Document:

exv10w16

Exhibit 10.16

*****CONFIDENTIAL TREATMENT REQUESTED

ORACLE PARTNERNETWORK

EMBEDDED SOFTWARE LICENSE DISTRIBUTION AGREEMENT

This Embedded Software License Distribution Agreement (“agreement”) includes the terms and
definitions set out below and any orders and/or monthly reports you submit. This agreement is not
effective until accepted by Oracle. If accepted, Oracle will notify you and the terms of this
agreement will govern.

A. Agreement Definitions

“You” and “your” refer to the entity that has entered into this agreement with Oracle USA, Inc.
(“Oracle”) to distribute Oracle’s programs with your application program. “You” and “your” also
refer to your majority owned subsidiaries. You warrant that you have the authority to bind your
majority owned subsidiaries to the terms of this agreement and any applicable order with Oracle
and/or report and further warrant that you shall be responsible for a breach of such terms by your
majority owned subsidiaries.

The term “application package” refers to your application program into which the programs are
embedded, and that is distributed to an end user. You must complete a separate application package
registration form for each application package.

The term “application program” refers to an application program or physical device developed by you
specified in the applicable application package registration form which is developed to run on the
programs and complies with the following requirements: (1) the application program or physical
device must be generally commercially available to commercial customers; (2) the application
program or physical device must be accompanied by end user documentation; and (3) the application
program or physical device must be commercially available to multiple end users and must not be
intended for the exclusive use of a specific end user or group.

The term “distribution rights” refers to the right to distribute the programs to an end user
embedded with the application package defined in an application package registration form in
accordance with the terms of this agreement.

The term “embedded” refers to the following requirements, with which the application package must
comply:

(i) The programs must be ***** on the application program’s product *****. When loading the
software, the application software must *****. ***** is available as an installer for one or
more of the programs then those programs must be *****. The application package must ***** for the programs you are embedding. The end user must not be permitted to
*****;

(ii) The application program must be designed and developed *****. You may not ***** for a
single end user or a group of end users. All ***** are to be provided *****. The end user must not
be permitted to *****;

(iii) All information from the programs must be accessed by the end user either through *****.
If you include Oracle or third party reporting tools in the application package, such tools must
be *****;

(iv) If the application package must interface with another application or database, the end user
is not permitted to *****. *****, you must set up ***** and management of the data transfer must
be done through *****;

(v) If you include Oracle or third party database tools in *****, such tools must be *****
pursuant to the terms of this agreement. The end user may not be permitted to use such tools to
*****;

(vi) Program upgrades must be certified and distributed as a component of the application package
and the end user shall be unable to upgrade the database or other Oracle program technology
versions as a separate component;

(vii) As you deem necessary, you will provide customer service, support, and education for all
program operations to the end user. If you discontinue providing customer service, support, or
education for your application package to the end user, Oracle will not be obligated to provide
ongoing service, support, or education to the end user. You will notify Oracle of your intention
to discontinue any support services provided by you to the end user;

(viii) Only you can access the programs directly for purposes of technical assistance to your end
user and such access is limited to providing technical assistance, including troubleshooting,
problem resolution, and support assistance. You shall

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

 

 

not provide remote or onsite program administration tasks on behalf of the end user that are
otherwise prohibited under the terms of this agreement;

(ix) The embedded programs and the application program must be priced together on your standard
price list and on the end user’s invoice as the price of the application package, and must not be
distributed separately; and

(x) The application program(s) described on the applicable application package registration form
and with which the programs are embedded must not be distributed under any other Oracle
distribution agreement.

The term “end user” refers to a third party that is licensed to use the application program with
the embedded programs for its own internal business operations subject to the terms of an end user
license agreement as further provided for in this agreement. End user shall not include any public
sector entity.

The term “end user license agreement” refers to a legally binding written agreement as further
described in Section G.

The term “Oracle Finance Division Contract” refers to a contract between you and Oracle (or one of
Oracle’s affiliates) that provides for payments over time of some or all of the sums due to Oracle
under this agreement.

The term “Oracle PartnerNetwork” refers to Oracle’s partner program that provides access to
specified Oracle services, tools and resources. You can access the Oracle PartnerNetwork at
http://partner.oracle.com.

The term “Partner Ordering Policy” refers to Oracle’s Partner Ordering Policy in effect at the time
a report is submitted to Oracle which is incorporated into this agreement and is subject to change
at Oracle’s discretion. You may access the current version of the Partner Ordering Policy at
http://partner.oracle.com (log in, select Membership / Agreements & Policies).

The term “programs” refers to the software products owned or distributed by Oracle and set forth on
the Oracle Embedded Product and Royalty Matrix which you acquire pursuant to an Oracle
PartnerNetwork Agreement with Oracle for development purposes and which you are permitted to
distribute to an end user embedded with the application package as provided in this agreement,
including program documentation and any program updates acquired through technical support. The
term “programs” does not include any Oracle programs which are not included on the Oracle Embedded
Product and Royalty Matrix. You may access the Oracle Embedded Product and Royalty Matrix at
http://partner.oracle.com (log in, select Membership /Agreements & Policies).

The term “program documentation” refers to the program user manual and program installation
manuals. Program documentation for the programs you distribute is delivered with the programs, or
the documentation may be accessed online at http://oracle.com/contracts.

The term “public sector entity” is any government, legislature or decision making body, judiciary,
instrumentality, department, or agency at any level (national, local, municipal or otherwise);
entities managed, controlled or majority owned by government interests; public organizations or
foundations of any kind (including political parties, political organizations, or political
candidates); and any public international organization, such as, but not limited to, the
International Red Cross, United Nations, or the World Bank.

The term “services” refers to technical support or other services which you have ordered.

The term “technical support” consists of annual technical support services for the programs as
defined in Oracle’s technical support policies in effect at the time such technical support is
ordered.

B. Distribution Rights

You must be a member of the Oracle PartnerNetwork in order to distribute programs. Oracle grants
you a nonexclusive, nontransferable right to (a) to duplicate the programs for which you have
received a development license under an Oracle PartnerNetwork Agreement between you and Oracle and
(b) to distribute such programs to end users as part of the application package. The programs must
be embedded with your application program and distributed with your application program and cannot
be provided separately. Prior to distributing programs, you must obtain an order from the end user
for the programs, which order and programs shall be subject to a valid end user license agreement.
Each distributed embedded program must be used only for the internal business operations of the end
user and must be used only in conjunction with the application package. Each distributed embedded
program shall be subject to the terms of this agreement and the terms provided in the end user
license agreement. You may distribute the application package to yourself or your affiliated
entities and you or such entity shall be considered an end user under this agreement provided that
(1) the total fees paid to Oracle for such distribution do not exceed 20% of the total fees paid to
Oracle under this agreement, (2) you comply with the requirements of Section G

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(License Agreement), and (3) you report such distribution in accordance with Section F (Reporting).
You may not distribute the programs, learning credits, and/or services to end users that are
public sector entities. Oracle shall inform you of any notices and other instructions that are
related to third party software components (including open source software) that are included in a
program and that Oracle is required to distribute with such programs. These notices shall be
provided to you in at least one of the following ways, at Oracle’s sole discretion: (a)
automatically installed with the programs; (b) in the program documentation; or (c) via a
supplemental list. You shall comply with all other instructions related to third party software
components (including open source software) and you shall reproduce all third party notices in an
appropriate location in the application package and/or in its related documentation, as required by
the applicable notices or as otherwise directed by Oracle. You must provide the following legend
on the sign on screen of the application package, or if the application package is a physical
device, you must provide the legend on the label for the media containing the programs and your
application program: “The programs included herein are subject to a restricted use license and can
only be used in conjunction with this application.”

Oracle may request that you acquire any third party, royalty-free license offered generally to the
public that Oracle, in its reasonable discretion, determines may be necessary to avoid a claim of
infringement for distribution of any program or other Oracle software either by Oracle or by you
under the terms of this agreement. In the event you fail to acquire such license, Oracle may
terminate this agreement with respect to the relevant program(s) and/or other software on *****
written notice, and whether or not this agreement is terminated, Oracle shall have no obligation to
indemnify you under Section J (Indemnification) for any claim of infringement that would have been
avoided by the acquisition of such license.

C. Trial Licenses

Oracle grants you a nonexclusive right for you and your distributors to distribute trial licenses
of the application package to no more than ***** end users, at any one time, for the end users’ own
internal evaluation purposes (and not for development, prototype, training or technical support
purposes) pursuant to section G, License Agreement, below. Trial licenses shall be for ***** days
and shall be subject to the terms of this agreement and the terms provided in the order. If your
end users want to use a trial license for more than ***** days, then they must obtain an
appropriate license and pay the appropriate fees. You must pay Oracle a fee for any trial licenses
that you distribute that extend for more than ***** days. Programs licensed for trial purposes are
provided “as is” and Oracle does not provide technical support or any warranties for these
programs.

D. Distributors

You may appoint distributors to distribute the programs embedded with your application package as
provided under the terms of this agreement. Distributors have no right to make copies of the
programs and shall obtain all programs from you. Each distributor must be subject to a legally
binding written agreement between you and the distributor that (a) grant the rights for the
distributor to distribute the application package to end users, (b) contains or incorporates
provisions which are equivalent to the terms of this agreement, and (c) permits you to audit your
distributors’ activities under such agreement and report such activities to Oracle or assign your
right to audit the distributors’ activities to Oracle. In addition, the agreement with your
distributors shall require the distributors to distribute the application package subject to terms
that are consistent with the terms of this agreement. Any distribution of the application package
by your distributors shall be subject to an end user license agreement between you and the end user
as set forth in Section G (License Agreement) of this agreement. You shall keep executed
distributor agreements for Oracle to inspect upon request. You shall defend and indemnify Oracle
from all claims and for all damages arising out of the activities of your distributors.

E. Ownership and Restrictions

Oracle or its licensors retain all ownership and intellectual property rights to the programs.
Oracle retains all ownership and intellectual property rights to anything developed by Oracle and
delivered to you resulting from the services. Each end user may make a sufficient number of copies
of each program for the licensed use and one copy of each program media.

Third party technology may be necessary for use with some Oracle programs and is specified in the
program documentation; specific files (which are identified in the program documentation) of such
third party technology (collectively the “Open Source Technology”) may be included on the same
medium or as part of the download of Oracle programs you receive, but is licensed under the Mozilla
Public License, Common Public License, GNU Lesser General Public License, Netscape Public License
or similar royalty-free/open source license (collectively, the “Open Source Licenses”).

