series except as to the
dates from and after which dividends thereon shall be cumulative.

          (ii) The number of shares in this Series shall initially be one hundred thousand (100,000),
which number may from time to time be increased or decreased (but not below the number then
outstanding) by the Board of Directors. Shares of this Series purchased by the Corporation shall
be canceled and shall revert to authorized but unissued shares of Preferred Stock undesignated as
to series. Shares of this Series may be issued in fractional shares, which fractional shares shall
entitle the holder, in proportion to such holder’s fractional share, to all rights of a holder of a
whole share of this Series.

          (iii) The holders of full or fractional shares of this Series shall be entitled to receive,
when and as declared by the Board of Directors, but only out of funds legally available therefor,
dividends, (A) on each date that dividends or other distributions (other than dividends or
distributions payable in Common Stock of the Corporation) are payable on or in respect of Common
Stock comprising part of the Reference Package (as defined below), in an amount per whole share of
this Series equal to the aggregate amount of dividends or other distributions (other than dividends
or distributions payable in Common Stock of the Corporation) that would be payable on such date to
a holder of the Reference Package and (B) on the last day of March, June, September and December in
each year, in an amount per whole share of this Series equal to the excess (if any) of $0.01 over
the aggregate dividends paid per whole share of this Series during the three-month period ending on
such last day. Each such dividend shall be paid to the holders of record of shares of this Series
on the date, not exceeding 60 days preceding such dividend or distribution payment date, fixed for
that purpose by the Board of Directors in advance of payment of each particular dividend or
distribution. Dividends on each full and each fractional share of this Series shall be cumulative
from the date such full or fractional share is originally issued; provided that any such full or
fractional share originally issued after a dividend record date and on or prior to the dividend
payment date to which such record date relates shall not be entitled to receive the dividend
payable on such dividend payment date or any amount in respect of the period from such original
issuance to such dividend payment date.

 

 

          The term “Reference Package” shall initially mean ten thousand (10,000) shares of
Common Stock, par value $0.01 per share (“Common Stock”), of the Corporation. In the event
the Corporation shall at any time (A) declare or pay a dividend on any Common Stock payable in
Common Stock, (B) subdivide any Common Stock or (C) combine any Common Stock into a smaller number
of shares, then and in each such case the Reference Package after such event shall be the Common
Stock that a holder of the Reference Package immediately prior to such event would hold thereafter
as a result thereof.

          Holders of shares of this Series shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative dividends, as herein provided, on this
Series.

          So long as any shares of this Series are outstanding, no dividend (other than a dividend in
Common Stock or in any other stock ranking junior to this Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other stock ranking junior to this Series as to dividends or
upon liquidation, nor shall any Common Stock nor any other stock of the Corporation ranking junior
to or on a parity with this Series as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation (except by conversion
into or exchange for stock of the Corporation ranking junior to this Series as to dividends and
upon liquidation), unless, in each case, the full cumulative dividends (including the dividend to
be due upon payment of such dividend, distribution, redemption, purchase or other acquisition) on
all outstanding shares of this Series shall have been, or shall contemporaneously be, paid.

          (iv) In the event of any merger, consolidation, reclassification or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of this Series shall at the same time
be similarly exchanged or changed in an amount per whole share equal to the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case may be, that a
holder of the Reference Package would be entitled to receive as a result of such transaction.

          (v) In the event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of full and fractional shares of this
Series shall be entitled, before any distribution or payment is made on any date to the holders of
the Common Stock or any other stock of the Corporation ranking junior to this Series upon
liquidation, to be paid in full an amount per whole share of this Series equal to the greater of
(A) $0.01 or (B) the aggregate amount distributed or to be distributed prior to such date in
connection with such liquidation, dissolution or winding up to a holder of the Reference Package
(such greater amount being hereinafter referred to as the “Liquidation Preference”),
together with accrued dividends to such distribution or payment date, whether or not earned or
declared. If such payment shall have been made in full to all holders of shares of this Series,
the holders of shares of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.

          In the event the assets of the Corporation available for distribution to the holders of shares
of this Series upon any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders
are entitled pursuant to the first paragraph of this Section (v), no such distribution shall be
made on account of any shares of any other class or series of Preferred Stock ranking on a parity
with the shares of this Series upon such liquidation, dissolution or winding up unless
proportionate distributive amounts shall be paid on account of the shares of this Series, ratably
in proportion to the full distributable, amounts for which holders of all such parity shares are
respectively entitled upon such liquidation, dissolution or winding up.

          Upon the liquidation, dissolution or winding up of the Corporation, the holders of shares of
this Series then outstanding shall be entitled to be paid out of assets of the Corporation
available for distribution to its stockholders all amounts to which such holders are entitled
pursuant to the first paragraph of this Section (v) before any payment shall be made to the holders
of Common Stock or any other stock of the Corporation ranking junior upon liquidation to this
Series.

          For the purposes of this Section (v), the consolidation or merger of, or binding share
exchange by,

A-2

 

the Corporation with any other corporation shall not be deemed to constitute a
liquidation, dissolution or winding up of the corporation.

          (vi) The shares of this Series shall not be redeemable.

          (vii) In addition to any other vote or consent of stockholders required by law or by the
Certificate of Incorporation of the Corporation, each whole share of this Series shall, on any
matter, vote as a class with any other capital stock comprising part of the Reference Package and
voting on such matter and shall have the number of votes thereon that a holder of the Reference
Package would have.

     IN WITNESS WHEREOF, LHC Group, Inc. has caused this Certificate of Designation to be executed
as of March 10, 2008.

	 	 	 	 	 	 	 
	 	 	LHC GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

A-3

 

STOCKHOLDER PROTECTION RIGHTS AGREEMENT

BETWEEN

LHC GROUP, INC.

AND

COMPUTERSHARE TRUST COMPANY, N.A., AS RIGHTS AGENT

March 10, 2008

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