Document:

EX-4.1

Exhibit 4.1

Execution Version

RIGHTS AGREEMENT

dated as of

April 29, 2009

between

SIRIUS XM RADIO INC.

and

THE BANK OF NEW YORK MELLON,

as Rights Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Section 1  Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 2  Appointment of Rights Agent
	 	 	6	 
	 
	 	 	 	 
	Section 3  Issuance of Rights Certificates
	 	 	7	 
	 
	 	 	 	 
	Section 4  Form of Rights Certificates
	 	 	9	 
	 
	 	 	 	 
	Section 5  Countersignature and Registration
	 	 	9	 
	 
	 	 	 	 
	Section 6  Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates
	 	 	10	 
	 
	 	 	 	 
	Section 7  Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	11	 
	 
	 	 	 	 
	Section 8  Cancellation and Destruction of Rights Certificates
	 	 	12	 
	 
	 	 	 	 
	Section 9  Company Covenants Concerning Securities and Rights
	 	 	12	 
	 
	 	 	 	 
	Section 10 Record Date
	 	 	14	 
	 
	 	 	 	 
	Section 11 Adjustment of Purchase Price, Number and Kind of Securities or Number
of Rights
	 	 	14	 
	 
	 	 	 	 
	Section 12 Certificate of Adjusted Purchase Price or Number of Shares
	 	 	22	 
	 
	 	 	 	 
	Section 13 Reserved
	 	 	22	 
	 
	 	 	 	 
	Section 14 Fractional Rights and Fractional Shares
	 	 	22	 
	 
	 	 	 	 
	Section 15 Rights of Action
	 	 	24	 
	 
	 	 	 	 
	Section 16 Agreement of Rights Holders
	 	 	24	 
	 
	 	 	 	 
	Section 17 Rights Certificate Holder Not Deemed a Stockholder
	 	 	25	 
	 
	 	 	 	 
	Section 18 Concerning the Rights Agent
	 	 	25	 
	 
	 	 	 	 
	Section 19 Merger, Consolidation or Change of Name of Rights Agent
	 	 	26	 
	 
	 	 	 	 
	Section 20 Duties of Rights Agent
	 	 	27	 
	 
	 	 	 	 
	Section 21 Change of Rights Agent
	 	 	29	 
	 
	 	 	 	 
	Section 22 Issuance of New Rights Certificates
	 	 	30	 

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	 	 	Page	 
	Section 23 Redemption
	 	 	31	 
	 
	 	 	 	 
	Section 24 Exchange
	 	 	31	 
	 
	 	 	 	 
	Section 25 Notice of Certain Events
	 	 	33	 
	 
	 	 	 	 
	Section 26 Notices
	 	 	33	 
	 
	 	 	 	 
	Section 27 Supplements and Amendments
	 	 	34	 
	 
	 	 	 	 
	Section 28 Successors
	 	 	35	 
	 
	 	 	 	 
	Section 29 Determinations and Actions by the Board
	 	 	35	 
	 
	 	 	 	 
	Section 30 Benefits of this Agreement
	 	 	35	 
	 
	 	 	 	 
	Section 31 Severability
	 	 	36	 
	 
	 	 	 	 
	Section 32 Governing Law
	 	 	36	 
	 
	 	 	 	 
	Section 33 Counterparts
	 	 	36	 
	 
	 	 	 	 
	Section 34 Descriptive Headings; Interpretation
	 	 	36	 
	 
	 	 	 	 
	Section 35 Force Majeure
	 	 	37	 

EXHIBITS

	 	 	 
	Exhibit A:

	 	Form of Certificate of Designation of Series C Junior Preferred Stock
	 
	 	 
	Exhibit B:

	 	Form of Rights Certificate
	 
	 	 
	Exhibit C:

	 	Summary of Rights

ii

 

RIGHTS AGREEMENT

     RIGHTS AGREEMENT, dated as of April 29, 2009 (the “Agreement”), between Sirius XM
Radio Inc., a Delaware corporation (the “Company”) and The Bank of New York Mellon, a New
York banking corporation (the “Rights Agent”).

W I T N E S S E T H

     WHEREAS, on April 28, 2009, the Board authorized and declared a dividend distribution of one
right (a “Right”) for each share of common stock, par value $0.001 per share, of the
Company (the “Common Stock”) outstanding at the Close of Business (as hereinafter defined)
on May 11, 2009 (the “Record Date”), each Right initially representing the right to
purchase one one-millionth of a share of Preferred Stock (as hereinafter defined) of the Company,
upon the terms and subject to the conditions hereinafter set forth, and further authorized and
directed the issuance of one Right (subject to adjustment as provided herein) with respect to each
share of Common Stock issued or delivered by the Company (whether originally issued or delivered
from the Company’s treasury) at any time after the Record Date but prior to the Distribution Date
(as hereinafter defined).

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

Section 1 Certain Definitions

     For purposes of this Agreement, the following terms shall have the meanings indicated:

     (a) “Acquiring Person” shall mean any Person (other than the Company, any Related
Person or any Exempt Person) that the Board has determined has become, in itself or, together with
all Affiliates and Associates of such Person (but excluding shares held by the Company, any Related
Person or any Exempt Person), the Beneficial Owner of 4.9% or more of the shares of Common Stock
then-outstanding (assuming for purposes of this calculation that all of the Series A Convertible
Preferred Stock and Series B-1 Convertible Preferred Stock are converted into Common Stock),
provided, however, that a Person will not be deemed to have become an Acquiring
Person solely as a result of (i) a reduction in the number of shares of Common Stock outstanding,
(ii) the exercise of any options, warrants, rights or similar interests (including restricted
stock) granted by the Company to its directors, officers and employees, (iii) any unilateral grant
of any security by the Company, or (iv) an Exempt Transaction, unless and until such time as such
stockholder acquires the beneficial ownership of one additional share of Common Stock.
Notwithstanding the foregoing, at any time the Board may, in its sole discretion, determine that
any Person shall not be deemed to be an “Acquiring Person” for any purposes of this
Agreement.

     (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement, and to the extent not included within the foregoing clause of this
Section 1(b), shall also include, with respect to any Person, any other Person (other than any
Related Person or Exempt Person) whose shares of Common Stock would be deemed

 

 

constructively owned by such first Person pursuant to Section 1.382-4 of the Treasury
Regulations, owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury
Regulations, or otherwise aggregated with shares owned by such first Person pursuant to the
provisions of the Code, or any successor provision or replacement provision, and the Treasury
Regulations thereunder, provided, however, that a Person shall not be deemed to be
the Affiliate or Associate of another Person solely because either or both Persons are or were
directors of the Company.

     (c) “Agreement” shall have the meaning set forth in the preamble of this Agreement.

     (d) “Authorized Officer” shall mean the Chief Executive Officer, President, any Vice
President, the Treasurer or the Secretary of the Company.

     (e) A Person shall be deemed the “Beneficial Owner” of, and to “beneficially
own” any securities:

          (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, warrants, options, or other
rights (in each case, other than upon exercise or exchange of the Rights); provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own” securities (including rights, options or warrants) which are convertible
or exchangeable into Common Stock until such time as the convertible or exchangeable securities are
exercised and converted or exchanged into Common Stock except to the extent the acquisition or
transfer of such rights, options or warrants would be treated as exercised on the date of its
acquisition or transfer under Section 1.382-4(d) of the Treasury Regulations; and, provided
further, however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own securities tendered pursuant to a tender or exchange offer made by such Person or
any of such Person’s Affiliates or Associates until such tendered securities are accepted for
purchase or exchange;

          (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has or shares the right to vote or dispose of, or has “beneficial ownership” of (as
defined under Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding (whether or not in writing), but only if
the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity”
under Section 1.382-3(a)(1) of the Treasury Regulations, or

          (iii) which any other person is the Beneficial Owner, if such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (whether or not in
writing) with such other Person (or any of such other Person’s Affiliates or Associates) with
respect to acquiring, holding, voting or disposing of any securities of the Company, but only if
the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity”
under Section 1.382-3(a)(1) of the Treasury Regulations; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own” any security (A) if
such Person has the right to vote such security pursuant to an agreement,

2

 

arrangement or understanding (whether or not in writing) which (1) arises solely from a
revocable proxy given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report), or (B) if such beneficial ownership arises solely as a result of such Person’s
status as a “clearing agency,” as defined in Section 3(a)(23) of the Exchange Act; provided
further, however, that nothing in this Section 1(e) shall cause a Person engaged in
business as an underwriter of securities or member of a selling group to be the Beneficial Owner
of, or to “beneficially own,” any securities acquired through such Person’s participation in good
faith in an underwriting syndicate until the expiration of 40 calendar days after but not including
the date of such acquisition, or such later date as the directors of the Company may determine in
any specific case. Notwithstanding anything herein to the contrary, to the extent not within the
foregoing provisions of this Section 1(e), a Person shall be deemed the “Beneficial Owner” of and
shall be deemed to “beneficially own” or have “beneficial ownership” of, securities which such
Person would be deemed to constructively own or which otherwise would be aggregated with shares
owned by such pursuant to Section 382 of the Code, or any successor provision or replacement
provision and the Treasury Regulations thereunder.

     (f) “B-1 Consent Right Termination Date” shall have the meaning set forth in Section
24(a) hereof.

     (g) “Board” shall mean the Board of Directors of the Company.

     (h) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the States of New York or New Jersey (or such other state in which the
principal office of the Rights Agent may be located) are authorized or obligated by law or
executive order to close.

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

     (j) “Code” shall mean the Internal Revenue Code of 1986, as amended.

     (k) “Common Stock” shall have the meaning set forth in the preamble of this Agreement.

     (l) “Company” shall have the meaning set forth in the preamble of this Agreement.

     (m) “Company’s Certificate of Incorporation” shall mean the Certificate of
Incorporation of the Company, as amended.

     (n) “Current Per Share Market Price” shall have the meaning set forth in Section
11(d)(i) or Section 11(d)(ii) hereof, as applicable.

     (o) “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.

3

 

     (p) “Distribution Date” shall mean the Close of Business on the tenth Business Day
after the Stock Acquisition Date.

     (q) “Equivalent Preferred Stock” shall have the meaning set forth in Section 11(b)
hereof.

     (r) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     (s) “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof

     (t) “Exempt Person” shall mean each of (i) any Liberty Party, (ii) any Person whose
Beneficial Ownership (together with all Affiliates and Associates of such Person) of 4.9% or more
of the then-outstanding Common Stock (assuming for purposes of this calculation that all of the
Series A Convertible Preferred Stock and Series B-1 Convertible Preferred Stock are converted into
Common Stock) would not, as determined by the Board in its sole discretion, jeopardize or endanger
the availability to the Company of its Tax Benefits and (iii) any Person that beneficially owns, as
of the date hereof, 4.9% or more of the outstanding shares of Common Stock (assuming for purposes
of this calculation that all of the Series A Convertible Preferred Stock and Series B-1 Convertible
Preferred Stock are converted into Common Stock), provided, however, that, with
respect to clause (iii) of this paragraph, any such Person shall only be deemed to be an Exempt
Person under such clause (iii) for so long as it beneficially owns no more than the amount of
Common Stock it owned on the date hereof; and provided, further, that, with respect
to clauses (ii) and (iii) of this paragraph, any Person shall cease to be an Exempt Person under
such clauses (ii) and (iii), as applicable, as of the date that such Person ceases to beneficially
own 4.9% or more of the then outstanding Common Stock (assuming for purposes of this calculation
that all of the Series A Convertible Preferred Stock, and Series B-1 Convertible Preferred Stock
are converted into Common Stock). Additionally, a Person shall cease to be an Exempt Person with
respect to clause (ii) of this paragraph if the Board, in its sole discretion, makes a contrary
determination with respect to the effect of such Person’s Beneficial Ownership (together with all
Affiliates and Associates of such Person) with respect to the availability to the Company of its
Tax Benefits.

     (u) “Exempt Transaction” shall mean any transaction that the Board determines, in its
sole discretion, is exempt, which determination shall be irrevocable.

     (v) “Expiration Date” shall mean the earliest of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof, (iii) the time at which
the Rights are exchanged as provided in Section 24 hereof, (iv) the repeal of Section 382 of the
Code or any successor statute if the Board determines that this Agreement is no longer necessary
for the preservation of Tax Benefits, (v) the beginning of a taxable year of the Company to which
the Board determines that no Tax Benefits may be carried forward and (vi) June 30, 2010, if
Stockholder Approval has not been obtained.

     (w) “Final Expiration Date” shall be August 1, 2011.

     (x) “Liberty” shall mean Liberty Media Corporation, a Delaware corporation.

4

 

     (y) “Liberty Investment Agreement” shall mean that certain Investment Agreement dated
as of February 17, 2009, between the Company and Liberty Radio, LLC, a Delaware corporation and
indirect wholly owned subsidiary of Liberty Media, as amended from time to time.

     (z) “Liberty Party” shall have the meaning ascribed to such term in the Liberty
Investment Agreement.

     (aa) “Nasdaq” means The Nasdaq Stock Market.

     (bb) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, trust or other legal entity, group of persons
making a “coordinated acquisition” of shares or otherwise treated as an entity within the meaning
of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and includes any successor (by
merger or otherwise) of such individual or entity.

     (cc) “Preferred Stock” shall mean shares of Series C Junior Preferred Stock, par value
$0.001 per share, of the Company having the rights and preferences set forth in the form of
Certificate of Designation of Series C Junior Preferred Stock attached hereto as Exhibit A.

     (dd) “Purchase Price” shall mean initially $2.00 per one one-millionth of a share of
Preferred Stock, subject to adjustment from time to time as provided in this Agreement.

     (ee) “Record Date” shall have the meaning set forth in the recitals to this Agreement.

     (ff) “Redemption Price” shall mean $0.00001 per Right, subject to adjustment of the
Company to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof.

     (gg) “Related Person” shall mean (i) any Subsidiary of the Company or (ii) any
employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any
entity (including any entity in a fiduciary capacity) holding shares of Common Stock for or
pursuant to the terms of any such plan.

     (hh) “Rights” shall have the meaning set forth in the recitals to this Agreement.

     (ii) “Rights Agent” shall have the meaning set forth in the preamble of this
Agreement.

     (jj) “Rights Certificates” shall mean certificates evidencing the Rights, in
substantially the form attached hereto as Exhibit B.

     (kk) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section
11(a)(iii) hereof.

     (ll) "Securities Act” shall mean Securities Act of 1933, as amended.

     (mm) “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.

5

 

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

     (oo) “Stockholder Approval” shall mean the approval of this Agreement by the
affirmative vote of the holders of a majority of the voting power of the outstanding shares of
Common Stock (or other shares that vote together with the Common Stock as one class for purposes of
such an approval) entitled to vote and that are present, or represented by proxy, and are voted on
the proposal to approve this Agreement, at the meeting of stockholders of the Company duly held in
accordance with the Company’s Certificate of Incorporation and applicable law.

     (pp) “Subsidiary” shall mean, with reference to any Person, any corporation or other
legal entity of which a majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person, or otherwise controlled by such Person.

     (qq) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii)
hereof.

     (rr) “Summary of Rights ” shall mean a copy of a summary of the terms of the Rights,
in substantially the form attached hereto as Exhibit C.