This agreement does not modify or abridge any rights or obligations you may have in Open Source
Technology under applicable Open Source Licenses; however, to the extent that Open Source
Technology is incorporated into an Oracle program, your rights and remedies under this agreement
with respect to such Open Source Technology (i.e. indemnification) shall apply, but only for your
use of the Oracle program that is in compliance with the terms of this agreement and with the terms
of any relevant Open Source License. Any use of Open Source Technology outside of your licensed
use of applicable Oracle programs is subject to the rights and obligations under such third party
technology’s Open Source License. Open Source Technology programs that are separate from Oracle
programs are provided as a courtesy to you and are licensed

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

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solely under the relevant Open Source License. Any distribution by you of code licensed under an
Open Source License, whether alone or with the Oracle program, must be under the Open Source
License.

You may not:

	•	 	duplicate and/or distribute the programs unless embedded with the application package;

	•	 	use the programs except as expressly provided in this agreement;

	•	 	remove or modify any program markings or any notice of Oracle’s or its licensors
proprietary rights;

	•	 	rent, lease, or timeshare the programs, or provide subscription services for the programs,
or permit your end user to do so (unless Oracle expressly permits such access for the specific
program license the end user has acquired), or distribute the programs in any manner except as
provided under this agreement;

	•	 	cause or permit reverse engineering (unless required by law for interoperability),
disassembly, or decompilation of the programs (the foregoing prohibition includes but is not
limited to review of data structures or similar materials produced by programs);

	•	 	disclose results of any program benchmark tests without Oracle’s prior written consent;

	•	 	engage in any conduct that may be detrimental to Oracle or to the programs;

	•	 	enter into any agreement which requires you to take any actions that are in conflict with
the terms of this agreement;

	•	 	permit end users to install the programs separately and independently from the application
package; or

	•	 	provide end users access to, or permit end users to make use of any program APIs supplied
by Oracle.

Oracle reserves any rights not expressly granted to you under this agreement.

F. Reporting

In connection with your distribution activities under this agreement, you shall submit monthly
reports for programs distributed with the application package to Oracle in accordance with the
Partner Ordering Policy. You should review the Partner Ordering Policy prior to submitting a
report. Your monthly report must be complete when submitted to Oracle and may not (a) require any
concessions (including requiring Oracle to perform any obligations or to incur any liability not
set forth in your monthly report) or (b) be changed after it is submitted to Oracle.

Upon request, you will provide Oracle with a copy of the complete end user license agreement
including any addenda or amendments thereto, and any ordering documents or purchase agreements
between you and the end user related to the order, with any pricing information or any other
information reasonably deemed confidential or proprietary removed because the copy(ies) you provide
Oracle will not be considered confidential information. At a minimum you must provide information
related to the programs, including but not limited to, the end user’s name, the programs
distributed, the number of users, the license levels, the license grant to the end user, any
definitions related to licensing metrics, the date of the order, and any other information
reasonably requested by Oracle.

Where the acquisition of programs and/or technical support is financed or leased, then you will
comply with Oracle’s financing and leasing policies which can be accessed at
http://partneroracle.com (log in, select Membership / Agreements & Policies).

G. License Agreement

It is your responsibility to ensure that any distribution of the programs and/or services to an end
user is subject to a legally binding end user license agreement for the programs and/or services
that you distribute to the end user. The end user license agreement must, at a minimum:

	 	(1)	 	Limit the use of the programs that are subject to the end user license agreement to the
legal entity that executed the end user license agreement.
	 
	 	(2)	 	Restrict use of the programs to the scope of the application package and to the
internal business operations of the end user subject to the terms of the end user license
agreement. You may allow your end users to permit agents or contractors (including,
without limitation, outsourcers) to use the application package on the applicable end
user’s behalf for the purposes set forth in the end user license agreement, subject to the
terms of such agreement, provided that such end users are responsible for the agent’s,
contractor’s and outsourcer’s compliance with the end user license agreement in such use.
For an application package that includes programs that are specifically designed to allow
the end user’s customers and suppliers to interact with the end user in the furtherance of
the end user’s internal business operations, such use may be allowed under the end user
license agreement.
	 
	 	(3)	 	State that Oracle or its licensor retains all ownership and intellectual property
rights to the programs.
	 
	 	(4)	 	Prohibit (a) the transfer of the programs except for temporary transfer in the event of
computer malfunction if the application package embeds the programs in a physical device
and (b) the end user from assigning, giving, or transferring the programs and/or any
services ordered or an interest in them to another individual or entity (in the event
the end user grants a security interest in the programs and/or any services, the
secured party has no right to use or transfer the programs and/or any services).

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	 	(5)	 	Prohibit (a) use of the programs for rental, timesharing, subscription service,
hosting, or outsourcing; (b) the removal or modification of any program markings or any
notice of Oracle’s or its licensors’ proprietary rights; (c) the end user from making the
programs available in any manner to any third party for use in the third party’s business
operations (unless such access is expressly permitted for the specific program license);
and (d) title to the programs from passing to the end user or any other party.
	 
	 	(6)	 	Prohibit the reverse engineering (unless required by law for interoperability),
disassembly or decompilation of the programs (the foregoing prohibition includes but is not
limited to review of data structures or similar materials produced by programs) and
prohibit duplication of the programs except for a sufficient number of copies of each
program for the end user’s licensed use and one copy of each program media.
	 
	 	(7)	 	Disclaim, to the extent permitted by applicable law, Oracle’s liability for (a) any
damages, whether direct, indirect, incidental, special, punitive or consequential, and (b)
any loss of profits, revenue, data or data use, arising from the use of the programs.
	 
	 	(8)	 	Require the end user, at the termination of the agreement, to discontinue use and
destroy or return to you all copies of the programs and documentation.
	 
	 	(9)	 	Prohibit publication of any results of benchmark tests run on the programs.
	 
	 	(10)	 	Require the end user to comply fully with all relevant export laws and regulations of
the United States and other applicable export and import laws to assure that neither the
programs, nor any direct product thereof, are exported, directly or indirectly, in
violation of applicable laws.
	 
	 	(11)	 	Notify the end user that the programs are subject to a restricted license and can only
be used in conjunction with the application package and that the end user is not permitted
to modify the programs.
	 
	 	(12)	 	Not require Oracle to perform any obligations or incur any liability not previously
agreed to between you and Oracle.
	 
	 	(13)	 	Permit you to audit your end user’s use of the programs, require the end user to
provide reasonable assistance and access to information in the course of such audit and
permit you to report the audit results to Oracle or to assign your right to audit the end
user’s use of the programs to Oracle. Where you assign your right to audit to Oracle then
Oracle shall not be responsible for any of your or the end user’s costs incurred in
cooperating with the audit.
	 
	 	(14)	 	Designate Oracle as a third party beneficiary of the end user license agreement.
	 
	 	(15)	 	Exclude the application of the Uniform Computer Information Transactions Act.
	 
	 	(16)	 	Inform the end user that some programs may include source code that Oracle may provide
as part of its standard shipment of such programs, which source code shall be governed by
the terms of the end user license agreement.
	 
	 	(17)	 	State that third party technology that may be appropriate or necessary for use with
some Oracle programs is specified in the application package documentation or as otherwise
notified by you and that such third party technology is licensed to the end user only for
use with the application package under the terms of the third party license agreement
specified in the application package documentation or as otherwise notified by you and not
under the terms of the end user license agreement.

You shall be financially responsible for all claims and damages to Oracle caused by your failure to
include the required contractual terms set forth above in each end user license agreement between
you and an end user. Oracle is a third party beneficiary of any end user license agreement between
you and the end user, but does not assume any of your obligations thereunder, and you agree that
you will not enter into any end user license agreement that excludes Oracle as a third party
beneficiary.

You agree to inform Oracle promptly if you are aware of any breach of an end user license
agreement. You agree to enforce the terms of an end user license agreement between you and an end
user if Oracle requests you to do so to protect its interest, or, at Oracle’s request, to assign to
Oracle or its designee the right to enforce such agreement.

H. Fees and Taxes

You may place an order or submit a monthly report for programs and/or services with Oracle. You
agree to pay Oracle a fee for each order placed for programs and/or services ordered and/or
distributed under this agreement, as specified in the applicable order with Oracle and/or report.
You also agree to pay Oracle a fee for every application package with which the programs are
embedded regardless of an end users prior possession or pre-existing license of these programs
unless you are shipping only an updated version of the application package as part of your
technical support service for which you are paying technical support fees to Oracle as specified
herein. You will not be relieved of your obligation to pay any fees owed to Oracle by the
nonpayment of such fees by your end user. You are free to determine the fees charged to an end
user for program licenses and services. At your option, fees payable to Oracle for programs
distributed to end users with the application package will be equal to either option (a) ***** of
the applicable license fee for each individual program based on the Oracle Technology global price
list in effect at the time you issue a quote or option (b) the percentage shown in Oracle’s
Embedded Product and Royalty Matrix of the applicable standard license fee for the application
package based on your standard commercial price list in effect at the time you issue a quote,
incorporated in this agreement, and such fees owed to Oracle will not take into account any
discounts you have offered to your end users.

In addition, with regard to fees for technical support you provide to end users for perpetual or
term licenses of the programs, you agree to pay Oracle a technical support fee as set forth in the
Oracle Embedded Product and Royalty Matrix. Technical

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

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support may be available to the end user on
the date you ship the application package, or the date you distribute the application package to
the end user, if shipment is not required. If technical support is provided by you to an end user,
you must pay technical support fees to Oracle and the term for which you must pay fees to Oracle
for such technical support shall begin on the last day of the month in which the application
package is shipped, or distributed if shipment is not required, and if renewed, on that date in
each subsequent year thereafter. If the end user does not continuously maintain technical support
for the application package, you will be required to pay reinstatement fees to Oracle in accordance
with Oracle’s current technical support policies if the end user wants to reinstate technical
support. Fees for technical support are due and payable annually in advance.

You must select one of the above fee options for each application package by completing the
Application Package Registration Form attached hereto and your selection will be in effect for the
term of this agreement. If you select option (a), to view the Oracle Embedded Product and Royalty
Matrix, you must log into the OPN web site at http://partner.oracle.com (log in, select
Membership / Agreements & Policies). It is your responsibility to access the Oracle Embedded
Product and Royalty Matrix to obtain current information. If you select option (a), if Oracle’s
Embedded Product and Royalty Matrix changes after you issue a valid written quote for program
licenses to an end user, for 90 days after the date you submit the quote to the end user, the fee
applicable to the programs identified in the quote shall be based on the Oracle Embedded Product
and Royalty Matrix in effect on the date you submit the quote. If you select option (b), you will
provide Oracle with a copy of your current standard commercial application package price list at
least twice a year so that Oracle may verify the fees due and payable to Oracle.

Except as provided herein, all fees payable to Oracle (including fees for annual technical support
which you provide to end users) are due within *****. If you submit a purchase order to Oracle,
fees payable under such purchase order are due within *****. You also agree to pay any sales,
value-added or other similar taxes imposed by applicable law that Oracle must pay based on the
programs and/or services you ordered and/or reported, except for taxes based on Oracle’s income.
You agree and you will obtain your end users’ agreement that you and your end user have not relied
on the future availability of any programs or services in entering into the payment obligations in
the applicable order and/or monthly report; however, (a) if you order end user technical support
for programs, the preceding sentence does not relieve Oracle of its obligation to provide updates
under your ordering document, if-and-when available, in accordance with Oracle’s then current
technical support policies and (b) the preceding sentence does not change the rights granted for
any program licensed under your order and/or monthly report, per the terms of your order and/or
monthly report and this agreement. Oracle reserves the right to check your credit rating
periodically during the term of this agreement and to modify these payment terms in the event that
there is a material change in your credit rating. Fees listed in this agreement are exclusive of
value added tax and/or similar sales taxes. Such taxes shall be charged at the appropriate rate by
Oracle in addition to its stated fees and shall be shown separately on the relevant invoice. Upon
your submission of an order and/or monthly report to Oracle this payment obligation is
non-cancelable, and the sum paid is nonrefundable, is not subject to set-off for any reason, and is
not subject to the completion or occurrence of any event after the date your order and/or monthly
report is submitted to Oracle.

I. Warranties, Disclaimers and Exclusive Remedies

Oracle warrants to you that a program will operate in all material respects as described in the
applicable program documentation for ***** after delivery (i.e. via physical shipment or electronic
download) to the end user. You must notify Oracle of any program warranty deficiency within *****
after such delivery. Oracle also warrants that services will be provided in a professional manner
consistent with industry standards. You must notify Oracle of any services warranty deficiencies
within ***** from performance of the defective services described in the order with Oracle.

ORACLE DOES NOT GUARANTEE THAT THE PROGRAMS WILL PERFORM ERROR-FREE OR UNINTERRUPTED, OR THAT
ORACLE WILL CORRECT ALL PROGRAM ERRORS.

FOR ANY BREACH OF THE ABOVE WARRANTIES, YOUR EXCLUSIVE REMEDY AND ORACLE’S ENTIRE LIABILITY SHALL
BE: *****.

TO THE EXTENT PERMITTED BY LAW, THESE WARRANTIES ARE EXCLUSIVE AND THERE ARE NO OTHER EXPRESS OR
IMPLIED WARRANTIES OR CONDITIONS INCLUDING WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.

J. Indemnification

If a third party makes a claim against you or an end user that any program infringes their
intellectual property rights based on your duplication and/or distribution of the programs in
accordance with the terms of this agreement, Oracle, at its sole cost and expense, will defend you
and the end user against the claim and indemnify you and the end user from the damages,
liabilities, costs and expenses awarded by the court to the third party claiming infringement or the settlement
agreed to by Oracle, if you do the following:

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

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	•	 	notify the General Counsel, Oracle Legal Department, promptly in writing, not later than 30
days after you receive notice of the claim (or sooner if required by applicable law);

	•	 	give Oracle sole control of the defense and any settlement negotiations; and

	•	 	give Oracle the information, authority, and assistance Oracle needs to defend against or
settle the claim.

If Oracle believes or it is determined that any of the programs may have violated a third party’s
intellectual property rights based on your duplication and/or distribution of the programs, Oracle
may choose to either modify the program to be non-infringing (while substantially preserving its
utility or functionality) or obtain a license to allow for continued use, or if these alternatives
are not commercially reasonable, Oracle may end the license for the applicable program and refund
any fees you may have paid to Oracle for it and any unused, prepaid technical support fees you have
paid to Oracle for the licenses. Oracle will not indemnify you or an end user if you or an end
user alter a program or if you distribute or the end user uses it outside the scope of use
identified in the user documentation or if you distribute or an end user uses a version of the
program which has been superseded, if the infringement claim could have been avoided by
distributing or using an unaltered current version of the program which was provided to you.
Oracle will not indemnify you or an end user to the extent an infringement claim is based upon a
program not provided by Oracle. Oracle will not indemnify you or an end user to the extent that an
infringement claim is based upon the combination of any program with any products or services not
provided by Oracle. Oracle will not indemnify you or an end user for infringement caused by you or
your end user’s actions against any third party if the Oracle program(s) as delivered to you and
distributed by you or used by an end user in accordance with the terms of this agreement would not
otherwise infringe any third party intellectual property rights. If a third party makes a claim
against Oracle that a program, when used in combination with any product or services provided by
you, infringes their intellectual property rights, and such claim would have been avoided by the
exclusive use of the program, you will indemnify Oracle. This section provides your exclusive
remedy for any infringement claims or damages.

K. End User Technical Support

You are responsible for providing all technical support services and updates to distributors and
end users. Any technical support questions Oracle receives from end users will be referred to you.
You shall have the right to provide technical support for the programs to end users, including you
or your affiliated entities if you have distributed the application package to you or such
entities, provided (a) that you continually maintain your membership in the Oracle PartnerNetwork
and maintain annual technical support for the development licenses that you acquire pursuant to
your Oracle PartnerNetwork Agreement with Oracle and (b) subject to your payment to Oracle of the
applicable annual fees for end user technical support set forth in Section H (Fees and Taxes)
below. If you contract to provide or provide technical support services to an end user for an
application package, including but not limited to providing any updates to the programs, then you
must report such services to Oracle in accordance with Section F (Reporting) above and pay the
applicable end user technical support fee. Technical support is effective upon shipment or
delivery by you to the end user, or if shipment or delivery is not required, upon the effective
date of the order with Oracle, unless otherwise stated in your order with Oracle. If your order
was placed through the Oracle Store or other online ordering system, the effective date is the date
your order was accepted by Oracle.

Upon expiration of this agreement, you may continue to provide technical support to end users
provided that (a) this agreement was not terminated due to your breach of a material term of this
agreement; (b) you continuously maintain your membership in the Oracle PartnerNetwork and thereby
maintain technical support for the development licenses that you acquired pursuant to your Oracle
PartnerNetwork Agreement with Oracle; (c) you pay all applicable fees and comply with the reporting
requirements set forth in this agreement. After expiration of this agreement, renewal fees for end
user technical support shall be invoiced by Oracle annually in advance. Fees for technical support
shall be due and payable in advance ***** from date of invoice.

Annual technical support is provided under Oracle’s technical support policies in effect at the
time the services are provided. The technical support policies, incorporated in this agreement,
are subject to change at Oracle’s discretion; however, Oracle will not materially reduce the level
of services provided for supported program licenses during the period for which fees for technical
support have been paid. You should review the policies prior to entering into the order for the
applicable services. You may access the current version of the technical support policies at
http://partner.oracle.com (log in, select Membership / Agreements & Policies).

You or your distributor will be responsible for any assistance needed to install the application
package at end user sites. In addition to technical support (as discussed above), you are
responsible for providing all training and consultations to distributors and end users and any
related questions Oracle receives from end users will be referred to you.

L. Term and End of Agreement

This agreement shall begin on the effective date specified herein unless you accept the terms of
this agreement online, in which case the effective date shall be as set forth in an email from
Oracle confirming Oracle’s acceptance of this agreement. The term of this agreement shall continue
for 2 years. If your membership in the Oracle PartnerNetwork expires or is

7

 

terminated, you will
not be permitted to distribute programs until your membership is made current. When this agreement
expires or terminates, in order to keep distributing the programs, you must execute the then
current version of Oracle’s distribution agreement and the agreement will be subject to acceptance
by Oracle, and Oracle may require you to complete certain training and assessment requirements at
no charge to Oracle’s satisfaction. If either of us breaches a material term of this agreement and
fails to correct the breach within 30 days of written specification of the breach, then the
breaching party is in default and the non-breaching party may terminate this agreement. If Oracle
ends this agreement as specified in the preceding sentence, you must pay within 30 days all amounts
which have accrued prior to such end, as well as sums remaining unpaid for programs and/or services
received under this agreement plus related taxes and expenses. If Oracle ends the license for a
program under the Indemnification section, you must pay within 30 days all amounts remaining unpaid
for services related to such license which have accrued prior to such end, plus related taxes and
expenses. In addition, if Oracle terminates this agreement as provided under this section, Oracle
also may terminate your Oracle PartnerNetwork agreement and your membership in the Oracle
PartnerNetwork. Except for nonpayment of fees, the non-breaching party may agree in its sole
discretion to extend the 30-day period for so long as the breaching party continues reasonable
efforts to cure the breach. You agree that if you are in default under this agreement, you may not
duplicate and/or distribute the programs and/or services. You also agree that if you have used an
Oracle Finance Division Contract to pay for fees due under this agreement and you are in default
under that contract, you may not distribute the programs and/or services that are subject to such
contract. The end users’ rights to use the programs properly distributed by you under this
agreement shall survive termination of this agreement, unless such rights are otherwise terminated
in accordance with the applicable end user license agreement. Provisions that survive termination
or expiration are those relating to limitation of liability, infringement indemnity, payment,
ethical business practices, and others which by their nature are intended to survive.

M. Nondisclosure

By virtue of this agreement, the parties may have access to information that is confidential to one
another (“confidential information”). We each agree to disclose only information that is required
for the performance of obligations under this agreement. Confidential information shall be limited
to the terms and pricing under this agreement, and all information clearly identified as
confidential at the time of disclosure.

A party’s confidential information shall not include information that: (a) is or becomes a part of
the public domain through no act or omission of the other party; (b) was in the other party’s
lawful possession prior to the disclosure and had not been obtained by the other party either
directly or indirectly from the disclosing party; (c) is lawfully disclosed to the other party by a
third party without restriction on the disclosure; or (d) is independently developed by the other
party.

We each agree to hold each other’s confidential information in confidence for a period of three
years from the date of disclosure. Also, we agree to disclose confidential information only to
those employees or agents who are required to protect it against unauthorized disclosure. Nothing
shall prevent either party from disclosing the terms or pricing under this agreement or orders
submitted under this agreement in any legal proceeding arising from or in connection with the terms
of this agreement or disclosing the confidential information to a federal or state governmental
entity as required by law.