     (ss) “Tax Benefits” shall mean the net operating loss carry forwards, capital loss
carry forwards, general business credit carry forwards, alternative minimum tax credit carry
forwards and foreign tax credit carry forwards, as well as any “net unrealized built-in loss”
within the meaning of Section 382 of the Code, of the Company or any direct or indirect Subsidiary
thereof.

     (tt) “Trading Day” shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading is open for the
transaction of business.

     (uu) “Trigger Event” shall have the meaning set forth in Section 11(a)(ii) hereof.

     (vv) “Trust” shall have the meaning set forth in Section 24(d) hereof.

     (ww) “Trust Agreement” shall have the meaning set forth in Section 24(d) hereof.

     (xx) “Treasury Regulations” shall mean final, temporary and proposed income tax
regulations promulgated under the Code, including any amendments thereto.

Section 2 Appointment of Rights Agent

     The Company hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem necessary or desirable.
Prior to the appointment of a co-rights agent, the specific duties and obligations of each such
co-rights agents shall be set forth in writing and delivered to the Rights Agent and the proposed
co-rights agent. Any actions which may be taken by the Rights Agent pursuant to the terms of this
Agreement may be taken by any such co-rights agent. To the extent

6

 

that any co-rights agent takes
any action pursuant to this Agreement, such co-rights agent shall
be entitled to all of the rights and protections of, and subject to all of the applicable
duties and obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement. The
Rights Agent will have no duty to supervise, and in no event will be liable for, the acts or
omissions of any co-rights agent.

Section 3 Issuance of Rights Certificates

     (a) Until the Distribution Date, (i) the Rights shall be evidenced (subject to Section 3(b))
by the certificates representing the shares of Common Stock, registered in the names of the record
holders thereof (which certificates representing such shares of Common Stock shall also be deemed
to be Rights Certificates), (ii) the Rights shall be transferable only in connection with the
transfer of the underlying shares of Common Stock, and (iii) the surrender for transfer of any
certificates representing such shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with the shares of Common Stock
represented by such certificates.

     (b) On or as promptly as practicable after the Record Date, the Company shall send by first
class, postage prepaid mail, to each record holder of shares of Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records of the Company as
of such date, a copy of a Summary of Rights to Purchase Preferred Stock in substantially the form
attached as Exhibit C. With respect to certificates for Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in
the names of the holders thereof together with the Summary of Rights.

     (c) Rights shall be issued by the Company in respect of all shares of Common Stock (other than
any shares of Common Stock that may be issued upon the exercise or exchange of any Right) issued or
delivered by the Company (whether originally issued or delivered from the Company’s treasury) after
the Record Date but prior to the earlier of the Distribution Date and the Expiration Date or in
certain circumstances provided in Section 22(b) hereof, after the Distribution Date. Certificates
representing such shares of Common Stock shall have stamped on, impressed on, printed on, written
on, or otherwise affixed to them a legend in substantially the following form or such similar
legend as the Company may deem appropriate and is not inconsistent with the provisions of this
Agreement and as do not affect the rights, duties or responsibilities of the Rights Agent, or as
may be required to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction reporting system on
which the shares of Common Stock may from time to time be listed or quoted:

This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Sirius XM Radio Inc. and The Bank of New York Mellon,
dated as of April 29, 2009 and as amended from time to time (the “Rights Agreement”), the
terms of which are hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of Sirius XM Radio Inc. The Rights are not exercisable
prior to the occurrence of certain events specified in the Rights

7

 

Agreement. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, may be amended, or may be
evidenced by separate certificates and no longer be evidenced by this certificate. Sirius
XM Radio Inc. shall mail to the holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances as set forth in the Rights Agreement,
Rights that are or were beneficially owned by an Acquiring Person or any Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights Agreement) may
become null and void.

     (d) Any Rights Certificate issued pursuant to this Section 3 or Section 22 hereof that
represents Rights beneficially owned by an Acquiring Person or any of its Associates or Affiliates
and any Rights Certificate issued or issuable at any time upon the transfer of any Rights to an
Acquiring Person or any of its Associates or Affiliates or to any nominee of such Acquiring Person,
Associate or Affiliate and any Rights Certificate issued pursuant to Section 6, 11 or 22(a) hereof
upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in
this sentence shall be subject to and contain a legend in substantially the following form or such
similar legend as the Company may deem appropriate and is not inconsistent with the provisions of
this Agreement and as do not affect the rights, duties or responsibilities of the Rights Agent, or
as may be required to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights may from time to
time be listed:

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

     (e) As promptly as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall send or cause to be sent (and the
Rights Agent will, if requested, and if provided with all necessary information, send), by first
class, insured, postage prepaid mail, to each record holder of shares of Common Stock, as of the
Close of Business on the Distribution Date (other than an Acquiring Person or any Associate or
Affiliate of an Acquiring Person), at the address of such holder shown on the records of the
Company or the transfer agent or registrar of the Common Stock, a Rights Certificate representing
one Right for each share of Common Stock so held, subject to adjustment as provided herein. As of
and after the Distribution Date, the Rights shall be represented solely by such Rights
Certificates. The Company shall promptly notify the Rights Agent in writing upon the occurrence of
the Distribution Date and, if such notification is given orally, the Company shall confirm same in
writing on or prior to the next Business Day. Until such notice is received by the Rights Agent,
the Rights Agent may presume conclusively that the Distribution Date has not occurred.

     (f) In the event that the Company purchases or otherwise acquires any shares after the Record
Date but prior to the Distribution Date, any Rights associated with such shares of

8

 

Common Stock
shall be deemed canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock so purchased or acquired.

Section 4 Form of Rights Certificates

     The Rights Certificates (and the form of election to purchase and the form of assignment to be
printed on the reverse thereof) shall each be substantially in the form attached hereto as
Exhibit B with such changes and marks of identification or designation, and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate (but which do not
affect the rights, duties or responsibilities of the Rights Agent) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
or transaction reporting system on which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Section 22 hereof, the Rights Certificates,
whenever distributed shall entitle the holders thereof to purchase such number of one-millionths of
a share of Preferred Stock as is set forth therein at the Purchase Price; provided,
however, that the Purchase Price, the number and kind of securities issuable upon exercise
of each Right and the number of Rights outstanding shall be subject to adjustments as provided in
this Agreement.

Section 5 Countersignature and Registration

     (a) The Rights Certificates shall be executed on behalf of the Company by any Authorized
Officer, either manually or by facsimile signature, and shall have affixed thereto the Company’s
seal or a facsimile thereof which shall be attested by any Authorized Officer, either manually or
by facsimile signature. The Rights Certificates shall be countersigned, either manually or by
facsimile signature by the Rights Agent, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.

     (b) Following the Distribution Date, upon receipt by the Rights Agent of written notice of the
occurrence of the Distribution Date pursuant to Section 3(e) hereof, a stockholder list and all
other relevant information referred to in Section 3(e) or as reasonably requested by the Rights
Agent, the Rights Agent shall keep or cause to be kept, at its office or offices designated for
such purposes and at such other offices as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation of any stock
exchange or any transaction reporting system on which the rights may from time to time be listed or
quoted, books for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the

9

 

Rights Certificates, the
number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of
the Rights Certificates.

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

     (a) Subject to the provisions of Section 7(d), Section 14 and Section 16 hereof, at any time
after the Close of Business on the Distribution Date, and prior to the Expiration Date, any Rights
Certificate(s) (other than Rights Certificates representing Rights that have become null and void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof)
representing exercisable Rights may be transferred, split up, combined or exchanged for another
Rights Certificate(s), entitling the registered holder to purchase a like number of one-millionth
of a share of Preferred Stock (or other securities, as the case may be) as the Rights
Certificate(s) surrendered then entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split up, combine or exchange any such
Rights Certificate(s) must make such request in writing delivered to the Rights Agent, and must
surrender the Rights Certificate(s) to be transferred, split up, combined or exchanged, with the
forms of assignment and certificate contained therein duly executed, at the office or offices of
the Rights Agent designated for such purpose. The Rights Certificates are transferable only on the
registry books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate(s) until the registered holder shall have (i) properly completed and duly signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate,
(ii) provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof and of the Rights evidenced thereby and the Affiliates and Associates of
such Beneficial Owner (or former Beneficial Owner) as the Company or the Rights Agent shall
reasonably request and (iii) paid a sum sufficient to cover any tax or charge that may be imposed
in connection with any transfer, split up, combination or exchange or Rights Certificates as
required by Section 9(d) hereof. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested registered in such name or names as may be designated by the surrendering registered
holder. The Rights Agent shall promptly forward any such sum collected by it to the Company or to
such Person or Persons as the Company shall specify by written notice. The Rights Agent shall have
no duty or obligation to take any action under any section of this Rights Agreement which requires
the payment by a Rights holder of applicable taxes and/or charges unless and until it is satisfied
that all such taxes and/or charges have been paid.

     (b) Upon receipt by the Company and the Rights Agent of evidence satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate, if mutilated, the Company shall execute and
deliver a new Rights Certificate of like tenor to the Rights Agent and the Rights Agent will
countersign and deliver such new Rights Certificate to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

10

 

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

     (a) Except as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date and prior to the Expiration Date, and thereafter the registered holder of any
Right Certificate may, subject to Section 11(a)(ii) and Section 24 hereof, exercise the Rights
evidenced thereby in whole or in part upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof properly completed and duly executed, to the
Rights Agent at the office or agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price (including any applicable tax or charge required to be paid by the
holder of such Rights Certificate in accordance with the provisions of Section 9(d)) hereof for
each one one-millionth of a share of Preferred Stock (or other securities, cash or assets, as the
case may be) as to which the Rights are exercised. Except for those provisions herein which
expressly survive the termination of this Agreement, this Agreement shall terminate at such time as
the Rights are no longer exercisable hereunder.

     (b) Upon receipt of a Rights Certificate representing exercisable Rights with the form of
election to purchase and the certificate properly completed and duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal to any applicable
tax or charge required to be paid under Section 9(d) hereof by certified check, cashier’s check,
bank draft or money order payable to the order of the Company, subject to Section 20(k) hereof, the
Rights Agent shall, thereupon promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares)
certificates representing the total number of one-millionths of a share of Preferred Stock to be
purchased (and the Company hereby irrevocably authorizes and directs its transfer agent to comply
with all such requests) or (B) if the Company shall have elected to deposit any shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one-millionths of a share of
Preferred Stock as are to be purchased (and the Company hereby irrevocably authorizes and directs
such depositary agent to comply with all such requests), (ii) after receipt of such certificates
(or depositary receipts, as the case may be) cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, (iii) when necessary, requisition from the Company or any transfer agent
therefor of certificates representing the number of equivalent shares to be issued in lieu of the
issuance of shares of Common Stock, as the case may be, in accordance with the provisions of
Section 11(a)(iii) when necessary, after receipt of such certificates, cause the same to be
delivered to or upon the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, (v) when necessary, requisition from the
Company of the amount of cash to be paid in lieu of the issuance of fractional shares in accordance
with the provisions of Section 14 hereof, and (vi) when necessary, after receipt, deliver such cash
to the registered holder of such Rights Certificate.

     (c) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, the Rights Agent shall prepare, execute and deliver a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised to the registered

11

 

holder of such Rights Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.

     (d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to any purported transfer,
split up, combination or exchange of any Rights Certificate pursuant to Section 6 or
exercise or assignment of a Rights Certificate as set forth in this Section 7 unless the
registered holder of such Rights Certificate shall have (i) properly completed and duly signed the
certificate following the form of assignment or the form of election to purchase, as applicable,
set forth on the reverse side of the Rights Certificate surrendered for such transfer, split up,
combination, exchange, exercise or assignment and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced
thereby and Affiliates and Associates thereof as the Company or the Rights Agent may reasonably
request.

Section 8 Cancellation and Destruction of Rights Certificates

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

Section 9 Company Covenants Concerning Securities and Rights

     (a) The Company covenants and agrees that it shall cause to be reserved, authorized for
issuance and kept available out of its authorized and unissued shares of Preferred Stock, and/or
other securities, or any shares of any such security of the Company held in its treasury, a number
of shares of Preferred Stock (or any other security of the Company as may be applicable at the time
of exercise) that shall be sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7.

     (b) The Company covenants and agrees so long as the shares of Preferred Stock (and, following
the occurrence of any Person becoming an Acquiring Person, shares of Common Stock and/or other
securities) issuable upon the exercise of the Rights may be listed on any national securities
exchange, or quoted on Nasdaq, it shall endeavor to cause, from and after such time as the Rights
become exercisable, all securities reserved for issuance upon the exercise of Rights to be listed
on such exchange, or quoted on the Nasdaq, upon official notice of issuance upon such exercise.

     (c) The Company covenants and agrees it will take all such actions as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of any Person becoming an
acquiring Person shares of Common Stock and/or other securities) delivered

12

 

upon exercise of Rights,
at the time of delivery of the certificates for such securities, shall be (subject to payment of
the Purchase Price) duly authorized, validly issued, fully paid and nonassessable securities.

     (d) The Company covenants and agrees it will pay when due and payable any and all federal or
state taxes and charges that may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates representing securities issued upon the exercise
of Rights; provided, however, that the Company shall not be required to pay any tax
or charge which may be payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or depositary receipts representing
securities issued upon the exercise of Rights in a name other than that of, the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise, or to issue or deliver any
certificates or depositary receipts representing securities issued upon the exercise of any Rights
until any such tax or charge has been paid (any such tax or charge being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been established to the Company’s
and the Rights Agent’s reasonable satisfaction that no such tax or charge is due.

     (e) If the Company determines that registration under the Securities Act is required, then the
Company shall use commercially reasonable efforts (i) to file, as soon as practicable after the
Distribution Date, on an appropriate form, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration
statement to become effective as soon as practicable after such filing and (iii) to cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company shall also take such
action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws
of the various states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed 90 days, the exercisability of the Rights
in order to prepare and file such registration statement and to permit it to become effective or to
qualify the rights, the exercise thereof or the issuance of shares of Preferred Stock, Common
Stock, or other securities upon the exercise thereof under state securities or “blue sky” laws.
Upon any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. In addition, if the Company determines that a
registration statement or other document should be filed under the Securities Act or any state
securities laws following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights, for a period of time not to exceed 90 days, in each relevant
jurisdiction until such time as a registration statement has been declared effective or any such
other document filed and, if required, approved, and, upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction if the requisite registration or qualification in such jurisdiction has not been
effected or the exercise of the Rights is not permitted under applicable law. The Company shall
notify the Rights Agent in writing whenever it makes a public

13

 

announcement
pursuant to this Section
9(e) and give the Rights Agent a copy of such announcement.

     (f) Notwithstanding anything in this Agreement to the contrary, after the later of the Stock
Acquisition Date and the Distribution Date, the Company shall not take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably foreseeable that such action
shall eliminate or otherwise diminish the benefits intended to be afforded by the Rights.

     (g) In the event that the Company is obligated to issue other securities of the Company and/or
pay cash pursuant to Sections 7, 11, 14 or 24 it shall make all arrangements necessary so that such
other securities and/or cash are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.