N. Trademarks and Copyrights

You are authorized to use Oracle’s trademarks and service marks (the “Oracle trademarks”) to refer
to the associated Oracle products and services. Your use of the Oracle trademarks shall comply
with Oracle’s trademark usage guidelines and all goodwill based upon use of the Oracle Trademarks
shall inure to Oracle’s benefit. Oracle’s trademark usage guidelines, incorporated in this
agreement, are subject to change. You may access Oracle’s trademark usage guidelines at
http://partner.oracle.com (log in, select Membership / Agreements & Policies). In
marketing, promoting, or licensing the programs, you agree to make it clear that Oracle is the
source of the programs. You shall retain all notices, including copyright and trademark notices, on
the programs and any copies of the programs. In connection with your distribution of the
program(s), you shall include on all documentation, the sign-on screen for any software
incorporating the program(s), and any media containing the program(s): (a) reproduction of
Oracle’s copyright notice for the program(s); or (b) a copyright notice for your software that is
distributed with the program(s).

O. Relationships between Parties

In all matters relating to this agreement, you will act as an independent contractor. This
agreement does not create a partnership, joint venture, agency, employee/employer,
lobbyist/lobbyist employer relationship, or franchisee/franchisor relationship between the parties.
Neither party will represent that it has any authority to assume or create any obligation, express
or implied, on behalf of the other party, nor to represent the other party as agent, employee,
franchisee, or in any other capacity. Nothing in this agreement shall be construed to limit either
party’s right to independently develop or distribute software that is functionally similar to the
other party’s product, so long as proprietary information of the other party is not included in
such software or used to create such software.

8

 

P. Privacy

If you provide Oracle with personal information concerning your customers, prospects or employees,
Oracle will only use the information in manners consistent with those specified in this agreement
to accomplish their purposes, or as otherwise indicated at the time Oracle collects such
information. This information may be maintained by Oracle in data centers in the United States and
may be accessed by Oracle’s global personnel as required for business purposes. You agree to
provide all relevant notices and obtain any consents required to share the information with Oracle.

If Oracle provides you with personal information concerning Oracle’s partners, customers, prospects
or employees you agree that you will permit access to and use of such information solely in
connection with the sale of Oracle products or services and for the limited purpose(s) for which it
was provided by Oracle under this agreement. You also agree to comply with all laws that apply to
your use of this information for such purposes. The requirements of this section do not apply to
either party’s relationships with its customers.

From time to time, the parties may exchange information regarding marketing and sales opportunities
through Oracle’s Partner Management application. Both parties agree to use any such information in
compliance with the terms of this agreement and Oracle’s Partner Management Opportunity Routing
Policy the current version of which is located at http://partner.oracle.com (log in,
select Membership / Agreements & Policies).

Q. URLs

It is your responsibility to regularly monitor all applicable URLs referenced in this agreement.
You confirm that you have access to the Internet and confirm that prior to entering into this
agreement you have read the policies on the websites referenced above and agree to the terms and
conditions set out in those policies. You undertake that you will visit the websites referenced
above on a regular basis so that you are aware of any amendments Oracle may make to those policies
from time to time.

R. Ethical Business Practices

You acknowledge and agree that you and your owners, directors, officers, employees or agents have
not, and will not, make or promise to make corrupt payments of money or anything of value, directly
or indirectly, to any government or public international organization officials, political parties,
or candidates for political office, or employee of a commercial customer or supplier, for the
purpose of obtaining or retaining business or securing any improper advantage. You agree to
accurately document all transactions related to this agreement in your financial books, records,
statements, and in reports or other documents provided to Oracle. You agree to comply with the
terms of the Oracle Partner Code of Conduct and Business Ethics, which is available at
http://partner.oracle.com (log in, select Membership / Agreements & Policies). You agree
that any violation of this section constitutes just cause for the immediate termination by Oracle
of this agreement without any liability to you. You will also indemnify and hold Oracle, Oracle
Corporation, and subsidiaries, parents and affiliates harmless from any claims, losses and
liabilities resulting from any breach of any of your obligations under this section. The
obligations under this section shall survive the termination or expiration of this agreement.

S. Entire Agreement

You agree that this agreement and the information which is expressly incorporated into this
agreement by written reference (including reference to information contained in a URL or referenced
policy), together with the applicable order and/or monthly report, are the complete agreement for
the programs and/or services ordered by you, and that this agreement supersedes all prior or
contemporaneous agreements or representations, written or oral, regarding such programs and
services. If any term of this agreement is found to be invalid or unenforceable, the remaining
provisions will remain effective and such term shall be replaced with a term consistent with the
purpose and intent of this agreement. It is expressly agreed that the terms of this agreement and
any order with Oracle shall supersede the terms in any purchase order or other non-Oracle ordering
document and no terms included in any such purchase order or other non-Oracle ordering document
shall apply to the programs and/or services ordered. This agreement and any order with Oracle may
not be modified and the rights and restrictions may not be altered or waived except in a writing
signed or accepted online through an Oracle online ordering system by authorized representatives of
you and of Oracle. Any notice required under this agreement shall be provided to the other party in
writing.

T. Limitation of Liability

NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL
DAMAGES, OR ANY LOSS OF PROFITS, REVENUE, DATA, OR DATA USE. ORACLE’S MAXIMUM LIABILITY FOR ANY
DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR YOUR ORDER OR MONTHLY REPORT, WHETHER IN
CONTRACT OR TORT, OR OTHERWISE, SHALL BE LIMITED TO *****. AND IF SUCH DAMAGES RESULT FROM YOUR
DUPLICATION AND DISTRIBUTION OF PROGRAMS OR SERVICES, SUCH LIABILITY SHALL BE LIMITED TO *****.

U. Export

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

9

 

Export laws and regulations of the United States and other relevant local export laws and
regulations apply to the programs. You agree that such export control laws govern your use and
distribution of the programs (including technical data) and any services deliverables provided
under this agreement, and you agree to comply with all such export laws and regulations (including
“deemed export” and “deemed re-export regulations). You agree that no data, information, programs,
and/or materials resulting from services (or direct product thereof), will be exported, directly or
indirectly, in violation of these laws, or will be used for any purpose prohibited by these laws
including, without limitation, nuclear, chemical, or biological weapons proliferation, or
development of missile technology.

V. Other

	1.	 	This agreement is governed by the substantive and procedural laws of the State of California
and you and Oracle agree to submit to the exclusive jurisdiction of, and venue in, the courts
in San Francisco, San Mateo, or Santa Clara counties in California in any dispute arising out
of or relating to this agreement.

	2.	 	If you have a dispute with Oracle or if you wish to provide a notice under Section J
(Indemnification) of this agreement, or if you become subject to insolvency or other similar
legal proceedings, you will promptly send written notice to: Oracle USA, Inc., 500 Oracle
Parkway, Redwood Shores, California, United States 94065, Attention: General Counsel, Legal
Department.

	3.	 	You may not assign this agreement or give or transfer the programs and/or any services
ordered or an interest in them to another individual or entity. If you grant a security
interest in the programs and/or any services deliverables, the secured party has no right to
use or transfer the programs and/or any services.

	4.	 	Except for actions for nonpayment or breach of Oracle’s proprietary rights, no action,
regardless of form, arising out of or relating to this agreement may be brought by either
party more than two years after the cause of action has accrued.

	5.	 	You agree that the sales process that you use complies with applicable procurement
regulations (if the end user is a government entity) and that you will keep accurate books and
records in connection with the activities under this agreement. Upon 45 days written notice,
Oracle may audit your duplication and distribution of the programs and your activities under
this agreement. Any such audit shall not unreasonably interfere with your normal business
operations. You agree to cooperate with Oracle’s audit and provide reasonable assistance and
access to information, including but not limited to relevant books, records, agreements,
servers, technical personnel, and reporting systems. Upon Oracle’s request, you will also
provide to Oracle a system generated list of the Oracle program licenses distributed to end
users under this agreement during the time period specified by Oracle and any supporting
documentation requested by Oracle pursuant to the terms of Section F Reporting for the
purposes of validating completeness and accuracy of your reporting obligations under this
agreement. You agree to pay within 30 days of written notification any fees applicable to
your distribution of the programs in excess of your license rights and underpaid fees. If you
do not pay, Oracle can end your technical support, licenses and this agreement and/or may
choose not to accept your application to renew this agreement at such time of renewal. Upon
Oracle’s request, you agree to audit end user(s) and/or distributors and report the findings
to Oracle, or assign your right to audit end user(s) and/or distributors to Oracle. You agree
that Oracle shall not be responsible for any of your costs incurred in cooperating with this
audit.

	6.	 	The Uniform Computer Information Transactions Act does not apply to this agreement or any
order or monthly report hereunder.

W. Force Majeure

Neither of us shall be responsible for failure or delay of performance if caused by: an act of war,
hostility, or sabotage; act of God, electrical, Internet, or telecommunication outage that is not
caused by the obligated party; government restrictions (including the denial or cancellation of any
export or other license); other event outside the reasonable control of the obligated party. We
both will use reasonable efforts to mitigate the effect of a force majeure event. If such event
continues for more than 90 days, either of us may cancel unperformed services upon written notice.
This section does not excuse either party’s obligation to take reasonable steps to follow its
normal disaster recovery procedures or your obligation to pay for programs delivered or services
provided.

The effective date of this Agreement shall be May 31, 2009.

10

 

	 	 	 	 	 	 	 	 	 
	PARTNER:
	 	ARCSIGHT, INC.
	 	ORACLE USA, INC.
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Partner Address:

	 	5 Results Way, Cupertino, CA 95014	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Partner Fax No:

	 	408-532-5459	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Authorized Signature:
	 	/s/ Stewart Grierson
	 	Authorized Signature:	 	/s/ Douglas W. Doran	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Stewart Grierson
	 	Name:
	 	Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	Director, License Contracts	 	 
	 
	 	 	 	 	 	 	 	 
	Signature Date:

	 	May 20, 2009
	 	Signature Date:
	 	5/21/2009	 	 
	 
	 	 	 	 	 	 	 	 
	Agreement No:	 	US-OPN-EMBD-10237203-31-MAY-09	 	[to be completed by Oracle]	 	 

11

 

AMENDMENT ONE

to the

ORACLE PARTNERNETWORK

EMBEDDED SOFTWARE LICENSE DISTRIBUTION AGREEMENT

between

ARCSIGHT, INC.

and

ORACLE USA, INC

This document (“Amendment One”) amends the Oracle PartnerNetwork Embedded Software License
Distribution Agreement (v100908) between ArcSight, Inc. (“you” and “your”) and Oracle USA, Inc.
(“Oracle”), dated May 31, 2009 and any and all amendments thereto (the “agreement”).

The parties hereby agree to amend the agreement as follows:

	 	1.	 	In section B. Distribution Rights, in the second paragraph, in the first
sentence, immediately after the phrase “royalty free”, insert “patent”.
	 
	 	2.	 	In section C. Trial Licenses, in the first sentence, replace “*****” with
“*****”.
	 
	 	3.	 	In section C. Trial Licenses, in the second, third, and fourth sentences,
replace “*****” with “*****”.
	 
	 	4.	 	In section C. Trial Licenses, insert the following after the fourth sentence of
the section: : “Notwithstanding the foregoing, trial licenses distributed to federal
government end users may be used by such federal government end users for up to *****. You
must pay Oracle a fee for any trial licenses you extend to federal end users for more than
*****.”
	 
	 	5.	 	In section D. Distributors, in the third sentence, delete the phrase “(a) grant
the rights for the distributor to distribute the application package to end users,” and
replace it with the following:
	 
	 	 	 	“(a) grants (i) the rights for the distributor to distribute the application package to end
users, and, at your option, (ii) the right for the distributor to use the demonstration
licenses for the programs you order under your Oracle PartnerNetwork membership to
demonstrate the programs to potential end users solely as the programs are embedded in and
solely in connection with the application package, and/or to provide training for the
distributor’s employees and end users solely as the programs are embedded in and solely in
connection with the application package,”
	 
	 	6.	 	In section E. Ownership and Restrictions, in the fourth paragraph, at the end
of the of the seventh bullet point, after “programs” and before the semicolon, insert “,
provided, however, that nothing herein shall restrict you from using or distributing
products provided by parties other than Oracle or being in any business in competition with
Oracle”
	 
	 	7.	 	In section F. Reporting, in the second paragraph, delete the first sentence and
replace it with the following:
	 
	 	 	 	“Upon request, you will provide Oracle with a copy of the complete end user license
agreement, including any addenda or amendments thereto, and any ordering documents or
purchase agreements between you and the end user related to the order, with any pricing
information removed. Such copies shall be considered confidential information provided they
are clearly identified as confidential at the time of disclosure and otherwise meet the
requirements of Section M. Nondisclosure.”
	 
	 	8.	 	In section G. License Agreement, in the first paragraph, at the end of
subsection (1), insert the following:
	 
	 	 	 	“Notwithstanding the foregoing, you may allow the majority-owned subsidiaries of an end user
to use the programs for the internal business operations of such end user provided (i) the
majority-owned subsidiary
agrees to be bound by the terms and conditions of the applicable ordering document and the
end user license agreement, and the end user agrees in writing to be responsible for any
breach of such terms and conditions by such majority-owned subsidiary, or (ii), the end user
warrants that it has the authority to bind such majority-owned subsidiaries to the terms and
conditions of the agreement and the end user agrees in writing to be responsible for any
breach of such terms and conditions by such majority-owned subsidiaries.”

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

 

 

	 	9.	 	In section G. License Agreement, in the first paragraph, at the end of
subsection (4), insert the following:
	 
	 	 	 	“Notwithstanding the foregoing, upon written notice to Oracle provided that technical
support has been continuously maintained for the programs, the end user may assign its
rights to use the programs as part of the application package under the end user license
agreement to an entity that (i) is acquiring all or substantially all of the end user’s
assets and assuming all liabilities related to such assets; and (ii) agrees in writing to
the terms and conditions of the end user license agreement; ”.
	 
	 	10.	 	In section J. Indemnification, in the first paragraph, in the third bullet
point, after the word “claim”, insert the following:
	 
	 	 	 	“Oracle will reimburse you for reasonable out-of-pocket expenses incurred by you in
providing such assistance.”
	 
	 	11.	 	In section J. Indemnification, in the second paragraph, in the second sentence,
immediately after the phrase “Oracle will not indemnify you or an end user if you or an end
user alter a program or if you distribute”, insert “it outside the scope of this agreement”
	 
	 	12.	 	In section Q. URLs, add the following new sentence after the third (last)
sentence of the section:
	 
	 	 	 	“In the event of a direct conflict between the terms and conditions of this agreement and
the terms of any of the referenced and incorporated policies contained at the URLs specified
herein, the terms and conditions of the agreement shall control the parties’ rights and
obligations.”
	 
	 	13.	 	In section T. Limitation of Liability, at the beginning of the second sentence
before the word “ORACLE’S”, insert: “EXCEPT FOR ORACLE’S OBLIGATION TO INDEMNIFY YOU UNDER
SECTION J. INDEMNIFICATION,”
	 
	 	14.	 	In section T. Limitation of Liability, add the following new paragraph at the
end of the section:
	 
	 	 	 	“Notwithstanding anything to the contrary in this section and with respect only to a
Claimant’s cause of action against the Recipient for infringement which results in a final
judgment or award (after appeals), or settlement in such Claimant’s favor, against the
Recipient for which the Provider is liable under Section J (Indemnification) of this
agreement to indemnify the Recipient, the Provider’s indemnity obligation under said section
for such final judgment, award, or settlement shall apply without regard to whether damages
are classified as direct, indirect, incidental, special or consequential. “Claimant” as
used herein shall refer to parties other than you and Oracle. “Recipient” as used herein
means the party, either you or Oracle, receiving the indemnification, and “Provider” as used
herein means the party, either you or Oracle, providing the indemnification.”
	 
	 	15.	 	In section V. Other, in subsection 3., add the following after the first
sentence:
	 
	 	 	 	“Notwithstanding the previous sentence, upon advance written notice to Oracle and provided
that you have continuously maintained technical support and your membership in the Oracle
PartnerNetwork, you may assign your rights under this agreement to an assignee if and when
the assignee either (a) acquires all or substantially all of your assets and assumes all
liabilities related to such assets, or (b) acquires your division, business unit or
operation which distributes Oracle software programs and assumes the liabilities of such
division, business unit or operation. Additionally, assignee must agree in writing to the
terms and conditions of this agreement, must agree to continue to provide technical support services
to supported end users to whom you were providing technical support services under the terms
of the agreement, and must assume all your obligations under any end user license
agreement(s). Notwithstanding the assignment rights granted herein, you may not assign your
rights under this agreement to an Oracle competitor. As used herein the term “competitor”
shall mean IBM (including PWC), Microsoft, PWC, SAP, and Sybase.”
	 
	 	16.	 	In section V. Other, in subsection 5, in the fifth sentence, immediately after
the phrase “Upon Oracle’s request”, insert “in the event of an audit”. In the penultimate
sentence, immediately after the phrase “Upon Oracle’s” insert “reasonable”.

Page 2 of 3

 

	 	17.	 	Add a new section X as follows:

“X. Viruses

Oracle will use reasonable efforts to test programs for viruses. Oracle will
also maintain a master copy of the appropriate versions of the program, free
of viruses. If you believe a virus might be present in the delivered
programs, then upon your request, Oracle will provide a master copy for
comparison with and correction of your copy of the programs.”

Other than the modifications above, the terms and conditions of the agreement remain unchanged and
in full force and effect.

The effective date of this Amendment One is May 31, 2009 (effective date to be completed by
Oracle).

	 	 	 	 	 	 	 	 	 
	 

	 	ARCSIGHT, INC.
	 	 	 	ORACLE USA, INC.
	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stewart Grierson
	 	By:
	 	/s/ Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Stewart Grierson
	 	Name:
	 	Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	Director, License Contracts	 	 
	 
	 	 	 	 	 	 	 	 
	Signature

	 	 	 	Signature	 	 	 	 
	Date:

	 	May 20, 2009
	 	Date:
	 	5/21/2009	 	 

Page 3 of 3

 

BUYOUT ADDENDUM

to the

EMBEDDED SOFTWARE LICENSE DISTRIBUTION AGREEMENT

between

ARCSIGHT, INC.

and

ORACLE USA, INC.

This Buyout Addendum (the “Buyout Addendum”) is between Oracle USA, Inc. (“Oracle”) and ArcSight,
Inc. (“you”) and shall be governed by and incorporated into the terms of the Oracle PartnerNetwork
Embedded Software License Distribution Agreement (v100908) between Oracle and you dated May 31,
2009 (the “agreement”). The rights and obligations defined herein are in addition to all terms in
the agreement. Defined terms used in the agreement shall have the same meaning under this Buyout
Addendum, unless expressly stated otherwise. If there is a direct conflict between a term of this
Buyout Addendum and a term of the agreement with respect to the subject matter of this Buyout
Addendum, the term of this Buyout Addendum shall prevail.

1. Distribution Rights

Subject to the terms of the agreement and this Buyout Addendum, during the Distribution Term
(defined below) you may distribute the embedded programs as part of one of the application packages
specified in section 6 below (the “application package(s)”), (i) to new end users to whom you have
never previously distributed the application package and (ii) to end users to whom you have
previously distributed the application package under a distribution agreement with Oracle prior to
the date of this Buyout Addendum, for additional incremental usage of the application package,
provided that (a) the end user has continuously maintained technical support for the application
package previously distributed, (b) the end user has not continuously maintained technical support
for the application package previously distributed, but the end user has reinstated technical
support for such application package and is currently receiving technical support for the
application package previously distributed at the time you distribute additional licenses for
additional incremental usage of the embedded programs, (c) the end user has never contracted for or
obtained technical support for the application package previously distributed and you agree that
you shall not provide technical support to the end user for either (1) the application package
previously distributed or (2) any licenses for additional incremental usage related to such
application package that you distribute under this Buyout Addendum, or (d) the end user has never
contracted for or obtained technical support for the application package previously distributed,
however if at or before the time you distribute licenses for additional incremental usage of the
application package to the end user the end user obtains (and you pay to Oracle the respective
technical support fees associated with the end user’s obtaining) current supported status
(including payment of any reinstatement or back support fees per Oracle’s technical support
policies) and additionally such end user obtains technical support for any additional incremental
usage licenses to use the application package that you distribute under this Buyout Addendum at the
time you distribute the additional licenses Any distribution rights granted will be limited to the
application package(s) and may not be combined with any additional functionality or additional
application programs. For the purposes of this Buyout Addendum, the “Distribution Term” shall
commence on the effective date of this Buyout Addendum and shall terminate 2 years from the
effective date hereof unless terminated earlier as provided herein.

In the event that you do not (a) distribute the embedded programs in accordance with this Buyout
Addendum and the agreement or (b) pay the technical support fees due under this Buyout Addendum for
the duration of the Distribution Term, then the Distribution Term and your right to distribute the
embedded programs under this Buyout Addendum and to provide technical support for the embedded
programs shall immediately terminate, subject to and in accordance with Section L (Term and End of
the Agreement) following written notice to you by Oracle of the breach, and your failure to cure
such breach within thirty (30) days of such written notice.