Section 10 Record Date

     Each Person in whose name any certificate for a number of one-millionths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of such
shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights Certificate
representing such Rights was duly surrendered and payment of the Purchase Price (and all applicable
taxes and charges) was duly made; provided, however, that if the date of such
surrender and payment is a date upon which the transfer books of the Company for shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be) are closed, such
Person shall be deemed to have become the record holder of such securities on, and such certificate
shall be dated, the next succeeding Business Day on which the transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of any security of the Company with respect to
shares for which the Rights are or may be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

Section 11 Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights

     The Purchase Price, the number of shares of Preferred Stock or other securities or property
purchasable upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

     (a) (i) In the event the Company shall at any time after the Record Date (A) declare a
dividend on the shares of Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding shares of Preferred Stock, (C) combine the outstanding shares of Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the shares of Preferred Stock (including any such

14

 

reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, as the case may be, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such date and at a time
when the transfer books of the Company for the shares of Preferred Stock were open, the holder
would have owned upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of one
Right.

          (ii) Subject to Section 24 of this Agreement and except as otherwise provided in this Section
11(a)(ii) and Section 11(a)(iii), in the event that any Person becomes an Acquiring Person (a
“Trigger Event”), each holder of a Right shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then-current Purchase Price in accordance with the terms
of this Agreement such number of shares of Common Stock as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of one-millionth of a share of Preferred
Stock for which a Right is then exercisable and dividing that product by (y) 50% of the Current Per
Share Market Price of the Company’s Common Stock (determined pursuant to Section 11(d) hereof) on
the date of the occurrence of such event; provided, however, that the Purchase
Price (as so adjusted) and the number of shares of Common Stock so receivable upon exercise of a
Right shall thereafter be subject to further adjustment as appropriate in accordance with Section
11(f) hereof. After the occurrence of a Trigger Event, Rights will no longer be exercisable for
the purchase of Preferred Stock, except as provided in Section 11(a)(iii).

          Notwithstanding anything in this Agreement to the contrary, however, from and after the time
(the “invalidation time”) when any Person first becomes an Acquiring Person, any Rights
that are beneficially owned by (A) any Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (B) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who becomes a transferee after the invalidation time or (C) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who became a transferee prior to or concurrently with the
invalidation time pursuant to either (1) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement, arrangement or
understanding, written or otherwise, regarding the transferred Rights or (2) a transfer that the
Board has determined is part of a plan, arrangement or understanding, written or otherwise, which
has the purpose or effect of avoiding the provisions of this paragraph, and subsequent transferees
of such Persons (with respect to the Rights acquired from such Persons, only), shall be null and
void without any further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement. The Company will use
commercially reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and

15

 

after the invalidation time, no Right
Certificates shall be issued pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become null and void pursuant to the provisions of this paragraph, and any Right
Certificates delivered to the Rights Agent that represents Rights that are or have become null and
void pursuant to the provisions of this paragraph shall be cancelled. The Company shall give the
Rights Agent written notice of the identity of any such Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing, and the Rights Agent may rely on such notice in carrying
out its duties under this Agreement and shall be deemed not to have any knowledge of the identity
of any such Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing unless
and until it shall have received such notice.

     (iii) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value equal to the Current Per Share
Market Price of a share of Common Stock. In the event that there shall be an insufficient number
of shares of Common Stock authorized but unissued (and unreserved) to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii), the Board shall, with respect to
such deficiency, to the extent permitted by applicable law and any material agreements then in
effect to which the Company is a party (A) determine the excess of (x) the value of the shares of
Common Stock issuable upon the exercise of a Right in accordance with the foregoing subparagraph
(ii) (the “Current Value”) over (y) the then-current Purchase Price multiplied by the
number of one-millionths of shares of Preferred Stock for which a Right was exercisable immediately
prior to the time that the Acquiring Person became such (such excess, the “Spread”), and
(B) with respect to each Right (other than Rights which have become null and void pursuant to
Section 11(a)(ii)), make adequate provision to substitute for the shares of Common Stock issuable
in accordance with subparagraph (ii) upon exercise of the Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in such Purchase Price, (3) shares of Preferred Stock or
other equity securities of the Company (including, without limitation, shares or fractions of
shares of preferred stock which, by virtue of having dividend, voting and liquidation rights
substantially comparable to those of the shares of Common Stock, are deemed in good faith by the
Board to have substantially the same value as the shares of Common Stock, as the case may be (such
shares of preferred stock and shares or fractions of shares of preferred stock are hereinafter
referred to as “Common Stock Equivalents”), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having a value which, when added to the value of
the shares of Common Stock actually issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any such reduction in the applicable Purchase
Price), where such aggregate value has been determined by the Board (upon the advice of a
nationally recognized investment banking firm selected by the Board in good faith);
provided, however, if the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within 30 days following but not including the date that the
Acquiring Person became such (the “Section 11(a)(ii) Trigger Date”), then the Company shall
be obligated to deliver, to the extent permitted by applicable law and any material agreements then
in effect to which the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent available), and
then, if necessary, such number or fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash

16

 

have an aggregate value equal to the Spread.
If within the 30 day period referred to above the Board shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, then, if the Board so elects, such 30 day period may be extended to
the extent necessary, but not more than 90 days after but not including the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization of such
additional shares (such 30 day period, as it may be extended, is hereinafter called the
“Substitution Period”). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii)
hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such second sentence and to
determine the value thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect.

     (b) If the Company fixes a record date for the issuance of rights, options or warrants to all
holders of shares of Preferred Stock entitling them (for a period expiring within 45 calendar days
after but not including such record date) to subscribe for or purchase shares of Preferred Stock
(or securities having equivalent rights, privileges and preferences as the shares of Preferred
Stock (for purposes of this Section 11(b), “Equivalent Preferred Stock”)) or securities
convertible into shares of Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred Stock) less than the
Current Per Share Market Price of the shares of Preferred Stock (determined pursuant to Section
11(d)) on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such Current Per Share Market Price and the denominator of which is the number of
shares of Preferred Stock outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock issuable
upon exercise of one Right. In case such subscription price may be paid in a consideration part or
all of which is in a form other than cash, the value of such consideration shall be as determined
in good faith by the Board, whose determination shall be described in a written statement filed
with the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that such rights, options
or

17

 

warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

     (c) If the Company fixes a record date for the making of a distribution to all holders of
shares of Preferred Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a
dividend payable in shares of Preferred Stock) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which is the Current Per Share Market Price of the
shares of Preferred Stock (as determined pursuant to Section 11(d)) on such record date or, if
earlier, the date on which shares of Preferred Stock begin to trade on an ex-dividend or when
issued basis for such distribution, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a written statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed
or of such subscription rights, options or warrants applicable to one share of Preferred Stock, and
the denominator of which is such Current Per Share Market Price of the shares of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right but less than the aggregate par value of the shares of capital stock issuable
upon exercise of one Right. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such record date had
not been fixed.

     (d) (i) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of any security (a “Security” for purposes of this Section 11(d)(i) only) on any date
shall be deemed to be the average of the daily closing prices per share of a share of the Common
Stock for the 30 consecutive Trading Days immediately prior to, but not including, such date;
provided, however, that in the event that the Current Per Share Market Price of the
Security is determined during a period following the announcement by the issuer of such Security of
(A) a dividend or distribution on such Security payable in shares of such Security or securities
convertible into such shares (other than the Rights) or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading Days after, but not
including, the ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the Current Per Share
Market Price shall be appropriately adjusted to take into account ex-dividend trading or to reflect
the current per share market price per share equivalent of such Security. The closing price for
each day shall be the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the Nasdaq or, if the Security is not listed or admitted to trading on the
Nasdaq, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
low

18

 

asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker making a market in the
Security selected by the Board. If the Security is not publicly held or not so listed or traded,
or is not the subject of available bid and asked quotes, the Current Per Share Market Price of such
Security shall mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent.

     (ii) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of shares of the Preferred Stock shall be determined in accordance with the method set
forth above in Section 11(d)(i) other than the last sentence thereof. If the Current Per Share
Market Price of Preferred Stock cannot be determined in the manner provided above, it shall be
conclusively deemed to be an amount equal to the current per share market price of the shares of
Common Stock multiplied by one million (as such number may be appropriately
adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar
transactions relating to the shares of Common Stock occurring after the date of this Agreement).
If neither the Common Stock nor the Preferred Stock are publicly held or so listed or traded, or
the subject of available bid and asked quotes, “Current Per Share Market Price” of the Preferred
Stock shall mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent. For all purposes of
this Agreement, the current per share market price of one one-millionth of a Preferred Share will
be equal to the current per share market price of one Preferred Share divided by one million.

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

     (f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right
thereafter exercised becomes entitled to receive any securities of the Company other than shares of
Preferred Stock, thereafter the number and/or kind of such other securities so receivable upon
exercise of any Right (and/or the Purchase Price in respect thereof) shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the shares of Preferred Stock (and the Purchase Price in respect thereof) contained
in this Section 11, and the provisions of Sections 7, 9, 10 and 14 with respect to the shares of
Preferred Stock (and the Purchase Price in respect thereof) shall apply on like terms to any such
other securities (and the Purchase Price in respect thereof).

     (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase

19

 

Price, the
number of one-millionths of a share of Preferred Stock issuable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

     (h) Unless the Company has exercised its election as provided in Section 11(i), upon each
adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding
immediately prior to the making of such adjustment shall evidence the right to purchase, at the
adjusted Purchase Price, that number of one-millionths of a share of Preferred Stock (calculated to
the nearest one-millionth of a share of Preferred Stock) obtained by (i) multiplying (x) the number
of one-millionths of a share of Preferred Stock issuable upon exercise of a Right immediately prior
to such adjustment of the Purchase Price by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.

     (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in substitution for any adjustment in the number of one-
millionths of a share of Preferred Stock issuable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be exercisable for the
number of one-millionths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. The Company shall also, as promptly as practicable, notify
the Rights Agent in writing of same and give the Rights Agent a copy of such announcement. Such
record date may be the date on which the Purchase Price is adjusted or any day thereafter, but if
the Rights Certificates have been issued, such record date shall be at least 10 calendar days later
than, but not including, the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to the provision of
Section 14, the additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders are entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and delivered by the Company,
and countersigned and delivered by the Rights Agent in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date specified in the public
announcement.

     (j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or
kind of securities issuable upon the exercise of the Rights, the Rights Certificates

20

 

theretofore
and thereafter issued may continue to express the Purchase Price and the number and kind of
securities which were expressed in the initial Rights Certificate issued hereunder.

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

     (l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
(with prompt written notice thereof to the Rights Agent) until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number of one-millionths
of a share of Preferred Stock or other securities of the Company, if any, issuable upon such
exercise over and above the number of one-millionths of a share of Preferred Stock or other
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
delivers to such holder a due bill or other appropriate instrument evidencing such holder’s right
to receive such additional shares of Preferred Stock or other securities upon the occurrence of the
event requiring such adjustment.

     (m) Notwithstanding anything in this Agreement to the contrary, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its good faith judgment the Board determines to be
necessary or advisable in order that any (i) consolidation or subdivision of the shares of
Preferred Stock, (ii) issuance wholly for cash of shares of Preferred Stock at less than the
Current Per Share Market Price therefor, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its shares of Preferred Stock is not
taxable to such stockholders.

     (n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company
at any time after the Record Date and prior to the Distribution Date (i) pays a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a
smaller number of shares or (iv) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock following any such event
equals the result obtained by multiplying the number of Rights associated with each share of Common
Stock immediately prior to such event by a

21

 

fraction the numerator of which is the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which is the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is paid or such a subdivision, combination or reclassification is effected.

Section 12 Certificate of Adjusted Purchase Price or Number of Shares

     Whenever an adjustment is made or any event affecting the Rights or their exercisability (including
without limitation an event which causes Rights to become null and void) occurs as provided in Section 11, the Company shall promptly
(a) prepare a certificate setting forth such adjustment and a brief, reasonably detailed statement of the facts, computations, methodology,
and calculations accounting for such adjustment, or describing such event, (b) file with the Rights Agent, and with each transfer agent
for the shares of Preferred Stock and the shares of Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25 and Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of any such adjustment or any such event unless and until it shall have received such certificate.

Section 13 Reserved

Section 14 Fractional Rights and Fractional Shares

     (a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company
shall pay to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of one Right. For purposes of this Section 14(a), the current market value of one
Right is the closing price of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing price for any Trading Day
shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the Nasdaq or, if the Rights are not listed or admitted to trading on the Nasdaq, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the
Rights, such market maker to be selected by the Board. If the Rights are not publicly held or are
not so listed or traded, or are not the subject of available bid and asked quotes, the current
market

22

 

value of one Right shall mean the fair value thereof as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights Agent.

     (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-millionth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-millionth of a share
of Preferred Stock). Fractions of Preferred Stock in integral multiples of one one-millionth of
such Preferred Stock may, in the sole discretion of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement provides that the holders of such depositary receipts have all the
rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-millionth of a share of Preferred Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current market value of one
one-millionth of a share of Preferred Stock. For purposes of this Section 14(b), the current
market value of one one-millionth of a share of Preferred Stock shall be one one-millionth of the
closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise; provided,
however, that if the closing price of the shares of the Preferred Stock cannot be so
determined, the closing price of the shares of the Preferred Stock for such Trading Day shall be
conclusively deemed to be an amount equal to the closing price of the shares of Common Stock shares
for such Trading Day multiplied by one million (as such number may be appropriately adjusted to
reflect events such as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Stock shares occurring after the date of this Agreement).

     (c) Following the occurrence of any Person becoming an Acquiring Person, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise or exchange of the Rights or
to distribute certificates which evidence fractional shares of Common Stock. In lieu of issuing
any such fractional securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same fraction of the current
market value of one such security. For purposes of this Section 14(c), the current market value of
one share of Common Stock, or other security issuable upon the exercise or exchange of Rights shall
be the closing price thereof (as determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise or exchange.

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

     (e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the

23

 

Rights Agent in the form of fully collected funds to make such payments. The Rights Agent
shall be fully protected in relying upon such a certificate and shall have no duty with respect to,
and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares
under any Section of this Agreement relating to the payment of fractional Rights or fractional
shares unless and until the Rights Agent shall have received such a certificate and sufficient
monies.

Section 15 Rights of Action

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

     (b) 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 of competent jurisdiction 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 shall use
commercially reasonable efforts to have any such injunction, order, judgment, decree or ruling
lifted or otherwise overturned as soon as possible.

Section 16 Agreement of Rights Holders

     Every holder of a Right consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:

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

     (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office or offices of the Rights Agent

24

 

designated for such purposes, duly endorsed and accompanied by a properly executed instrument
of transfer with the appropriate forms and certificates fully executed;

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

     (d) such holder expressly waives any right to receive any fractional Rights and any fractional
securities upon exercise or exchange of a Right, except as otherwise provided in Section 14.

Section 17 Rights Certificate Holder Not Deemed a Stockholder

     No holder, of any Rights Certificate, by means of such possession, shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of one-millionths of a
share of Preferred Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights Certificate, by means of
such possession, any of the rights of a stockholder of the Company including any right to vote on
any matter submitted to stockholders at any meeting thereof, including the election of directors,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate have been exercised in accordance with the provisions of this Agreement.

Section 18 Concerning the Rights Agent

     (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder, and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the negotiation, preparation,
delivery, amendment, administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent (which gross negligence, bad faith or willful misconduct
must be determined by a final, non-appealable judgment of a court of competent jurisdiction), for
any action taken, suffered or omitted by the Rights Agent in connection with the acceptance,
administration, exercise and performance of its duties and responsibilities under this Agreement
and the exercise of its rights hereunder, including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly. The costs and expenses of enforcing
this right of indemnification will also be paid by the Company. The provisions of this Section 18
and Section 20 shall survive the exercise, exchange,

25

 

redemption or expiration of the Rights, the resignation, replacement or removal of the Rights
Agent and the termination of this Agreement.