2. License and Technical Support Fees

You agree to pay Oracle a license and technical support fee of $4,750,000.00 (“License and
Technical Support Fee”) for the right to distribute the embedded programs and to provide annual
technical support for the embedded programs for each year in the Distribution Term as set forth in
this Buyout Addendum. This fee entitles you to distribute an unlimited number of licenses of the
embedded programs during the Distribution Term.

 1 

 

Except as provided in the agreement and this Buyout Addendum, all license fees payable to the
applicable Oracle group company under this Buyout Addendum are due within ***** of the effective
date below. This payment obligation is non-cancelable, and the sum paid is nonrefundable, is not
subject to set-off for any reason, and is not subject to the completion or
occurrence of any event after the effective date of this Buyout Addendum. Oracle agrees that if,
concurrent with the delivery of this Buyout Addendum, you deliver an Oracle Credit Corporation
(“OCC”) Payment Plan Agreement and OCC ISV Payment Schedule (“PPA”) that is satisfactory to OCC,
then the payment terms in the PPA shall replace the above payment terms to the extent specified in
the PPA, and OCC shall pay Oracle. The License and Technical Support Fee for the Distribution Term
for the Oracle programs and services that are subject to the PPA wilt not be considered fully paid
until all sums due under the PPA have been paid.

3. Reporting

Subject to the terms in section F of the agreement (“Reporting”), notwithstanding the monthly
reporting frequency, you shall submit quarterly reports to Oracle for the embedded programs
distributed under this Buyout Addendum within 30 days of the last day of the quarter in which the
application package is distributed to the end user, and notwithstanding the data elements required
under the Partner Ordering Policy, such reports must include (1) for those application packages
that embed the programs into a physical device; the name of the programs licensed, the name,
including the date or version, of your agreement with Oracle under which the programs are being
distributed; the applicable license metrics, quantity; the date of the end user’s order; (2) for
those application packages that embed the programs into a software package, the name and address of
the end user, the name, including the date or version, of your agreement with Oracle under which
the programs are being distributed, the date of the end user’s order; the name of the programs
licensed; the applicable license metrics and quantity. For purposes of this agreement, quarters
shall start on the first day of June, September, December, and March. The quantity of licenses
distributed pursuant to this Buyout Addendum will be fixed and shall be equal to the total number
of end user licenses distributed at the end of the Distribution Term.

4. Technical Support

You are responsible for providing all technical support services to distributors and end users.
Questions that Oracle receives from end users will be referred to you. You shall have the right to
provide technical support to end users for the embedded programs for the Distribution Term provided
that you continually maintain technical support for your development licenses and subject to the
payment of the License and Technical Support Fee. The License and Technical Support Fee does not
include any fees due and payable to Oracle for technical support for any programs distributed by
you prior to the effective date of this Buyout Addendum, any fees due and payable to Oracle for
technical support for any programs distributed by you under a prior distribution agreement with
Oracle, or any fees due and payable to Oracle for technical support for any programs distributed by
you under the agreement which are not included in this Buyout Addendum. Annual technical support
is provided under Oracle’s technical support policies in effect at the time the services are
provided. The technical support policies, incorporated in this agreement, are subject to change at
Oracle’s discretion.

The amount of fees for technical support pursuant to a warranty claim or otherwise, during any of
the first and second years of the Distribution Term, would be the amount you have paid for
technical support pursuant to an Oracle Credit Corporation (OCC) Payment Plan Agreement and OCC ISV
Payment Schedule (PPA) or paid pursuant to the terms of this Buyout Addendum as of the date of the
applicable claim, up to ***** for each year.

Following the end of the Distribution Term, you may continue to renew technical support for the
embedded programs and provide technical support to your end users of such programs provided that
you continuously maintain technical support for the development licenses, you pay alt applicable
fees set forth in this agreement, and you maintain your membership in the Oracle PartnerNetwork.
Following the end of the Distribution Term, renewal of annual technical support services shall be
provided in accordance with Oracle’s then-current technical support policies and the terms of the
agreement and this Buyout Addendum. If one hundred percent (100%) of your install base (defined
below) is receiving technical support from you, the renewal fee for the first year for technical
support for the embedded programs shall be equal to ***** plus Oracle’s then current technical
support annual percentage increase which shall not exceed ***** (the “100% renewal fee”). Sixty
(60) days prior to the end of the Distribution Term, you shall submit a written certification to
Oracle verifying the percentage of your install base that you are providing technical support to
(“Supported Install Base”). Notwithstanding anything to the contrary in the agreement, upon
receipt of your certification, Oracle will calculate your annual technical support fee for the
embedded programs for the first year following the end of the Distribution Term as follows: the
Supported Install Base multiplied by the 100% renewal fee. After the first year following the end
of the Distribution Term, renewal fees for annual technical support services for the embedded
programs shall be subject to Oracle’s then current technical support policies and the terms of the
agreement. As used herein, the term “install base” shall mean the total number of licenses you
have distributed to end users for the embedded programs during the Distribution Term.

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

 2 

 

Renewal fees for technical support shall be invoiced by Oracle annually in advance. Fees for
technical support shall be due and payable in advance **** from date of invoice. Your payment
obligation for technical support fees is non-cancelable, and the sum paid is nonrefundable, is not
subject to set-off for any reason, and is not subject to the completion or occurrence of any event
after the effective date of this Buyout Addendum.

5. Term

The term of this Buyout Addendum shall commence on the effective date below and shall be effective
for the Distribution Term unless terminated earlier as provided herein or in the agreement.
Notwithstanding anything to the contrary in the agreement, the term of this Buyout Addendum may not
be extended or renewed, unless the parties agree in writing. You understand and agree that you may
not continue to distribute the programs with the application package defined herein after the
expiration or termination of this Buyout Addendum or the Distribution Term unless and until new
terms and pricing have been agreed in writing by both parties. In the event that the term of the
agreement expires before the term of this Buyout Addendum then the term of the agreement shall be
extended for the remainder of the term of the Buyout Addendum.

6. Application Packages

Your distribution of the embedded programs under this Buyout Addendum applies only to the
application packages identified below and described in the relevant Application Package
Registration Form attached to this Buyout Addendum.

List of Application Packages

ArcSight ESM

ArcSight Express

ArcSight ESM — Computer Based Training (CBT)

7. Internet Hosting

Notwithstanding the terms of the agreement, you shall have the right to license the programs solely
in conjunction with the application packages listed above in section 6 to end users so that such
end users may use the programs to provide internet hosting services to their customers. You may
allow your end users to provide access to the programs for their customers’ business operations
and/or to provide services to third parties using the hosted programs, provided that all such use
shall be subject to the terms of your license agreement with your end users that meets the
requirements of the section entitled “License Agreement” (except, with respect to the requirement
set forth in #2 of such section in which the end user license agreement must among other things
restrict use of the programs to the internal business operations of the end user, in connection
with the rights granted under this paragraph, such requirement shall be construed to include the
internal business operations of the end users’ customers’ business operations; and, with respect to
the requirements set forth in #5a and #5c of the section, in connection with the rights granted
under this paragraph, such requirements shall be construed to be applicable except as otherwise
explicitly allowed by the limited rights granted under this paragraph). You shall prohibit your
end users from reselling or assigning their program licenses to their customers and from providing
access to their customers to any Oracle Application programs (as used herein “Oracle Application
programs” shall mean Oracle Application programs as listed on Oracle’s Business Intelligence
Applications, E-Business Suite (EBS) Applications, Peoplesoft (PSFT) Applications, JD Edwards (JDE)
Applications, and Siebel Applications price lists, and shall expressly not mean the embedded
programs as specified for use in the application packages identified above and described in the
relevant Application Package Registration Forms attached to this Buyout Addendum). You agree to
require your end users to be financially responsible to Oracle for all damages or losses resulting
from the end users’ and their customers’ breach of these terms. The personnel accessing and
computers running the programs shall be included in determining the quantity of program licenses
deployed by your end users and their customers. Notwithstanding anything to the contrary in this
agreement, you and your affiliated entities may not be considered end users under this paragraph
(i.e., you and your affiliated entities cannot use the programs to provide internet hosting
services).

8. Delivery

Oracle has no delivery obligation under this Buyout Addendum. You acknowledge that Oracle has
previously delivered to your location, 1 copy of the software media and 1 set of program
documentation (in the form generally available) for each program in the application package.

 

			
	*****	 	The omitted portions of this exhibit have been filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934, as amended.

 3 

 

Other than the modifications above, the terms and conditions of the agreement remain unchanged and
in full force and effect. The effective date of this Buyout Addendum is May 31, 2009.

	 	 	 	 	 	 	 	 	 
	PARTNER:

	 	ARCSIGHT, INC.
	 	ORACLE USA, INC.
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Authorized Signature:

	 	/s/ Stewart Grierson
	 	Authorized Signature:
	 	/s/ Douglas W. Doran	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Stewart Grierson
	 	Name:
	 	Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	Director, License Contracts	 	 
	 
	 	 	 	 	 	 	 	 
	Signature Date:

	 	May 20, 2009
	 	Signature Date:
	 	5/21/2009	 	 

 4 

 

PUBLIC SECTOR ADDENDUM

to the

EMBEDDED SOFTWARE LICENSE DISTRIBUTION AGREEMENT

between

ARCSIGHT, INC.

and

ORACLE USA, INC.

This Public Sector Addendum (the “addendum”) is between Oracle USA, Inc. (“Oracle”) and ArcSight,
Inc. (“you”) and shall be governed by and incorporated into the terms of the Oracle. PartnerNetwork
Embedded Software License Distribution Agreement between Oracle and you dated May 31, 2009 (the
“agreement”). The rights and obligations defined herein are in addition to all terms in the
agreement. Definitions used in the agreement shall have the same meaning under this addendum,
unless expressly stated otherwise. If there is a direct conflict between a term of this addendum
and a term of the agreement with respect to the subject matter of this addendum, the term of this
addendum shall prevail.

	1.	 	Agreement Definitions
	 
	 	 	For the purposes of this addendum, the term “public sector end user” refers to an end user that
is (a) a government, legislature or decision making body, instrumentality, department, or agency
at any level (national, local, municipal or otherwise); entities managed, controlled or majority
owned by government interests; public organizations or foundations of any kind (including
political parties, political organizations, or political candidates); and any public
international organization, such as, but not limited to, the International Red Cross,
United Nations, or the World Bank; and (b) licensed to use the application program with the
embedded programs for its own internal business operations subject to the terms of an end user
license agreement as further provided for in the agreement.
	 