     (b) The Rights Agent may conclusively rely on, and will be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted by it in connection
with, its acceptance or administration of this Agreement and the exercise and performance of its
duties and responsibilities and the exercise of its rights hereunder, in reliance upon any Rights
Certificate or certificate evidencing shares of Preferred Stock, Common Stock or other securities
of the Company, or any 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, or otherwise upon the advice of counsel as set forth
in Section 20 hereof. The Rights Agent shall not be deemed to have knowledge of any event of
which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully
protected and shall incur no liability for failing to take action in connection therewith unless
and until it has received such notice in writing.

     (c) Notwithstanding anything in this Agreement to the contrary, in no event will the Rights
Agent be liable for special, punitive, indirect, incidental or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of action.

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

     (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the shareholder
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 21 hereof. If at the time
such successor Rights Agent shall succeed to the agency created by this Agreement any of the Rights
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and if at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights Certificates and in
this Agreement.

     (b) If at any time the name of the Rights Agent changes and at such time any of the Rights
Certificates have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so countersigned; and if 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

26

 

such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

Section 20 Duties of Rights Agent

     The Rights Agent undertakes to perform the duties and obligations expressly imposed by this
Agreement (and no implied duties) 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
or an employee of the Rights Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it in accordance with such
advice or opinion.

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of the Current Per Share Market Price) be proved or
established by the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by any Authorized
Officer and delivered to the Rights Agent; and such certificate, pursuant to its terms, shall be
full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur
no liability for or in respect of any action taken, suffered or omitted by it under the provisions
of this Agreement in reliance upon such certificate.

     (c) The Rights Agent shall be liable to the Company and any other Person hereunder only for
its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable judgment of a court of competent
jurisdiction). Any liability of the Rights Agent under this Agreement will be limited to the
amount of annual fees paid by the Company to the Rights Agent.

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

     (e) The Rights Agent will have no liability for or be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the due execution and
delivery hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisablity of the Rights (including the Rights
becoming null and void pursuant to Section 11(a)(ii) hereof) or any change or adjustment required
under the provisions of Sections 11, 12, 22 or 23 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of

27

 

Rights evidenced by Rights Certificates after actual notice pursuant to Section 12, upon which
the Rights Agent may rely, of any such adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of any shares of Common
Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock shall, when so issued, be validly authorized
and issued, fully paid and nonassessable.

     (f) The Company agrees that it shall 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 and the exercise of the rights hereunder from any person reasonably
believed by the Rights Agent to be one of the Authorized Officers, and to apply to such Authorized
Officers for advice or instructions in connection with its duties, and such instructions shall be
full authorization and protection to the Rights Agent and the Rights Agent shall not be liable for
or in respect of any action taken, suffered or omitted by it in accordance with instructions of any
such Authorized Officer or for any delay in acting while waiting for those instructions. The
Rights Agent shall be fully authorized and protected in relying upon the most recent instructions
received from any such Authorized Officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken, suffered or omitted by the Rights Agent under this Agreement and the
date on and/or after which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken 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 but not
including the date any Authorized Officer of the Company actually receives such application, unless
any such Authorized 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, affiliate, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though the
Rights Agent were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such stockholder, affiliate, director, officer or employee from acting in any other
capacity for the Company or for any other Person.

     (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself (through its directors, officers or employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default,

28

 

neglect or misconduct, absent gross negligence, willful misconduct or bad faith in the
selection and continued employment thereof (which gross negligence, willful misconduct or bad faith
must be determined by a final, non-appealable judgment of a court of competent jurisdiction).

     (j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed to certify the holder
is not an Acquiring Person (or an Affiliate or Associate thereof) or a transferee thereof, the
Rights Agent shall not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.

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

     (l) The Rights Agent will not be required to take notice or be deemed to have notice of any
fact, event or determination (including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person, Affiliate or Associate) under
this Agreement unless and until the Rights Agent is specifically notified in writing by the Company
of such fact, event or determination.

     (m) The provisions of this Section 20 shall survive the exercise, exchange, redemption or
expiration of the Rights, the resignation, replacement or removal of the Rights Agent and the
termination of this Agreement.

Section 21 Change of Rights Agent

     The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ written notice mailed to the Company, and to each
transfer agent of the shares of Common Stock and Preferred Stock known to the Rights Agent,
respectively, by registered or certified mail, and, if such resignation occurs after the
Distribution Date, to the registered holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ written
notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the shares of Common Stock and the Preferred Stock, by registered or certified
mail, and, if such removal occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall, in its sole discretion, appoint a
successor to the Rights Agent. If the Company shall fail to make such appointment within a period
of thirty (30) days after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or of the State of New York or

29

 

of any other state of the United States, in good standing, which is authorized under such laws
to exercise corporate trust, stock transfer or shareholder services powers and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or
(b) an affiliate of a Person described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer agent of the shares
of Common Stock and the Preferred Stock, and, if such appointment occurs after the Distribution
Date, mail a notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

Section 22 Issuance of New Rights Certificates

     (a) 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 the Board to reflect any adjustment or change in the Purchase Price and the number
or kind or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.

     (b) In addition, in connection with the issuance or sale by the Company of shares of Common
Stock following the Distribution Date and prior to the Expiration Date, the Company (i) shall, with
respect to shares of Common Stock so issued or sold pursuant to the exercise, exchange or
conversion of securities (other than Rights) issued prior to the Distribution Date which are
exercisable or exchangeable for, or convertible into, shares of Common Stock (including without
limitation all shares of Series B-1 Preferred Stock) and (ii) subject to the last sentence of this
Section 22, may, in any other case, if deemed necessary or appropriate by the Board, issue Rights
in the form of Rights Certificates representing the appropriate number of Rights as would have been
issued in respect of such shares of Common Stock if they had been issued or sold prior to the
Distribution Date, as appropriately adjusted as provided herein as if they had been so issued or
sold; provided, however, that (i) except in the case of any shares of Common Stock
issuable upon the conversion of shares of Series B-1 Preferred Stock, no such Right or Rights
Certificate shall be issued pursuant to this sentence if, and to the extent that, in its good faith
judgment the Board determines that the issuance of such Right or Rights Certificate could have a
material adverse tax consequence to the Company or to the Person to whom or which such Right or
Rights Certificate otherwise would be issued, and (ii) no such Rights or Rights Certificates shall
be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof (provided that, in the case of any such adjustment with respect to the
Series B-1 Preferred Stock, such adjustment shall have been made in accordance with the Company’s
Certificate of Designation with respect to such series). Anything contained herein to the contrary
notwithstanding, if at any time following the Distribution Date and prior to the Expiration Date,
any shares of Common Stock are issued

30

 

without Rights upon any conversion of shares of Series B-1 Preferred Stock then outstanding,
then from and after the effective time of such conversion of shares of Series B-1 Preferred Stock,
the Company shall not issue any additional Rights hereunder, except as provided in clause (i) of
the preceding sentence.

Section 23 Redemption

     (a) The Board may, at any time prior to the Distribution Date, redeem all but not less than
all the then-outstanding Rights at 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 in its sole discretion
may establish. The Company may, at its option, pay the Redemption Price in cash, securities or any
other form of consideration deemed appropriate by the Board.

     (b) Immediately upon the effectiveness of the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held without interest thereon. Promptly after the effectiveness of the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the then outstanding
Rights (with prompt written notice thereof to the Rights Agent) by mailing such notice to all such
holders at each holder’s last address as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for the shares of
Common Stock; provided however, that the failure to give, or any defect in, any
such notice will not affect the validity of the Redemption of the Rights. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by which the payment of the
Redemption Price shall be made.

Section 24 Exchange

     (a) Subject to Section 24(c), on or after the Distribution Date, the Company (i) if on such
date the voting rights set forth in Section 12 of the Certificate of Designations for the Series
B-1 Preferred Stock are still in effect (the expiration of such voting rights, the “B-1 Consent
Right Termination Date”), shall and (ii) at any time thereafter, may, at the option of the
Board, exchange all of the then-outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 11(a)(ii) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring after the date hereof
(such number of shares of Common Stock per Right being hereinafter referred to as the “Exchange
Ratio”). If pursuant to an exchange in accordance with the terms of this Section 24(a), a
registered holder of any Rights Certificate is entitled to receive shares of Common Stock in an
aggregate amount that is not a whole number, the Company will round downward the number of whole
shares of Common Stock so issued to the nearest whole number.

     (b) Immediately upon the action of the Board ordering the exchange of Rights pursuant to
subsection (a) of this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number

31

 

of such Rights held by such holder multiplied by the Exchange Ratio (or, pursuant to Section
24(c), the equivalent number of shares of Preferred Stock). Promptly after the effectiveness of
the exchange of Rights as provided in subsection (a) of this Section 24, the Company shall publicly
announce such exchange (with prompt written notice thereof to the Rights Agent) and within 10
calendar days thereafter, shall give notice of such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights Agent; provided,
however, that the failure to give, or any defect in, such announcement or notice shall not affect
the validity of such exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights shall be effected.

     (c) In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued (and unreserved) to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable upon exchange of a
Right, (i) Common Stock Equivalents, as such term is used in Section 11(a)(iii), (ii) cash, (iii)
debt securities of the Company, (iv) other assets or (v) any combination of the foregoing, in any
event having an aggregate value, as determined in good faith by the Board (whose determination
shall be described in a statement filed with the Rights Agent), equal to the Current Per Share
Market Price of one share of Common Stock (determined pursuant to Section 11(d)) on the Trading Day
immediately preceding the date of the effectiveness of the exchange pursuant to this Section 24.

     (d) The exchange of the Rights by the Board may be made effective at such time, on such basis
and with such conditions as the Board in its sole discretion may establish. Without limiting the
foregoing, prior to effecting an exchange pursuant to this Section 24, the Board may direct the
Company to enter into a Trust Agreement in such form and with such terms as the Board of Directors
shall then approve (the “Trust Agreement”). If the Board of Directors so directs, the
Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement
(the “Trust”) all of the shares of Common Stock (or substitute securities or assets
pursuant to Section 24(c)) issuable pursuant to the exchange (or any portion thereof that have not
theretofore been issued in connection with the exchange). From and after the time at which such
shares are issued to the Trust, all Persons then entitled to receive shares pursuant to the
exchange shall be entitled to receive such shares (or substitute securities or assets pursuant to
Section 24(c)) (and any dividends or distributions made thereon after the date on which such shares
are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms
and provisions of the Trust Agreement. Any shares of capital stock issued at the direction of the
Board in connection herewith shall be validly issued, fully paid and nonassessable shares of Common
Stock or Preferred Stock (as the case may be), and the Company shall be deemed to have received as
consideration for such issuance a benefit having a value that is at least equal to the aggregate
par value of the shares so issued.

     (e) Notwithstanding any other provision of this Agreement, prior to the B-1 Consent Right
Termination Date, the Company shall not in any way amend or supplement this

32

 

Section 24 without the prior written consent of the holders of a majority of the Series B-1
Preferred Stock.

Section 25 Notice of Certain Events

     (a) If the Company proposes to (i) pay any dividend payable in stock of any class to the
holders of shares of Preferred Stock or to make any other distribution to the holders of shares of
Preferred Stock (other than a regular periodic cash dividend), (ii) offer to the holders of shares
of Preferred Stock rights, options, warrants or any similar instrument to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv)
effect any consolidation or merger into or with any other Person, (v) to effect the liquidation,
dissolution or winding up of the Company or (vi) declare or pay any dividend on the shares of
Common Stock payable in shares of Common Stock or to effect a subdivision, combination or
reclassification of the Common Stock then, in each such case, the Company shall give to the Rights
Agent and, to the extent possible, to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution or offering of rights, warrants, options or any
similar instrument or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii) above at least ten
(10) days prior to but not including the record date for determining holders of the shares of
Common Stock and/or Preferred Stock for purposes of such action, and in the case of any such other
action covered by clause (i) or (ii) above at least ten (10) days prior to but not including the
date of such proposed action or the date of participation therein by the holders of the shares of
Preferred Stock, whichever is the earlier.

     (b) If a Stock Acquisition Date occurs, then the Company shall as soon as practicable
thereafter give to the Rights Agent and, to the extent feasible, to each holder of a Rights
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights.

Section 26 Notices

     (a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made
(a) immediately, if made by personal delivery to the party to be notified, (b) on the fifth
(5th) day if sent by first-class mail, postage prepaid, (c) the next Business Day if by
nationally recognized overnight courier or (d) upon confirmation, if transmission by facsimile
combined with a phone call to the Company notifying it of such transmission, all addressed (until
another address is filed in writing by the Company with the Rights) as follows:

33

 

Sirius XM Radio Inc.

1221 Avenue of the Americas

New York, New York 10020

Attention: Patrick L. Donnelly, Esq.

Phone:       (212) 584-5180

Facsimile: (212) 584-5353

     (b) Subject to the provisions of Section 21 any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made (a) immediately, if made by personal delivery to the
party to be notified, (b) on the fifth (5th) day if sent by first-class mail, postage
prepaid, (c) the next Business Day if by nationally recognized overnight courier or (d) upon
confirmation, if transmission by facsimile combined with a phone call to the Rights Agent notifying
it of such transmission, all addressed (until another address is filed in writing by the Rights
Agent with the Company) as follows:

The Bank of New York Mellon

Newport Office Center VII

480 Washington Boulevard

Jersey City, New Jersey 07310

Attention: Relationship Manager

with a copy to:

Mellon Investor Services LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, New Jersey 07310

Attention: General Counsel

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

Section 27 Supplements and Amendments

     Prior to the Distribution Date, the Company may in its sole and absolute discretion, and the
Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement
in any respect without the approval of any holders Rights, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent. From and after the time at
which the Rights cease to be redeemable pursuant to Section 23, the Company may and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights in order (i) to cure any ambiguity, (ii)

34

 

to correct or supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period hereunder or (iv) to
amend or supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable; provided, however, that no such supplement or amendment shall adversely
affect the interests of the holders of Rights (other than an Acquiring Person or any Affiliate or
Associate of an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause this Rights Agreement again to become amendable other than in accordance with
this sentence. Upon the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything herein
to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or
amendment that affects the Rights Agent’s own right, duties, obligations or immunities under this
Agreement.

Section 28 Successors

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

Section 29 Determinations and Actions by the Board

     (a) For all purposes of this Agreement, any calculation of the number of shares of Common
Stock or any other class of capital stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act or the provisions
of Section 382 of the Code or any successor or replacement provision.

     (b) The Board shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations
and calculations deemed necessary or advisable for the administration of this Agreement (including
without limitation a determination to redeem or not redeem the Rights or amend this Agreement).

     (c) All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other Persons, and (y) not subject the Board, or any of
the directors on the Board to any liability to any Person, including without limitation the Rights
Agent and the holders of the Rights. The Rights Agent shall always be entitled to assume that the
Board acted in good faith and the Rights Agent shall be fully protected and shall incur no
liability in reliance thereon.

35

 

Section 30 Benefits of this Agreement

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

Section 31 Severability

     If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however,
that nothing contained in this Section 31 will affect the ability of the Company under the
provisions of Section 27 to supplement or amend this Agreement to replace such invalid, void or
unenforceable term, provision, covenant or restriction with a legal, valid and enforceable term,
provision, covenant or restriction; provided further, however, that if such
excluded provision shall affect the rights, duties or obligations of the Rights Agent, the Rights
Agent shall be entitled to resign two Business Days following but not including the date on which
such term, provision, covenant or restriction is found to be invalid, void or unenforceable.

Section 32 Governing Law

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

Section 33 Counterparts

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

Section 34 Descriptive Headings; Interpretation

     Descriptive headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.
For the avoidance of doubt and for clarification purposes only, if under any circumstance
contemplated herein Rights become exercisable for the purchase of shares of Common Stock, such
Rights may only be exercised as follows: Rights issued in respect of Common Stock will be
exercisable only for the purchase of shares of Common Stock (or any common stock equivalents issued
in respect thereof).

36

 

Section 35 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 malfunctions 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.

[Remainder Of Page Left Intentionally Blank]

37

 

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

	 	 	 	 	 
	 

	 	SIRIUS XM RADIO INC.	 	 
	 
	 	 	 	 
	 

	 	/s/  Patrick Donnelly
 

Name:  Patrick Donnelly
	 	 
	 

	 	Title:    Executive
Vice President and General
             Counsel	 	 
	 
	 	 	 	 
	 

	 	THE BANK OF NEW YORK MELLON,	 	 
	 

	 	as Rights Agent	 	 
	 
	 	 	 	 
	 

	 	/s/  James F. Kiszka
 

Name:  James F. Kiszka
	 	 
	 

	 	Title:    Vice
President	 	 

Signature page to Rights Agreement

 

 

Exhibit A

CERTIFICATE OF DESIGNATION

OF

SERIES C JUNIOR PREFERRED STOCK

OF

SIRIUS XM RADIO INC.

(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)

     Sirius XM Radio, Inc. (hereinafter called the “Company”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does
hereby certify:

     1. The name of the Company is Sirius XM Radio, Inc.

     2. The certificate of incorporation, as amended (the “Certificate of Incorporation”) of the
Company authorizes the issuance of 50,000,000 shares of Preferred Stock, $0.001 par value (the
"Preferred Stock”), and expressly vests in the Board of Directors of the Company (the “Board”) the
authority provided therein to provide for the issuance of said shares in series and by filing a
certificate pursuant to the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications, limitations, or
restrictions thereof.

     3. The Board, pursuant to the authority expressly vested in it as aforesaid, on April 28, 2009
adopted the following resolutions creating a “Series C Junior” series of Preferred Stock:

     RESOLVED, that a series of the class of authorized Preferred Stock of the Company be and
hereby is created, and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of such series, and
the qualifications, limitations or restrictions thereof are as follows:

SERIES C JUNIOR PREFERRED STOCK

Section 1 Designation and Amount. The shares of such series will be designated as Series C Junior
Preferred Stock (the “Series C Preferred”) and the number of shares constituting the Series C
Preferred is 9,000. Such number of shares may be increased or decreased by resolution of the
Board; provided, however, that no decrease will reduce the number of shares of Series C Preferred
to a number less than the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company and convertible into Series C Preferred.

 

 

Section 2 Dividends and Distributions.(a) Subject to the rights of the holders of any shares
of any series of Preferred Stock ranking prior to the Series C Preferred with respect to dividends,
the holders of shares of Series C Preferred, in preference to the holders of Common Stock, par
value $0.001 per share (collectively, the “Common Stock”), of the Company, and of any other junior
stock, will be entitled to receive, when, as and if declared by the Board out of funds legally
available for the purpose, dividends payable in cash (except as otherwise provided below) on such
dates as are from time to time established for the payment of dividends on the Common Stock (each
such date being referred to herein as a “Dividend Payment Date”), commencing on the first Dividend
Payment Date after the first issuance of a share or fraction of a share of Series C Preferred (the
"First Dividend Payment Date”), in an amount per share (rounded to the nearest cent) equal to,
subject to the provision for adjustment hereinafter set forth, the greater of (i) $1 and (ii) one
million (1,000,000) times the aggregate per share amount of all cash dividends, and one million
(1,000,000) times the aggregate per share amount (payable in kind) of all non-cash dividends, other
than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately
preceding Dividend Payment Date or, with respect to the First Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series C Preferred. In the event that the
Company at any time (i) declares a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares or (iv) issues any shares of its
capital stock in a reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and regardless of whether any shares
of Series C Preferred are then issued or outstanding, the amount to which holders of shares of
Series C Preferred would otherwise be entitled immediately prior to such event will be
correspondingly adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.(b) The Company will declare a dividend on the Series C Preferred as provided in paragraph
(a) of this Section 2 immediately after it declares a dividend on the Common Stock (other than a
dividend payable in shares of Common Stock). Each such dividend on the Series C Preferred will be
payable immediately prior to the time at which the related dividend on the Common Stock is payable.

     (c) Dividends will accrue, and be cumulative, on outstanding shares of Series C Preferred from
the Dividend Payment Date next preceding the date of issue of such shares, unless (i) the date of
issue of such shares is prior to the record date for the First Dividend Payment Date, in which case
dividends on such shares will accrue from the date of the first issuance of a share of Series C
Preferred or (ii) the date of issue is a Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series C Preferred entitled to receive a dividend and
before such Dividend Payment Date, in either of which events such dividends will accrue, and be
cumulative, from such Dividend Payment Date. Accrued but unpaid dividends will cumulate from the
applicable Dividend Payment Date but will not bear
interest. Dividends paid on the shares of Series C Preferred in an amount less than the total
amount of such dividends at the time accrued and payable on such shares will be allocated pro

 

 

rata
on a share-by-share basis among all such shares at the time outstanding. The Board may fix a
record date for the determination of holders of shares of Series C Preferred entitled to receive
payment of a dividend or distribution declared thereon, which record date will be not more than 60
calendar days prior to the date fixed for the payment thereof.

Section 3 Voting Rights.

          The holders of shares of Series C Preferred shall have the following voting rights:

     (a) Subject to the provision for adjustment hereinafter set forth and except as otherwise
provided in the Certificate of Incorporation or required by law, each share of Series C Preferred
shall entitle the holder thereof to 1,000,000 votes, on all matters upon which the holders of the
Common Stock of the Company are entitled to vote. In the event the Company shall at any time after
the Record Date declare or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series C Preferred were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.

     (b) Except as otherwise provided herein, in the Certificate of Incorporation or in any other
Certificate of Designations creating a series of Preferred Stock or any similar stock, and except
as otherwise required by law, the holders of shares of Series C Preferred and the holders of shares
of Common Stock and any other capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the Company.

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

Section 4 Restrictions.

     (a) Whenever dividends or distributions payable on the Series C Preferred are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series C Preferred outstanding have been paid in full, the Company will not:

          (i) Declare or pay dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) (“Junior Stock”) to
the shares of Series C Preferred;

 

 

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

          (iii) Redeem, purchase or otherwise acquire for consideration shares of any Junior Stock;
provided, however, that the Company may at any time redeem, purchase or otherwise acquire shares of
any such Junior Stock in exchange for shares of any other Junior Stock of the Company; or

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

     (b) The Company will not permit any majority-owned subsidiary of the Company to purchase or
otherwise acquire for consideration any shares of stock of the Company unless the Company could,
under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.

Section 5 Reacquired Shares. Any shares of Series C Preferred purchased or otherwise acquired by
the Company in any manner whatsoever will be retired and canceled promptly after the acquisition
thereof. All such shares will upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation of
the Company, or in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock or as otherwise required by law.

Section 6 Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up
of the Company, no distribution will be made (a) to the holders of shares of Junior Stock unless,
prior thereto, the holders of shares of Series C Preferred have received an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the date of such
payment; provided, however, that the holders of shares of Series C Preferred will be entitled to
receive an aggregate amount per share, subject to the provision for adjustment hereinafter set
forth, equal to a minimum per share liquidation payment of $1,000 but will be entitled to an
aggregate per share liquidation payment of 1,000,000 times the payment made per share of Common
Stock or (b) to the holders of shares of Parity Stock, except distributions made ratably on the
shares of Series C Preferred and all such Parity Stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Company at any time (i) declares a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of
Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares
or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of
Common Stock (including any such reclassification in connection with a

 

 

consolidation or merger in
which the Company is the continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series C Preferred are then issued or outstanding, the
aggregate amount to which each holder of shares of Series C Preferred would otherwise be entitled
immediately prior to such event will be correspondingly adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

Section 7 Consolidation, Merger, Etc. In the event that the Company enters into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then, in each such case,
each share of Series C Preferred will at the same time be similarly exchanged for or changed into
an amount per share, subject to the provision for adjustment hereinafter set forth, equal to one
million (1,000,000) times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Company at any time (a) declares a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (b) subdivides the
outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a
smaller number of shares or (d) issues any shares of its capital stock in a reclassification of the
outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), then, in
each such case and regardless of whether any shares of Series C Preferred are then issued or
outstanding, the amount set forth in the preceding sentence with respect to the exchange or change
of shares of Series C Preferred will be correspondingly adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

Section 8 Redemption. The shares of Series C Preferred are not redeemable.

Section 9 Rank. The Series C Preferred rank, with respect to the payment of dividends and the
distribution of assets, junior to all other series of the Company’s Preferred Stock, unless the
terms of such series shall so provide.

Section 10 Fractional Shares. Series C Preferred may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all other rights of
holders of Series C Preferred.

     FURTHER RESOLVED, that the statements contained in the foregoing resolutions creating and
designating the said Series C Junior Preferred Stock and fixing the number, powers, preferences and
relative, optional, participating, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics thereof shall, upon the
effective date of said series, be deemed to be included in and be a part of the Certificate of
Incorporation of the Company pursuant to the provisions of Sections 104 and 151 of the DGCL.

[Remainder Of Page Left Intentionally Blank]

 

 

     IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Company by
the undersigned on April 29, 2009.

	 	 	 	 	 
	 

	 	SIRIUS XM RADIO INC.	 	 
	 
	 	 	 	 
	 

	 	By: 
 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

Exhibit B

FORM OF RIGHTS CERTIFICATE

			
	     	 	 
	Certificate No. R-                    
	 	                    Rights in respect of Common Stock

NOT EXERCISABLE AFTER AUGUST 1, 2011 OR SUCH EARLIER DATE AS PROVIDED BY THE RIGHTS AGREEMENT OR IF
REDEMPTION, EXCHANGE OR AMENDMENT OCCURS. IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS
THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF SHALL
BECOME NULL AND VOID AND NO LONGER TRANSFERABLE.

RIGHTS CERTIFICATE

Sirius XM Radio, Inc.

     This certifies that                                         , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions, and conditions of the Rights Agreement, (the “Rights Agreement”), by and between Sirius
XM Radio, Inc., a Delaware corporation (the “Company”), and The Bank of New York Mellon, a New York
banking corporation (the “Rights Agent”), dated as of April 29, 2009, to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 p.m. (New York time) on the Expiration Date (as such term is defined in the Rights
Agreement) at the office or offices of the Rights Agent designated for such purpose, one-millionth
of a fully paid nonassessable share of Series C Junior Preferred Stock, par value $0.001 per share
(the “Preferred Shares”), of the Company, at a purchase price of $2.00 per one one-millionth of a
Preferred Share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed. If this Rights
Certificate is exercised in part, the holder will be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.
The number of Rights evidenced by this Rights Certificate (and the number of one one-millionths of
a Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of the date of the Rights Agreement,
based on the Preferred Shares as constituted at such date. Terms used herein with initial capital
letters and not defined herein are used herein with the meanings ascribed thereto in the Rights
Agreement.

     As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of
shares of Preferred Stock (or other securities, as the case may be) which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to adjustment upon the
occurrence of certain events.

 

 

     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of the Rights under the circumstances specified in
the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and can be obtained from the Company without charge upon written request
therefor.

     Pursuant to the Rights Agreement, from and after the occurrence of any Person becoming an
Acquiring Person, any Rights that are Beneficially Owned by (i) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who becomes a transferee after the occurrence of any Person becoming
an Acquiring Person or (iii) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with any Person becoming an Acquiring
Person pursuant to either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (b) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has the purpose or effect of
avoiding certain provisions of the Rights Agreement, and subsequent transferees of any of such
Persons, will be null and void without any further action and any holder of such Rights will
thereafter have no rights whatsoever with respect to such Rights under any provision of the Rights
Agreement. From and after the occurrence of any Person becoming an Acquiring Person, no Rights
Certificate will be issued that represents Rights that are or have become null and void pursuant to
the provisions of the Rights Agreement, and any Rights Certificate delivered to the Rights Agent
that represents Rights that are or have become null and void pursuant to the provisions of the
Rights Agreement will be canceled.

     This Rights Certificate, with or without other Rights Certificates, may be exchanged for
another Rights Certificate or Rights Certificates entitling the holder to purchase a like number of
one-millionths of a Preferred Share (or other securities, as the case may be) as the Rights
Certificate or Rights Certificates surrendered entitled such holder (or former holder in the case
of a transfer) to purchase, upon presentation and surrender hereof at the office or offices of the
Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the
related Certificate properly completed and duly executed.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $0.00001 per Right or may be
exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the
Company, as provided therein.

     The Company is not required to issue fractions of Preferred Shares (other than fractions which
are integral multiples of one one-millionth of a Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or other securities issuable, as the case may be,
upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing such

 

 

fractional Preferred Shares or other Securities, the Company may make a cash payment, as
provided in the Rights Agreement.

     No holder of this Rights Certificate, as such, will be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable upon the exercise of the Right or Rights represented
hereby, nor will anything contained herein or in the Rights Agreement 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 Right or Rights evidenced by this Rights
Certificate have been exercised in accordance with the provisions of the Rights Agreement.

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

[Remainder Of Page Left Intentionally Blank]

 

 

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

	 	 	 	 	 
	 

	 	SIRIUS XM RADIO INC.	 	 
	 
	 	 	 	 
	 

	 	By: 
 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

Countersigned:

THE BANK OF NEW YORK MELLON,

as Rights Agent

By:                                                                                 

Name:

Title:

Signature page for Rights Certificate

 

 

Form of Reverse Side of Rights Certificate

FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED,                                          hereby sells, assigns and transfers unto

 

(Please print name and address of transferee)

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

Dated :                     ,                                         

                                                                                

Signature

Signature(s) Guaranteed:

SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).

                                                                                

Signature

 

 

CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                     ,                                         

                                                                                

Signature

 

 

Form of
Reverse Side of Rights Certificate — continued

FORM OF ELECTION TO PURCHASE

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

To Sirius XM Radio Inc.:

The undersigned hereby irrevocably elects to exercise                      Rights represented by this
Rights Certificate to purchase the number of one-millionths of a Preferred Share or other
securities issuable upon the exercise of such Rights and requests that certificates for such
securities be issued in the name of and delivered to:

Please insert social security or other identifying number:                                         

 

(Please print name and address)

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

Please insert social security or other identifying number:                                         

 

(Please print name and address)

Dated:                     ,                     

                                                                                

Signature

Signature(s) Guaranteed:

SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).

                                                                                

Signature

 

 

CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                     ,                     

                                                                                

Signature

 

 

NOTICE

          The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.