	2.	 	Distribution Rights
	 
	 	 	Notwithstanding anything to the contrary in the agreement, Oracle grants you a nonexclusive,
nontransferable right to distribute programs and/or services to public sector end users subject
to the terms of the agreement.
	 
	3.	 	Order Terms
	 
	 	 	Notwithstanding anything to the contrary in section F of the agreement, Reporting, upon request
from Oracle, you agree to submit to Oracle a copy of the end user license agreement related to
each order for a public sector end user and any ordering documents, purchase agreements and
other documents between you and the public sector end user that together with the end user
license agreement form the complete end user contract related to the order.
	 
	4.	 	U.S. Government End Users
	 
	 	 	Oracle programs, including documentation, delivered to U.S. Government end users are “commercial
computer software” pursuant to the applicable Federal Acquisition Regulation (“FAR”) and
agency-specific supplemental regulations. As such, use, duplication, disclosure, modification,
and adaptation of the programs, including documentation, shall be subject to the license and
license restrictions set forth in this agreement, and, to the extent applicable, the additional
rights set forth in FAR 52.227-19, Commercial Computer Software — Restricted Rights (June 1987).
	 
	5.	 	Term and End of Agreement
	 
	 	 	The term of this addendum shall commence on its effective date below and shall co-terminate with
the agreement unless terminated earlier as provided in the agreement. Notwithstanding anything
to the contrary in the agreement, this addendum may be terminated by either party at any time by
providing thirty (30) days prior written notice to the other party.

 1 

 

Other than the modifications above, the terms and conditions of the agreement remain unchanged and
in full force and effect. The effective date of this addendum is May 31, 2009.

	 	 	 	 	 	 	 	 	 
	PARTNER:

	 	ARCSIGHT, INC.
	 	ORACLE
	 	ORACLE USA, INC.
	 	 
	 
	 	 	 	 	 	 	 	 
	Authorized Signature:

	 	/s/ Stewart Grierson
	 	Authorized Signature:
	 	/s/ Douglas W. Doran	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Stewart Grierson
	 	Name:
	 	Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	Director, License Contracts	 	 
	 
	 	 	 	 	 	 	 	 
	Signature Date:

	 	May 20, 2009
	 	Signature Date:
	 	5/21/2009	 	 

 2 

 

AMENDMENT ONE

to the

PUBLIC SECTOR ADDENDUM

to the

ORACLE PARTNERNETWORK

EMBEDDED SOFTWARE LICENSE DISTRIBUTION AGREEMENT

between

ARCSIGHT, INC.

and

ORACLE USA, INC

This document (“Amendment One”) amends the Public Sector Addendum to the Oracle PartnerNetwork
Embedded Software License Distribution Agreement (v100908) between ArcSight, Inc. (“you” and
“your”) and Oracle USA, dated May 31, 2009 and any and all amendments thereto (the “addendum”).

The parties hereby agree to amend the agreement as follows:

	1.	 	In section 3. Order Terms, add the following to the end of the section: “Such
copies shall be considered confidential information provided they are clearly identified as
confidential at the time of disclosure and otherwise meet the requirements of Section M.
Nondisclosure.”

	2.	 	In section 5. Term and End of Agreement, delete the second sentence, which
reads “Notwithstanding anything to the contrary in the agreement, this addendum may be
terminated by either party at any time by providing thirty (30) days prior written notice
to the other party.”

Other than the modifications above, the terms and conditions of the agreement remain unchanged and
in full force and effect.

The effective date of this Amendment One is May 31, 2009.

	 	 	 	 	 	 	 	 	 
	 

	 	ARCSIGHT, INC.
	 	 	 	ORACLE USA, INC.
	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stewart Grierson
	 	By:
	 	/s/ Douglas W. Doran	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Stewart Grierson
	 	Name:
	 	Douglas W. Doran	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	CFO
	 	Title:
	 	Director, License Contracts	 	 
	 
	 	 	 	 	 	 	 	 
	Signature

	 	 	 	Signature	 	 	 	 
	Date:

	 	May 20, 2009
	 	Date:
	 	5/21/2009	 	 

Page 1 of 1exv4w1

Exhibit 4.1

EXECUTION VERSION

 

DAWSON GEOPHYSICAL COMPANY

and

MELLON INVESTOR SERVICES LLC,

Rights Agent

 

Rights Agreement

Effective as of Close of Business on July 23, 2009

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section 1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	8	 
	 
	 	 	 	 
	Section 3. Issue of Rights Certificates
	 	 	8	 
	 
	 	 	 	 
	Section 4. Form of Rights Certificates
	 	 	10	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	11	 
	 
	 	 	 	 
	Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	12	 
	 
	 	 	 	 
	Section 7. Exercise of Rights; Purchase Price
	 	 	13	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	15	 
	 
	 	 	 	 
	Section 9. Reservation and Availability of Capital Stock
	 	 	15	 
	 
	 	 	 	 
	Section 10. Preferred Stock Record Date
	 	 	16	 
	 
	 	 	 	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	17	 
	 
	 	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	24	 
	 
	 	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power
	 	 	24	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	27	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	28	 
	 
	 	 	 	 
	Section 16. Agreement of Rights Holders
	 	 	29	 
	 
	 	 	 	 
	Section 17. Rights Certificate Holder Not Deemed a Shareholder
	 	 	29	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 20. Duties of Rights Agent
	 	 	31	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	33	 
	 
	 	 	 	 
	Section 22. Issuance of New Rights Certificates
	 	 	34	 
	 
	 	 	 	 

-i- 

 

	 	 	 	 	 
	 
	 	 	 	 
	Section 23. Redemption and Termination
	 	 	34	 
	 
	 	 	 	 
	Section 24. Exchange
	 	 	35	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	37	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	38	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	38	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	39	 
	 
	 	 	 	 
	Section 29. Determinations and Actions by the Board of Directors, etc
	 	 	39	 
	 
	 	 	 	 
	Section 30. Benefits of this Agreement
	 	 	40	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	40	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	40	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	40	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	40	 
	 
	 	 	 	 
	Section 35. Force Majeure
	 	 	41	 
	 
	 	 	 	 
	Exhibit A —  Form of Statement of Resolution Establishing Series of Shares with respect to the Series A Junior Participating Preferred Stock
	 	 	 	 
	 
	 	 	 	 
	Exhibit B —  Form of Rights Certificate
	 	 	 	 
	 
	 	 	 	 
	Exhibit C —  Summary of Rights
	 	 	 	 

-ii-

 

RIGHTS AGREEMENT

          This Rights Agreement, effective as of the close of business on July 23, 2009 (the
“Agreement”), between Dawson Geophysical Company, a Texas corporation, and Mellon Investor Services
LLC, a New Jersey limited liability company,

W I T N E S S E T H:

          WHEREAS, on July 13, 1999, the Company and the Rights Agent entered into a Rights Agreement
(the “Prior Agreement”) pursuant to which the Board of Directors of the Company declared a dividend
of one right to purchase preferred shares (the “Prior Rights”) for each share of common stock, par
value $0.33 1/3 per share, of the Company (the “Common Stock”) outstanding at the close of business
on July 23, 1999 and each share issued thereafter until such time as the Prior Rights expire; and

          WHEREAS, pursuant to the terms of the Prior Agreement, the Prior Rights will expire at the
close of business on July 23, 2009; and

          WHEREAS, on July 8, 2009 (the “Rights Dividend Declaration Date”), the Board of Directors of
the Company authorized and declared a dividend of one Right for each share of Common Stock
outstanding at the close of business on July 23, 2009 (the “Record Date”), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company issued (whether originally
issued or delivered from the Company’s treasury) between the Record Date and the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as hereinafter defined), and,
in certain circumstances provided for in Section 22 hereof, after the Distribution Date, each Right
initially representing the right to purchase one Fractional Share (as hereinafter defined) of
Series A Junior Participating Preferred Stock of the Company, upon the terms and subject to the
conditions hereinafter set forth (the “Rights”);

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

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

          “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person; provided, however, that a Person
shall not be or become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding
due to the repurchase of Common Stock by the Company, unless and until such time as such Person
together with its Affiliates and Associates shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock or any other Person (or Persons) who is (or collectively are) the Beneficial Owner of
shares of Common Stock constituting 1% or more
of the then outstanding shares of Common Stock shall become an Affiliate or Associate of such

-1-

 

Person, unless, in either such case, such Person, together with all Affiliates and Associates of
such Person, is not then the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; and provided, further, that if the Board of Directors, with the concurrence of a
majority of the members of the Board of Directors who are not, and are not representatives,
nominees, Affiliates or Associates of, such Person or an Acquiring Person, determines in good faith
that a Person that would otherwise be an “Acquiring Person” has become such inadvertently
(including, without limitation, because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an “Acquiring Person” or
(ii) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without
any intention of changing control of the Company, and if such Person as promptly as practicable
divested or divests itself of Beneficial Ownership of a sufficient number of shares of Common Stock
so that such Person would no longer be an “Acquiring Person,” then such Person shall not be deemed
to be or to have become an “Acquiring Person” for any purposes of this Agreement.

          Notwithstanding anything in this definition of “Acquiring Person” to the contrary, if, as of
the date hereof, any Person, together with all Affiliates or Associates of such Person, is the
Beneficial Owner of a number of shares of Common Stock that would otherwise cause such Person to be
an Acquiring Person, such Person shall not be or become an Acquiring Person unless and until such
time as such Person or any Affiliate or Associate of such Person shall purchase or otherwise become
the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of shares of Common Stock constituting 1% or more of the then outstanding
shares of Common Stock shall become an Affiliate or Associate of such Person unless, in either such
case, such Person, together with all Affiliates and Associates of such Person, is not then the
Beneficial Owner of a number of shares that would otherwise cause such Person to be an Acquiring
Person.

          At any time that the Rights are redeemable, the Board of Directors may, generally or with
respect to any specified Person or Persons, determine to increase to a specified percentage or
amount greater than that set forth herein or decrease to a specified percentage or amount lower
than that set forth herein or determine a number of shares to be (but in no event less than or
equal to the percentage or number of shares of Common Stock then beneficially owned by such
Person), the level of Beneficial Ownership of Common Stock at which a Person or such Person or
Persons becomes an Acquiring Person.

          “Adjustment Fraction” shall have the meaning set forth in Section 11(p) hereof.

          “Adjustment Shares” shall have the meaning set forth in Section 11(a)(ii) hereof.

          “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act, as in effect on the date of this Agreement.

          “Agreement” shall have the meaning set forth in the preamble hereof.