          In the event the certification set forth above in the Form of Assignment or the Form of Election to
Purchase, as the case may be, is not properly completed, such Assignment or Election to Purchase
will not be honored.

 

 

Exhibit C

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS PLAN) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.

SUMMARY OF RIGHTS

     On April 28, 2009, the Board of Directors (the “Board”) of Sirius XM Radio, Inc., a Delaware
corporation (the “Company”), adopted a rights plan and declared a dividend of one preferred share
purchase right for each outstanding share of common stock. The dividend is payable to our
stockholders of record as of May 11, 2009. The terms of the rights and the rights plan are set
forth in a Rights Agreement, by and between us and The Bank of New York Mellon, as Rights Agent,
dated as of April 29, 2009 (the “Rights Plan”).

     This summary of rights provides only a general description of the Rights Plan, and thus,
should be read together with the entire Rights Plan, which is incorporated into this summary by
reference. All capitalized terms used herein but not defined herein shall have the meanings
ascribed to such terms in the Rights Plan. Upon written request, the Company will provide a copy
of the Rights Plan free of charge to any of its stockholders.

     Our Board adopted the Rights Plan in an effort to protect stockholder value by attempting to
protect against a possible limitation on our ability to use our net operating loss carryforwards
and certain other tax benefits (the “NOLs”) to reduce potential future federal income tax
obligations. We have experienced and continue to experience substantial operating losses, and
under the Internal Revenue Code and rules promulgated by the Internal Revenue Service, we may
“carry forward” these losses in certain circumstances to offset any current and future earnings and
thus reduce our federal income tax liability, subject to certain requirements and restrictions. To
the extent that the NOLs do not otherwise become limited, we believe that we will be able to carry
forward a significant amount of NOLs, and therefore these NOLs could be a substantial asset to us.
However, if we experience an “Ownership Change,” as defined in Section 382 of the Internal Revenue
Code, our ability to use the NOLs will be substantially limited, and the timing of the usage of the
NOLs could be substantially delayed, which could therefore significantly impair the value of that
asset.

     The Rights Plan is intended to act as a deterrent to any person or group (other than the
Company, any Related Person or any Exempt Person) (an “Acquiring Person”) acquiring 4.9% or more of
our outstanding common stock (assuming for purposes of this calculation that all of the Series A
Convertible Preferred Stock and Series B-1 Convertible Preferred Stock are converted into common
stock) without the approval of our Board. Stockholders who own 4.9% or more of our outstanding
common stock as of the close of business on April 29, 2009 will not trigger the Rights Plan so long
as they do not (i) acquire any additional shares of common stock or (ii) fall under 4.9% ownership
of common stock and then re-acquire 4.9% or more of the common stock. The Rights Plan exempts
future acquisitions of common stock by any Liberty

 

 

Party, but does not in any respect alter the respective rights and obligations of the Company
and the Liberty Parties under the Liberty Investment Agreement. Any rights held by an Acquiring
Person are null and void and may not be exercised. Our Board may, in its sole discretion, exempt
any person or group from being deemed an Acquiring Person for purposes of the Rights Plan.

     The Rights. Our Board authorized the issuance of one right per each outstanding share of our
common stock payable to our stockholders of record as of May 11, 2009. Subject to the terms,
provisions and conditions of the Rights Plan, if the rights become exercisable, each right would
initially represent the right to purchase from us one one-millionth of a share of our Series C
Junior Preferred Stock for a purchase price of $2.00 (the “Purchase Price”). If issued, each
fractional share of preferred stock would give the stockholder approximately the same dividend,
voting and liquidation rights as does one share of our common stock. However, prior to exercise, a
right does not give its holder any rights as a stockholder of the Company, including without
limitation any dividend, voting or liquidation rights.

     Exercisability. The rights will not be exercisable until the close of business on the tenth
business day after a public announcement by us that a person or group has become an Acquiring
Person.

     We refer to the date that the rights become exercisable as the “Distribution Date.” Until the
Distribution Date, our common stock certificates will evidence the rights and will contain a
notation to that effect. Any transfer of shares of common stock prior to the Distribution Date
will constitute a transfer of the associated rights. After the Distribution Date, the rights may
be transferred on the books and records of the Rights Agent as provided in the Rights Plan.

     After the Distribution Date, each holder of a Right, other than Rights beneficially owned by
the Acquiring Person (which will thereupon become null and void), will thereafter have the right to
receive upon exercise of a Right and payment of the Purchase Price, that number of shares of common
stock having a market value of two times the Purchase Price.

     Exchange. On or after the Distribution Date, the Company, (i) will, if on such date the
voting rights set forth in Section 12 of the Certificate of Designations for our Convertible
Perpetual Preferred Stock, Series B-1, are still in effect, and (ii) at any time thereafter, may,
at the option of the Board, exchange the Rights (other than Rights owned by such person or group
which will have become void), in whole or in part, at an exchange ratio of one share of our common
stock per right (subject to adjustment).

     Expiration. The rights and the Rights Plan will expire on the earliest of (i) August 1, 2011,
(ii) the time at which the Rights are redeemed pursuant to the Rights Plan, (iii) the time at which
the Rights are exchanged pursuant to the Rights Plan, (iv) the repeal of Section 382 of the Code or
any successor statute if the Board determines that the Rights Plan is no longer necessary for the
preservation of Tax Benefits, (v) the beginning of a taxable year of the Company to which the Board
determines that no Tax Benefits may be carried forward and (vi) June 30, 2010 if Stockholder
Approval has not been obtained.

 

 

     Redemption. At any time prior to the Distribution Date, the Board may redeem the Rights in
whole, but not in part, at a price of $0.00001 per Right, subject to adjustment to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (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 in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.

     Anti-Dilution Provisions. Our Board may make certain adjustments to prevent dilution that may
occur as a result of certain events, including among others, a stock dividend, a stock split or a
reclassification of the preferred shares or our common stock. Such adjustments may include
adjustments to the purchase price of the preferred shares under the Rights, the number of preferred
shares issuable pursuant to each Right and the number of outstanding Rights, in each case as
provided in the Rights Plan. Generally, no adjustments to the purchase price of less than 1% will
be made.

     Amendments. Before the Distribution Date, our Board may amend or supplement the Rights Plan
without the consent of the holders of the Rights. After the Distribution Date, our Board may amend
or supplement the Rights Plan only to cure an ambiguity, to alter time period provisions, to
correct inconsistent provisions, or to make any additional changes to the Rights Plan, but only to
the extent that those changes do not impair or adversely affect any rights holder and do not result
in the rights again becoming redeemable, and no such amendment may cause the Rights again to become
redeemable or cause this Rights Plan again to become amendable other than in accordance with this
sentence.exv10w1

Exhibit 10.1

NOBLE ENERGY, INC.

1992 STOCK OPTION AND RESTRICTED STOCK PLAN

(As Amended Through April 28, 2009)

     Section 1. Purpose

     The purpose of this Plan is to assist Noble Energy, Inc., a Delaware corporation formerly
known as Noble Affiliates, Inc., in attracting and retaining, as officers and key employees of the
Company and its Affiliates, persons of training, experience and ability and to furnish additional
incentive to such persons by encouraging them to become owners of Shares of the Company’s capital
stock, by granting to such persons Incentive Options, Nonqualified Options, Restricted Stock, or
any combination of the foregoing.

     Section 2. Definitions

     Unless the context otherwise requires, the following words as used herein shall have the
following meanings:

     (a) “Affiliate” means any corporation (other than the Company) in any unbroken chain of
corporations (i) beginning with the Company if, at the time of the granting of the Option or
award of Restricted Stock, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain, or (ii) ending with the Company
if, at the time of the granting of the Option or award of Restricted Stock, each of the
corporations, other than the Company, owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain.

     (b) “Agreement” means the written agreement (i) between the Company and the Optionee
evidencing the Option and any SARs that relate to such Option granted by the Company and the
understanding of the parties with respect thereto or (ii) between the Company and a recipient of
Restricted Stock evidencing the restrictions, terms and conditions applicable to such award of
Restricted Stock and the understanding of the parties with respect thereto.

     (c) “Board” means the Board of Directors of the Company as the same may be constituted from
time to time.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means the Committee provided for in Section 3 of the Plan as the same may be
constituted from time to time.

     (f) “Company” means Noble Energy, Inc., a Delaware corporation.

     (g) “Corporate Transaction” shall have the meaning as defined in Section 8 of the Plan.

     (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (i) “Fair Market Value” means the fair market value per Share as determined by the Committee
in good faith; provided, however, that if a Share is listed or admitted to trading on a
securities exchange registered under the Exchange Act, the Fair Market Value per Share shall be
the average of the reported high and low sales price on the date in question (or if there was no
reported sale on such date, on the last preceding date on which any reported sale occurred) on
the principal securities exchange on which such Share is listed or admitted to trading, or if a
Share is not listed or admitted to trading on any such exchange but is listed as a national
market security on the National Association of Securities Dealers, Inc. Automated Quotations
System (“NASDAQ”) or any similar system then in use, the Fair Market Value per Share shall be the
average of the reported high and low sales price on the date in question (or if there was no
reported sale on such date, on the last preceding date on which any reported sale occurred) on
such system, or if a Share is not listed or admitted to trading on any such exchange and is not
listed as a national market security on NASDAQ but is quoted on NASDAQ or any similar system then
in use, the Fair Market Value per Share shall be the average of the closing high bid and low
asked quotations on

1

 

such system for such Share on the date in question. For purposes of valuing Shares to be
made subject to Incentive Options, the Fair Market Value per Share shall be determined without
regard to any restriction other than one which, by its terms, will never lapse.

     (j) “Incentive Option” means an Option that is intended to satisfy the requirements of
Section 422(b) of the Code and Section 17 of the Plan.

     (k) “Nonqualified Option” means an Option that does not qualify as a statutory stock option
under Section 422 or 423 of the Code.

     (l) “Non-Employee Director” means a director of the Company who satisfies the definition
thereof under Rule 16b-3 promulgated under the Exchange Act.

     (m) “Option” means an option to purchase one or more Shares granted under and pursuant to
the Plan. Such Option may be either an Incentive Option or a Nonqualified Option.

     (n) “Optionee” means a person who has been granted an Option and who has executed an
Agreement with the Company.

     (o) “Outside Director” means a director of the Company who is an outside director within the
meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

     (p) “Plan” means this Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan, as
amended from time to time.

     (q) “Restricted Stock” means Shares issued or transferred pursuant to Section 20 of the
Plan.

     (r) “Retirement” means a termination of employment with the Company or an Affiliate either
(i) on a voluntary basis by a person who (A) is at least 55 years of age with five years of
credited service with the Company or one or more Affiliates or (B) has at least 20 years of
credited service with the Company or one or more Affiliates, immediately prior to such
termination of employment or (ii) otherwise with the written consent of the Committee in its sole
discretion.

     (s) “SARs” means stock appreciation rights granted pursuant to Section 7 of the Plan.

     (t) “Securities Act” means the Securities Act of 1933, as amended.

     (u) “Share” means a share of the Company’s present common stock, par value $3.33 1/3 per
share, and any share or shares of capital stock or other securities of the Company hereafter
issued or issuable in respect of or in substitution or exchange for each such present share. Such
Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion,
shall from time to time determine.

     Section 3. Administration

     The Plan shall be administered by, and the decisions concerning the Plan shall be made solely
by, a Committee of two or more directors of the Company, all of whom are (a) Non-Employee
Directors, and (b) not later than immediately after the first meeting of stockholders of the
Company at which its directors are elected that occurs after December 31, 1996, Outside Directors.
Each member of the Committee shall be appointed by and shall serve at the pleasure of the Board.
The Board shall have the sole continuing authority to appoint members of the Committee. In making
grants or awards, the Committee shall take into consideration the contribution the person has made
or may make to the success of the Company or its Affiliates and such other considerations as the
Board may from time to time specify.

     The Committee shall elect one of its members as its chairman and shall hold its meetings at
such times and places as it may determine. A majority of the members of the Committee shall
constitute a quorum. All decisions and determinations of the Committee shall be made by the
majority vote or decision of the members present at any meeting at which a quorum is present;
provided, however, that any decision or determination reduced to writing and

2

 

signed by all members of the Committee shall be as fully effective as if it had been made by a
majority vote or decision at a meeting duly called and held. The Committee may appoint a secretary
(who need not be a member of the Committee) who shall keep minutes of its meetings. The Committee
may make any rules and regulations for the conduct of its business that are not inconsistent with
the express provisions of the Plan, the bylaws or certificate of incorporation of the Company or
any resolutions of the Board.

     All questions of interpretation or application of the Plan, or of a grant of an Option and any
SARs that relate to such Option or an award of Restricted Stock, including questions of
interpretation or application of an Agreement, shall be subject to the determination of the
Committee, which determination shall be final and binding upon all parties.

     Subject to the express provisions of the Plan, the Committee shall have the authority, in its
sole and absolute discretion, (a) to adopt, amend or rescind administrative and interpretive rules
and regulations relating to the Plan; (b) to construe the Plan; (c) to make all other
determinations necessary or advisable for administering the Plan; (d) to determine the terms and
provisions of the respective Agreements (which need not be identical), including provisions
defining or otherwise relating to (i) the term and the period or periods and extent of
exercisability of the Options, (ii) the extent to which the transferability of Shares issued upon
exercise of Options or any SARs that relate to such Options is restricted, (iii) the effect of
termination of employment upon the exercisability of the Options, and (iv) the effect of approved
leaves of absence (consistent with any applicable regulations of the Internal Revenue Service) upon
the exercisability of such Options; (e) subject to Sections 9 and 11 of the Plan, to accelerate,
for any reason, regardless of whether the Agreement so provides, the time of exercisability of any
Option and any SARs that relate to such Option that have been granted or the time of the lapsing of
restrictions on Restricted Stock; (f) to construe the respective Agreements; and (g) to exercise
the powers conferred on the Committee under the Plan. The Board may correct any defect or supply
any omission or reconcile any inconsistency in the Plan in the manner and to the extent it shall
deem expedient to carry it into effect, and it shall be the sole and final judge of such
expediency. The determinations of the Committee or Board, as the case may be, on the matters
referred to in this Section 3 shall be final and conclusive.

     Section 4. Shares Subject to the Plan

     (a) The total number of Shares that may be purchased pursuant to Options, issued or
transferred pursuant to the exercise of SARs or awarded as Restricted Stock shall not exceed a
maximum of 24,000,000 in the aggregate, and the total number of shares for which Options and SARs
may be granted, and which may be awarded as Restricted Stock, to any one person during a calendar
year is 400,000 in the aggregate; provided that each such maximum number of Shares shall be
increased or decreased as provided in Section 13 of the Plan.

     (b) At any time and from time to time after the Plan takes effect, the Committee, pursuant
to the provisions herein set forth, may grant Options and any SARs that relate to such Options
and award Restricted Stock until the maximum number of Shares shall be exhausted or the Plan
shall be sooner terminated; provided, however, that no Incentive Option and any SARs that relate
to such Option shall be granted after December 9, 2006.

     (c) Shares subject to an Option that expires or terminates prior to exercise and Shares that
had been previously awarded as Restricted Stock that have since been forfeited shall be available
for further grant of Options or award as Restricted Stock. No Option shall be granted and no
Restricted Stock shall be awarded if the number of Shares for which Options have been granted and
which pursuant to this Section are not again available for Option grant, plus the number of
Shares that have been awarded as Restricted Stock, would, if such Option were granted or such
Restricted Stock were awarded, exceed 24,000,000.

     (d) Any Shares withheld pursuant to Section 19(c) of the Plan shall not be available after
such withholding for being optioned or awarded pursuant to the provisions hereof.

     (e) Unless the Shares awarded as Restricted Stock are Shares that have been reacquired by
the Company as treasury shares, Restricted Stock shall be awarded only for services actually
rendered, as determined by the Committee.

     Section 5. Eligibility

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     The persons who shall be eligible to receive grants of Options and any SARs that relate to
such Options, and to receive awards of Restricted Stock, shall be regular salaried officers or
other employees of the Company or one or more of its Affiliates.

     Section 6. Grant of Options

     (a) From time to time while the Plan is in effect, the Committee may, in its sole and
absolute discretion, select from among the persons eligible to receive a grant of Options under
the Plan (including persons who have already received such grants of Options) such one or more of
them as in the opinion of the Committee should be granted Options. The Committee shall thereupon,
likewise in its sole and absolute discretion, determine the number of Shares to be allotted for
option to each person so selected.

     (b) Each person so selected shall be offered an Option to purchase the number of Shares so
allotted to him, upon such terms and conditions, consistent with the provisions of the Plan, as
the Committee may specify. Each such person shall have a reasonable period of time, to be fixed
by the Committee, within which to accept or reject the proffered Option. Failure to accept within
the period so fixed may be treated as a rejection.

     (c) Each person who accepts an Option offered to him shall enter into an Agreement with the
Company, in such form as the Committee may prescribe, setting forth the terms and conditions of
the Option, whereupon such person shall become a participant in the Plan. In the event a person
is granted both one or more Incentive Options and one or more Nonqualified Options, such grants
shall be evidenced by separate Agreements, one for each Incentive Option grant and one for each
Nonqualified Option grant. The date on which the Committee completes all action constituting an
offer of an Option to a person, including the specification of the number of Shares to be subject
to the Option, shall constitute the date on which the Option covered by such Agreement is
granted. In no event, however, shall an Optionee gain any rights in addition to those specified
by the Committee in its grant, regardless of the time that may pass between the grant of the
Option and the actual signing of the Agreement by the Company and the Optionee.

     (d) Each Agreement that includes SARs in addition to an Option shall comply with the
provisions of Section 7 of the Plan.

     Section 7. Grant of SARs

     The Committee may from time to time grant SARs in conjunction with all or any portion of any
Option either (i) at the time of the initial Option grant (not including any subsequent
modification that may be treated as a new grant of an Incentive Option for purposes of Section
424(h) of the Code) or (ii) with respect to Nonqualified Options, at any time after the initial
Option grant while the Nonqualified Option is still outstanding. SARs shall not be granted other
than in conjunction with an Option granted hereunder.

     SARs granted hereunder shall comply with the following conditions and also with the terms of
the Agreement governing the Option in conjunction with which they are granted:

     (a) The SAR shall expire no later than the expiration of the underlying Option.

     (b) Upon the exercise of an SAR, the Optionee shall be entitled to receive payment equal to
the excess of the aggregate Fair Market Value of the Shares with respect to which the SAR is then
being exercised (determined as of the date of such exercise) over the aggregate purchase price of
such Shares as provided in the related Option. Payment may be made in Shares, valued at their
Fair Market Value on the date of exercise, or in cash, or partly in Shares and partly in cash, as
determined by the Committee in its sole and absolute discretion.

     (c) SARs shall be exercisable (i) only at such time or times and only to the extent that the
Option to which they relate shall be exercisable, (ii) only when the Fair Market Value of the
Shares subject to the related Option exceeds the purchase price of the Shares as provided in the
related Option, and (iii) only upon surrender of the related Option or any portion thereof with
respect to the Shares for which the SARs are then being exercised.

     (d) Upon exercise of an SAR, a corresponding number of Shares subject to option under the
related Option

4

 

shall be canceled. Such canceled Shares shall be charged against the Shares reserved for the
Plan, as provided in Section 4 of the Plan, as if the Option had been exercised to such extent
and shall not be available for future Option grants or Restricted Stock awards hereunder.

     Section 8. Option Price

     The option price for each Share covered by an Incentive Option shall not be less than the
greater of (a) the par value of such Share or (b) the Fair Market Value of such Share at the time
such Option is granted. The option price for each Share covered by a Nonqualified Option shall not
be less than the greater of (a) the par value of such Share or (b) 100 percent of the Fair Market
Value of such Share at the time the Option is granted. Notwithstanding the two immediately
preceding sentences, if the Company or an Affiliate agrees to substitute a new Option under the
Plan for an old Option, or to assume an old Option, by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation (any of such events
being referred to herein as a “Corporate Transaction”), the option price of the Shares covered by
each such new Option or assumed Option may be other than the Fair Market Value of the Shares at the
time the Option is granted as determined by reference to a formula, established at the time of the
Corporate Transaction, which will give effect to such substitution or assumption; provided,
however, in no event shall:

     (a) the excess of the aggregate Fair Market Value of the Shares subject to the Option
immediately after the substitution or assumption over the aggregate option price of such Shares
be more than the excess of the aggregate Fair Market Value of all Shares subject to the Option
immediately prior to the substitution or assumption over the aggregate option price of such
Shares;

     (b) in the case of an Incentive Option, the new Option or the assumption of the old
Option give the Optionee additional benefits that he would not have under the old Option; or

     (c) the ratio of the option price to the Fair Market Value of the stock subject to the
Option immediately after the substitution or assumption be more favorable to the Optionee than
the ratio of the option price to the Fair Market Value of the stock subject to the old Option
immediately prior to such substitution or assumption, on a Share by Share basis.

Notwithstanding the above, the provisions of this Section 8 with respect to the option price in the
event of a Corporate Transaction shall, in the case of an Incentive Option, be subject to the
requirements of Section 424(a) of the Code and the Treasury regulations and revenue rulings
promulgated thereunder. In the case of an Incentive Option, in the event of a conflict between the
terms of this Section 8 and the above cited statute, regulations and rulings, or in the event of an
omission in this Section 8 of a provision required by said laws, the latter shall control in all
respects and are hereby incorporated herein by reference as if set out at length.

     Section 9. Option Period and Terms of Exercise

     (a) Each Option shall be exercisable during such period of time as the Committee may
specify, but in no event for longer than 10 years from the date when the Option is granted;
provided, however, that

     (i) All rights to exercise an Option and any SARs that relate to such Option shall,
subject to the provisions of subsection (c) of this Section 9, terminate one year after the
date the Optionee ceases to be employed by at least one of the employers in the group of
employers consisting of the Company and its Affiliates, for any reason other than death,
becoming disabled (within the meaning of Section 22(e)(3) of the Code) or Retirement, except
that, in the event of the termination of employment of the Optionee on account of (a) fraud or
intentional misrepresentation, or (b) embezzlement, misappropriation or conversion of assets or
opportunities of the Company or its Affiliates, the Option and any SARs that relate to such
Option shall thereafter be null and void for all purposes. Employment shall not be deemed to
have ceased by reason of the transfer of employment, without interruption of service, between
or among the Company and any of its Affiliates.

     (ii) If the Optionee ceases to be employed by at least one of the employers in the group
of employers consisting of the Company and its Affiliates, by reason of his death, becoming
disabled (within the meaning of Section 22(e)(3) of the Code) or Retirement, all rights to
exercise such Option and any SARs that relate to such Option shall, subject to the provisions
of subsection (c) of this Section 9, terminate five years thereafter.

5

 

     (b) If an Option is granted with a term shorter than 10 years, the Committee may extend the
term of the Option and any SARs that relate to such Option, but for not more than 10 years from
the date when the Option was originally granted.

     (c) In no event may an Option or any SARs that relate to such Option be exercised after the
expiration of the term thereof.

     Section 10. Transferability of Options and SARs

     Except as provided in this Section 10, no Option or any SARs that relate to an Option shall be
(i) transferable otherwise than by will or the laws of descent and distribution, or (ii)
exercisable during the lifetime of the Optionee by anyone other than the Optionee. A Nonqualified
Option granted to an Optionee, and any SARs that relate to such Nonqualified Option, may be
transferred by such Optionee to a permitted transferee (as defined below), provided that (i) there
is no consideration for such transfer (other than receipt by the Optionee of interests in an entity
that is a permitted transferee); (ii) the Optionee (or such Optionee’s estate or representative)
shall remain obligated to satisfy all income or other tax withholding obligations associated with
the exercise of such Nonqualified Option or SARs; (iii) the Optionee shall notify the Company in
writing that such transfer has occurred and disclose to the Company the name and address of the
permitted transferee and the relationship of the permitted transferee to the Optionee; and (iv)
such transfer shall be effected pursuant to transfer documents in a form approved by the Committee.
A permitted transferee may not further assign or transfer any such transferred Nonqualified Option
or any SARs that relate to such Nonqualified Option otherwise than by will or the laws of descent
and distribution. Following the transfer of a Nonqualified Option and any SARs that relate to such
Nonqualified Option to a permitted transferee, such Nonqualified Option and SARs shall continue to
be subject to the same terms and conditions that applied to them prior to their transfer by the
Optionee, except that they shall be exercisable by the permitted transferee to whom such transfer
was made rather than by the transferring Optionee. For the purposes of the Plan, the term
“permitted transferee” means, with respect to an Optionee, (i) any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the Optionee,
including adoptive relationships, (ii) any person sharing the Optionee’s household (other than a
tenant or an employee), (iii) a trust in which the persons described in clauses (i) and (ii) above
have more than fifty percent of the beneficial interest, (iv) a foundation in which the Optionee
and/or persons described in clauses (i) and (ii) above control the management of assets, and (v)
any other entity in which the Optionee and/or persons described in clauses (i) and (ii) above own
more than fifty percent of the voting interests.

     Section 11. Exercise of Options and SARs

     (a) In the event of an Optionee’s death, any then exercisable portion of an Option that has
been granted to such Optionee, and any SARs that relate to such Option, may be exercised, within
the period ending with the earlier of the fifth anniversary of the date of the Optionee’s death
or the date of the termination of such Option, by the duly authorized representative of the
deceased Optionee’s estate or the permitted transferee to whom such Option and SARs have been
transferred.

     (b) At any time, and from time to time, during the period when any Option and any SARs that
relate to such Option, or a portion thereof, are exercisable, such Option or SARs, or portion
thereof, may be exercised in whole or in part; provided, however, that the Committee may require
any Option or SAR that is partially exercised to be so exercised with respect to at least a
stated minimum number of Shares.

     (c) Each exercise of an Option, or a portion thereof, shall be evidenced by a notice in
writing to the Company accompanied by payment in full of the option price of the Shares then
being purchased. Payment in full shall mean payment of the full amount due: (i) in cash, (ii) by
certified check or cashier’s check, (iii) with Shares owned by the exercising Optionee or
permitted transferee having a Fair Market Value at least equal to the aggregate option price
payable in connection with such exercise, but only to the extent that such Shares are “mature” as
determined by the Corporation in accordance with generally accepted accounting principles, or
(iv) by any combination of clauses (i) through (iii). If the exercising Optionee or permitted
transferee chooses to remit Shares in payment of all or any portion of the option price, then
(for purposes of payment of the option price) those Shares shall be deemed to have a cash value
equal to their aggregate Fair Market Value determined

6

 

as of the date the exercising Optionee or permitted transferee exercises such Option.

     Notwithstanding anything contained herein to the contrary, at the request of an exercising
Optionee or permitted transferee and to the extent permitted by applicable law, the Committee
shall approve arrangements with a brokerage firm or firms under which any such brokerage firm
shall, on behalf of the exercising Optionee or permitted transferee, make payment in full to the
Company of the option price of the Shares then being purchased, and the Company, pursuant to an
irrevocable notice in writing from the exercising Optionee or permitted transferee, shall make
prompt delivery of one or more certificates for the appropriate number of Shares to such
brokerage firm. Payment in full for purposes of the immediately preceding sentence shall mean
payment of the full amount due, either in cash or by certified check or cashier’s check.

     (d) Each exercise of SARs, or a portion thereof, shall be evidenced by a notice in writing
to the Company.

     (e) No Shares shall be issued upon exercise of an Option until full payment therefor has
been made, and an exercising Optionee or permitted transferee shall have none of the rights of a
shareholder until Shares are issued to him.

     (f) Nothing herein or in any Agreement shall require the Company to issue any Shares upon
exercise of an Option or SAR if such issuance would, in the opinion of counsel for the Company,
constitute a violation of the Securities Act or any similar or superseding statute or statutes,
or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option
or SAR (as a result of which the exercising Optionee or permitted transferee receives Shares), or
portion thereof, the exercising Optionee or permitted transferee shall give to the Company
satisfactory evidence that he is acquiring such Shares for the purposes of investment only and
not with a view to their distribution; provided, however, if or to the extent that the Shares
delivered to the exercising Optionee or permitted transferee shall be included in a registration
statement filed by the Company under the Securities Act, such investment representation shall be
abrogated.

     Section 12. Delivery of Stock Certificates

     As promptly as may be practicable after an Option or SAR (as a result of the exercise of which
the exercising Optionee or permitted transferee receives Shares), or a portion thereof, has been
exercised as hereinabove provided, the Company shall make delivery of one or more certificates for
the appropriate number of Shares. In the event that an Optionee exercises both (i) an Incentive
Option or SARs that relate to such Option (as a result of which the Optionee receives Shares), or a
portion thereof, and (ii) a Nonqualified Option or SARs that relate to such Option (as a result of
which the Optionee receives Shares), or a portion thereof, separate stock certificates shall be
issued, one for the Shares subject to the Incentive Option and one for the Shares subject to the
Nonqualified Option.

     Section 13. Changes in Company’s Shares and Certain Corporate Transactions

     If at any time while the Plan is in effect there shall be any increase or decrease in the
number of issued and outstanding Shares of the Company effected without receipt of consideration
therefor by the Company, through the declaration of a stock dividend or through any
recapitalization or merger or otherwise in which the Company is the surviving corporation,
resulting in a stock split-up, combination or exchange of Shares of the Company, then and in each
such event:

     (a) An appropriate adjustment shall be made in the maximum number of Shares then subject to
being optioned or awarded as Restricted Stock under the Plan, to the end that the same proportion
of the Company’s issued and outstanding Shares shall continue to be subject to being so optioned
and awarded;

     (b) Appropriate adjustment shall be made in the number of Shares and the option price per
Share thereof then subject to purchase pursuant to each Option previously granted and then
outstanding, to the end that the same proportion of the Company’s issued and outstanding Shares
in each such instance shall remain subject to purchase at the same aggregate option price; and

     (c) In the case of Incentive Options, any such adjustments shall in all respects satisfy the
requirements of Section 424(a) of the Code and the Treasury regulations and revenue rulings
promulgated thereunder.

7

 

     Except as is otherwise expressly provided herein, the issue by the Company of shares of its
capital stock of any class, or securities convertible into shares of capital stock of any class,
either in connection with a direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of or option price of Shares then subject to outstanding Options granted
under the Plan. Furthermore, the presence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the
Company of debt securities or preferred stock that would rank above the Shares subject to
outstanding Options granted under the Plan; (iv) the dissolution or liquidation of the Company; (v)
any sale, transfer or assignment of all or any part of the assets or business of the Company; or
(vi) any other corporate act or proceeding, whether of a similar character or otherwise.

     Section 14. Effective Date

     The Plan was originally adopted by the Board on January 28, 1992, and approved by the
stockholders of the Company on April 28, 1992. The Plan was amended and restated on December 10,
1996, and was approved by the stockholders of the Company on April 22, 1997. The Plan was amended
and restated on February 1, 2000, and was approved by the stockholders of the Company on April 25,
2000. The Plan as amended and restated through January 29, 2002, was approved and adopted by the
Board on January 29, 2002, to be effective as of that date. The Plan was amended by the Board on
January 27, 2003, and was approved by the stockholders of the Company on April 29, 2003. The Plan
was amended by the Board on July 22, 2003, to be effective as of that date. The Plan was amended by
the Board on April 25, 2005, to be effective as of that date. The Plan was amended by the Board on
March 3, 2007, and was approved by the stockholders of the Company on April 24, 2007. A Plan
amendment was adopted by the Board on March 18, 2009, and approved by the stockholders of the
Company on April 28, 2009.

     Section 15. Amendment, Suspension or Termination

     The Board may at any time amend, suspend or terminate the Plan; provided, however, that after
the shareholders have approved and ratified the Plan in accordance with Section 14 of the Plan, the
Board may not, without approval of the shareholders of the Company, amend the Plan so as to (a)
increase the maximum number of Shares subject thereto, as specified in Sections 4(a) and 13 of the
Plan, (b) reduce the option price for Shares covered by Options granted hereunder below the price
specified in Section 8 of the Plan or (c) permit the “repricing” of Options and any SARs that
relate to such new Options in contravention of Section 18 of the Plan; and provided further, that
the Board may not modify, impair or cancel any outstanding Option or SAR that relates to such
Option, or the restrictions, terms or conditions applicable to Shares of Restricted Stock, without
the consent of the holder thereof.

     Section 16. Requirements of Law

     Notwithstanding anything contained herein or in any Agreement to the contrary, the Company
shall not be required to sell or issue Shares under any Option or SAR if the issuance thereof would
constitute a violation by the Optionee or the Company of any provision of any law or regulation of
any governmental authority or any national securities exchange; and as a condition of any sale or
issuance of Shares upon exercise of an Option or SAR, the Company may require such agreements or
undertakings, if any, as the Company may deem necessary or advisable to assure compliance with any
such law or regulation.

     Section 17. Incentive Options

     The Committee may, in its sole and absolute discretion, designate any Option granted under the
Plan as an Incentive Option intended to qualify under Section 422(b) of the Code. Any provision of
the Plan to the contrary notwithstanding, (a) no Incentive Option shall be granted to any person
who, at the time such Incentive Option is granted, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or any Affiliate unless the
option price under such Incentive Option is at least 110 percent of the Fair Market Value of the
Shares subject to the Incentive Option at the date of its grant and such Incentive Option is not
exercisable after the expiration of five years from the date of its grant; and (b) the aggregate
Fair Market Value of the Shares subject to an Incentive Option and the aggregate Fair Market Value
of the shares of stock of the Company or any Affiliate (or a predecessor corporation of the Company
or an Affiliate) subject to any other

8

 

incentive stock option (within the meaning of Section 422(b) of the Code) of the Company and
its Affiliates (or a predecessor corporation of any such corporation), that may become first
exercisable in any calendar year, shall not (with respect to any Optionee) exceed $100,000,
determined as of the date the Incentive Option is granted.

     Section 18. Modification of Options and SARs

     Subject to the terms and conditions of and within the limitations of the Plan, the Committee
may modify, extend or renew outstanding Options and any SARs that relate to such Options granted
under the Plan. The Committee shall not have authority to accept the surrender or cancellation of
any Options and any SARs that relate to such Options outstanding hereunder (to the extent not
theretofore exercised) and grant new Options and any SARs that relate to such new Options hereunder
in substitution therefor (to the extent not theretofore exercised) at an Option Price that is less
than the Option Price of the Options surrendered or canceled. Notwithstanding the foregoing
provisions of this Section 18, no modification of an outstanding Option and any SARs that relate to
such Option granted hereunder shall, without the consent of the Optionee, alter or impair any
rights or obligations under any Option and any SARs that relate to such Option theretofore granted
hereunder to such Optionee, except as may be necessary, with respect to Incentive Options, to
satisfy the requirements of Section 422(b) of the Code.

     Section 19. Agreement Provisions

     (a) Each Agreement shall contain such provisions (including, without limitation,
restrictions or the removal of restrictions upon the exercise of the Option and any SARs that
relate to such Option and the transfer of shares thereby acquired) as the Committee shall deem
advisable. Each Agreement relating to an Option shall identify the Option evidenced thereby as an
Incentive Option or Nonqualified Option, as the case may be. Incentive Options and Nonqualified
Options may not both be covered by a single Agreement. Each such Agreement relating to Incentive
Options shall contain such limitations and restrictions upon the exercise of the Incentive Option
as shall be necessary for the Incentive Option to which such Agreement relates to constitute an
incentive stock option, as defined in Section 422(b) of the Code.

     (b) Each Agreement shall recite that it is subject to the Plan and that the Plan shall
govern where there is any inconsistency between the Plan and the Agreement.

     (c) Each Agreement shall contain a covenant by the Optionee, in such form as the Committee
may require in its discretion, that he consents to and will take whatever affirmative actions are
required, in the opinion of the Committee, to enable the Company or appropriate Affiliate to
satisfy its Federal income tax and FICA and any applicable state and local withholding
obligations incurred as a result of such Optionee’s (or his permitted transferee’s) exercise of
an Option granted to such Optionee or any SARs that relate to such Option. Upon the exercise of
an Option or SARs requiring tax withholding, an exercising Optionee or permitted transferee may
(i) direct the Company to withhold from the Shares to be issued to the exercising Optionee or
permitted transferee the number of Shares (based upon the aggregate Fair Market Value of the
Shares at the date of exercise) necessary to satisfy the Company’s obligation to withhold taxes,
(ii) deliver to the Company sufficient Shares (based upon the aggregate Fair Market Value of the
Shares at the date of exercise) to satisfy the Company’s tax withholding obligations, (iii)
deliver sufficient cash to the Company to satisfy the Company’s tax withholding obligations, or
(iv) any combination of clauses (i) through (iii). In the event the Committee subsequently
determines that the aggregate Fair Market Value (as determined above) of any Shares withheld as
payment of any tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Optionee to whom the Option and SARs in question were granted shall pay (or
cause the permitted transferee to whom such Option and SARs were transferred to pay) to the
Company, immediately upon the Committee’s request, the amount of that deficiency.

     (d) Each Agreement relating to an Incentive Option shall contain a covenant by the Optionee
immediately to notify the Company in writing of any disqualifying disposition (within the meaning
of Section 421(b) of the Code) of Shares received upon the exercise of an Incentive Option.

     Section 20. Restricted Stock

     (a) The Committee may from time to time, in its sole and absolute discretion, award Shares
of Restricted Stock to such persons as it shall select from among those persons who are eligible
under Section 5 of the Plan to receive

9

 

awards of Restricted Stock. Any award of Restricted Stock shall be made from Shares subject
hereto as provided in Section 4 of the Plan.

     (b) A Share of Restricted Stock shall be subject to such restrictions, terms and conditions,
including forfeitures, if any, as may be determined by the Committee, which may include, without
limitation, the rendition of services to the Company or its Affiliates for a specified time or
the achievement of specific goals, and to the further restriction that no such Share may be sold,
assigned, transferred, discounted, exchanged, pledged or otherwise encumbered or disposed of
until the terms and conditions set by the Committee at the time of the award of the Restricted
Stock have been satisfied. Each recipient of an award of Restricted Stock shall enter into an
Agreement with the Company, in such form as the Committee shall prescribe, setting forth the
restrictions, terms and conditions of such award, whereupon such recipient shall become a
participant in the Plan.

     If a person is awarded Shares of Restricted Stock, whether or not escrowed as provided
below, the person shall be the record owner of such Shares and shall have all the rights of a
shareholder with respect to such Shares (unless the escrow agreement, if any, specifically
provides otherwise), including the right to vote and the right to receive dividends or other
distributions made or paid with respect to such Shares. Any certificate or certificates
representing Shares of Restricted Stock shall bear a legend similar to the following:

     The shares represented by this certificate have been issued pursuant to the terms of the
Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan and may not be sold, assigned,
transferred, discounted, exchanged, pledged or otherwise encumbered or disposed of in any
manner except as set forth in the terms of the agreement embodying the award of such shares
dated      , .

     In order to enforce the restrictions, terms and conditions that may be applicable to a
person’s Shares of Restricted Stock, the Committee may require the person, upon the receipt of a
certificate or certificates representing such Shares, or at any time thereafter, to deposit such
certificate or certificates, together with stock powers and other instruments of transfer,
appropriately endorsed in blank, with the Company or an escrow agent designated by the Company
under an escrow agreement in such form as by the Committee shall prescribe.

     After the satisfaction of the restrictions, terms and conditions set by the Committee at the
time of an award of Restricted Stock to a person, a new certificate, without the legend set forth
above, for the number of Shares that are no longer subject to such restrictions, terms and
conditions shall be delivered to the person.

     If a person to whom Restricted Stock has been awarded dies after satisfaction of the
restrictions, terms and conditions for the payment of all or a portion of the award but prior to
the actual payment of all or such portion thereof, such payment shall be made to the person’s
beneficiary or beneficiaries at the time and in the same manner that such payment would have been
made to the person.

     The Committee shall have the authority (and the Agreement evidencing an award of Restricted
Stock may so provide) to cancel all or any portion of any outstanding restrictions prior to the
expiration of such restrictions with respect to any or all of the Shares of Restricted Stock
awarded to a person hereunder on such terms and conditions as the Committee may deem appropriate.

     (c) Without limiting the provisions of the first paragraph of subsection (b) of this Section
20, if a person to whom Restricted Stock has been awarded ceases to be employed by at least one
of the employers in the group of employers consisting of the Company and its Affiliates, for any
reason, prior to the satisfaction of any terms and conditions of an award, any Restricted Stock
remaining subject to restrictions shall thereupon be forfeited by the person and transferred to,
and reacquired by, the Company or an Affiliate at no cost to the Company or the Affiliate;
provided, however, if the cessation is due to the person’s death, disability or Retirement, the
Committee may, in its sole and absolute discretion, deem that the terms and conditions have been
met for all or part of such remaining portion. In the event of such forfeiture, the person, or in
the event of his death, his personal representative, shall forthwith deliver to the Secretary of
the Company the certificates for the Shares of Restricted Stock remaining subject to such
restrictions, accompanied by such instruments of transfer, if any, as may reasonably be required
by the Secretary of the Company.

     (d) In case of any consolidation or merger of another corporation into the Company in which
the Company is the surviving corporation and in which there is a reclassification or change
(including a change to the right to

10

 

receive cash or other property) of the Shares (other than a change in par value, or from par
value to no par value, or as a result of a subdivision or combination, but including any change
in such shares into two or more classes or series of shares), the Committee may provide that
payment of Restricted Stock shall take the form of the kind and amount of shares of stock and
other securities (including those of any new direct or indirect parent of the Company), property,
cash or any combination thereof receivable upon such consolidation or merger.

     Section 21. General

     (a) The proceeds received by the Company from the sale of Shares pursuant to Options shall
be used for general corporate purposes.

     (b) Nothing contained in the Plan or in any Agreement shall confer upon any Optionee or
recipient of Restricted Stock the right to continue in the employ of the Company or any
Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate
his employment at any time, with or without cause.

     (c) Neither the members of the Board nor any member of the Committee shall be liable for any
act, omission or determination taken or made in good faith with respect to the Plan or any Option
and any SARs that relate to such Option granted hereunder or any Restricted Stock awarded
hereunder; and the members of the Board and the Committee shall be entitled to indemnification
and reimbursement by the Company in respect of any claim, loss, damage or expenses (including
counsel fees) arising therefrom to the full extent permitted by law and under any directors’ and
officers’ liability or similar insurance coverage that may be in effect from time to time.

     (d) Any payment of cash or any issuance or transfer of Shares to an exercising Optionee or
permitted transferee, or to his legal representative, heir, legatee or distributee, in accordance
with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims
of such persons hereunder. The Committee may require an exercising Optionee or permitted
transferee, legal representative, heir, legatee or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall determine.

     (e) Neither the Committee, the Board nor the Company guarantees the Shares from loss or
depreciation.

     (f) All expenses incident to the administration, termination or protection of the Plan,
including, but not limited to, legal and accounting fees, shall be paid by the Company or its
Affiliates.

     (g) Records of the Company and its Affiliates regarding a person’s period of employment,
termination of employment and the reason therefor, leaves of absence, re-employment and other
matters shall be conclusive for all purposes hereunder, unless determined by the Committee to be
incorrect.

     (h) Any action required of the Company shall be by resolution of its Board or by a person
authorized to act by resolution of the Board. Any action required of the Committee shall be by
resolution of the Committee or by a person authorized to act by resolution of the Committee.

     (i) If any provision of the Plan or any Agreement is held to be illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or
such Agreement, as the case may be, but such provision shall be fully severable and the Plan or
such Agreement, as the case may be, shall be construed and enforced as if the illegal or invalid
provision had never been included herein or therein.

     (j) Whenever any notice is required or permitted hereunder, such notice must be in writing
and personally delivered or sent by mail. Any notice required or permitted to be delivered
hereunder shall be deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person who is to receive
it at the address which such person has theretofore specified by written notice delivered in
accordance herewith. The Company, an Optionee or a recipient of Restricted Stock may change, at
any time and from time to time, by written notice to the other, the address that it or he had
theretofore specified for receiving notices. Until changed in accordance herewith, the Company
and each Optionee and recipient of Restricted Stock shall specify as its and his address for
receiving notices the address set forth in the Agreement pertaining to the Shares to which such
notice relates.

11

 

     (k) Any person entitled to notice hereunder may waive such notice.

     (l) The Plan shall be binding upon the Optionee or recipient of Restricted Stock, his heirs,
legatees, distributees, legal representatives and permitted transferees, upon the Company, its
successors and assigns, and upon the Committee, and its successors.

     (m) The titles and headings of Sections and paragraphs are included for convenience of
reference only and are not to be considered in the construction of the provisions hereof.

     (n) All questions arising with respect to the provisions of the Plan shall be determined by
application of the laws of the State of Texas except to the extent Texas law is preempted by
Federal law.

     (o) Words used in the masculine shall apply to the feminine where applicable, and wherever
the context of the Plan dictates, the plural shall be read as the singular and the singular as
the plural.

     Section 22. UK Sub-Plan

Any provision of this Plan to the contrary notwithstanding, the Committee may grant to the
employees of the Company or one of its Affiliates whose compensation from the Company or such
Affiliate is subject to taxation under the laws of the United Kingdom Options which (i) will
terminate one year after the Optionee’s death, (ii) cannot be transferred to a permitted transferee
pursuant to the provisions of Section 10, (iii) cannot be exercised using a means of payment other
than cash or a certified check or cashier’s check, and (iv) will not be adjusted pursuant to
Section 13 without the approval of the Board of Inland Revenue of the United Kingdom.

12

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