-2-

 

          “Associate” shall mean, with reference to any Person, (1) any corporation, firm, partnership,
limited liability company, association, unincorporated organization or other entity (other than the
Company or a Subsidiary of the Company) of which such Person is an officer or general partner (or
officer or general partner of a general partner) or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities, (2) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity and (3) any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person.

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

     (i) that such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, is the “beneficial owner” of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of this
Agreement) or otherwise has the right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided, however, that
a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any
security under this subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy or consent given in response to a public (i.e., not
including a solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement) proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor report) and
(C) does not constitute a trust, proxy, power of attorney or other device with the purpose
or effect of allowing two or more persons, acting in concert, to avoid being deemed
“beneficial owners” of such security or otherwise avoid the status of “Acquiring Person”
under the terms of this Agreement or as part of a plan or scheme to evade the reporting
requirements under Schedule 13D or Sections 13(d) or 13(g) of the Exchange Act;

     (ii) that such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right or obligation to acquire (whether such right or obligation is
exercisable or effective immediately or only after the passage of time or the occurrence of
an event) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants
or options, or otherwise; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” (A) 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, (B)
securities issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or any of such
Person’s Affiliates or Associates prior to the Distribution Date or pursuant to

-3-

 

Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i)
or (p) hereof in connection with an adjustment made with respect to any Original Rights; or

     (iii) that are beneficially owned, directly or indirectly, by (A) any other Person (or
any Affiliate or Associate thereof) with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy
or consent as described in the proviso to subparagraph (i) of this definition) or disposing
of any voting securities of the Company or (B) any group (as that term is used in Rule
13d-5(b) of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement) of which such Person is a member;

provided, however, that nothing in this definition shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such Person’s participation in good faith in a firm commitment underwriting
(including, without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under the Exchange Act, or
to cover overallotments created in connection with a public offering) until the expiration of forty
days after the date of such acquisition. For purposes of this Agreement, “voting” a security shall
include voting, granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a shareholder meeting), entering into a
voting trust or voting agreement or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act, as in effect on the date of this Agreement) in respect of such
security.

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

          “close of business” on any given date shall mean 5:00 p.m., Dallas, Texas time, on such date;
provided, however, that if such date is not a Business Day, it shall mean 5:00 p.m., Dallas, Texas
time, on the next succeeding Business Day.

          “Closing Price” of a security for any day shall mean the last sales price, regular way, on
such day or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, in either case as reported in the principal transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange, or,
if such security is not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities exchange but sales
price information is reported for such security, as reported by such self-regulatory organization
or registered securities information processor (as such terms are used under the Exchange Act) that
then reports information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the over-the-counter market on such
day, as reported by such entity, or, if on such day such security is not quoted by any such entity,
the average of the closing bid and asked prices as furnished by a professional market maker making
a market in such security selected by the Board of Directors

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of the Company. If on such day no market maker is making a market in such security, the fair
value of such security on such day as determined in good faith by the Board of Directors of the
Company shall be used.

          “Common Stock” shall mean the common stock, par value $0.33 1/3 per share, of the Company,
except that “Common Stock” when used with reference to equity interests issued by any Person other
than the Company shall mean the capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the management, of
such Person.

          “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

          “Company” shall mean Dawson Geophysical Company until a successor Person shall have become
such or until a Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this Agreement, and
thereafter “Company” shall mean such successor Person or Principal Party.

          “Current Market Price” shall have the meaning set forth in Section 11(d) hereof.

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

          “Distribution Date” shall mean the earlier of (i) the close of business on the tenth day (or,
if such Stock Acquisition Date results from the consummation of a Permitted Offer, such later date
as may be determined by the Company’s Board of Directors as set forth below before the Distribution
Date occurs) after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business on the Record Date) or (ii) the close of
business on the tenth Business Day (or such later date as may be determined by the Company’s Board
of Directors as set forth below before the Distribution Date occurs) after the date that a tender
offer or exchange offer by any Person (other than any Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act as then in effect, if upon consummation thereof, such Person would be an Acquiring Person,
other than a tender or exchange offer that is determined before the Distribution Date occurs to be
a Permitted Offer. The Board of Directors of the Company may, to the extent set forth in the
preceding sentence, defer the date set forth in clause (i) or (ii) of the preceding sentence to a
specified later date or to an unspecified later date to be determined by a subsequent action or
event (but in no event to a date later than the close of business on the tenth day after the first
occurrence of a Triggering Event).

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

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

          “Exchange Ratio” shall have the meaning set forth in Section 24 hereof.

          “Exempt Person” shall mean the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, and any Person

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organized, appointed or established by the Company for or pursuant to the terms of any such
plan or for the purpose of funding any such plan or funding other employee benefits for employees
of the Company or any Subsidiary of the Company.

          “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
expire pursuant to Section 13(d) hereof and (iv) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.

          “Final Expiration Date” shall mean the close of business on July 23, 2019.

          “Flip-In Event” shall mean an event described in Section 11(a)(ii) hereof.

          “Flip-In Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.

          “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a)
hereof, but excluding any transaction described in Section 13(d) hereof that causes the Rights to
expire.

          “Fractional Share” with respect to the Preferred Stock shall mean one one-hundredth of a share
of Preferred Stock.

          “Original Rights” shall have the meaning set forth in the definition of “Beneficial Owner.”

          “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined, prior to the time the Person making the offer or
any Affiliate or Associate thereof is an Acquiring Person, by at least a majority of the members of
the Board of Directors who are not, and are not representatives, nominees, Affiliates or Associates
of, an Acquiring Person or the person making the offer, after receiving advice from one or more
investment banking firms, to be (a) at a price and on terms that are fair to shareholders (taking
into account all factors that such members of the Board deem relevant including, without
limitation, prices that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in the best interests of the
Company and its shareholders.

          “Person” shall mean any individual, firm, corporation, partnership, limited liability company,
association, trust, unincorporated organization or other entity or any group of Persons acting in
concert and shall include any successor (by merger or otherwise) thereof or thereto.

          “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock, par
value $1.00 per share, of the Company having the rights, powers and preferences set forth in the
form of Statement of Resolution Establishing Series of Shares with respect to the Series A Junior
Participating Preferred Stock attached hereto as Exhibit A and, to the extent that there is not a
sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, par value

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$1.00 per share, of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Preferred Stock.

          “Principal Party” shall have the meaning set forth in Section 13(b) hereof.

          “Prior Agreement” shall have the meaning set forth in the recitals clause at the beginning of
this Agreement.

          “Prior Rights” shall have the meaning set forth in the recitals clause at the beginning of
this Agreement.

          “Purchase Price” shall have the meaning set forth in Section 4(a) hereof.

          “Record Date” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.

          “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.

          “Rights” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.

          “Rights Agent” shall mean Mellon Investor Services LLC, a New Jersey limited liability
company, until a successor Rights Agent shall have become such pursuant to the applicable
provisions hereof, and thereafter “Rights Agent” shall mean such successor Rights Agent. If at any
time there is more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, “Rights Agent” shall mean and include each such Person.

          “Rights Certificates” shall mean the certificates evidencing the Rights.

          “Rights Dividend Declaration Date” shall have the meaning set forth in the recitals clause at
the beginning of this Agreement.

          “Securities Act” shall mean the Securities Act of 1933, as amended.

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

          “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes
of this definition and Section 23, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.

          “Subsidiary” shall mean, with reference to any Person, any corporation or other Person of
which an amount of voting securities sufficient to elect at least a majority of the directors or
other persons performing similar functions is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.

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

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          “Summary of Rights” shall mean the Summary of Rights sent pursuant to Section 3(b) hereof.

          “Trading Day” with respect to a security shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is open for the
transaction of business, or, if such security is not listed or admitted to trading on any national
securities exchange but is quoted by a self-regulatory organization or registered securities
information processor (as such terms are used under the Exchange Act), a day on which such entity
reports trades, or, if such security is not so quoted, a Business Day.

          “Triggering Event” shall mean any Flip-In Event or any Flip-Over Event.

          Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in no event shall it
be liable for, the acts or omissions of any such co-rights agents.

          Section 3. Issue of Rights Certificates.

          (a) Until the Distribution Date, (x) the Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates for Common Stock registered in the names of
the holders of the Common Stock or, for Common Stock held in book-entry accounts through the direct
registration service of the Company’s transfer agent, by such book-entry accounts (together with a
direct registration transaction advice with respect to such shares) and not by separate
certificates, and (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will, if provided with all necessary information, (i)
send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date (other than any Person referred to in the first
sentence of Section 7(e)), at the address of such holder shown on the records of the Company, one
or more Rights Certificates, evidencing one Right for each share of Common Stock so held, subject
to adjustment as provided herein, or (ii) credit the book-entry account of such holder with such
Rights and send a direct registration transaction advice with respect to such Rights to such
holder. In the event that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates or
such credits to the book-entry accounts, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed, or only whole numbers of Rights are
credited to book-entry accounts, and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates or
such book-entry credits and related direct registration transaction advices. In the event the
Company elects to distribute any Rights by crediting book-entry accounts, the provisions in this Agreement that reference Rights
Certificates shall be interpreted to reflect that the Rights are credits to the book-entry
accounts, that separate Rights Certificates are not issued with respect to some or all of the
Rights, and that any legend

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 required on a Rights Certificate may be placed on the direct
registration transaction advice with respect to certain Rights.

     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 the same in
writing on or prior to the Business Day next following. Until such notice is received by the
Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date
has not occurred.

          (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C, by first-class, postage
prepaid mail, to each record holder 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. With respect to Common Stock
outstanding as of the Record Date, until the Distribution Date or the earlier surrender for
transfer thereof or the Expiration Date, the Rights associated with (i) the shares of Common Stock
represented by certificates shall be evidenced by such certificates for Common Stock together with
the Summary of Rights, and (ii) the shares of Common Stock held in book-entry accounts shall be
held in book-entry accounts and evidenced by the related transaction advice together with the
Summary of Rights, and in either case the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any of the shares of Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with such Common Stock.

          (c) Rights shall be issued in respect of all shares of Common Stock that are issued (whether
originally issued or delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date or, in certain circumstances provided in
Section 22 hereof, after the Distribution Date. Certificates issued representing such shares of
Common Stock that shall so become outstanding or shall be transferred or exchanged after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date shall also be deemed
to be certificates for Rights, and shall bear a legend in substantially the following form:

     This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Dawson Geophysical Company (the
“Company”) and Mellon Investor Services LLC (the “Rights Agent”) effective as of the
close of business on July 23, 2009 as it may from time to time be supplemented or
amended (the “Rights Agreement”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such Rights may
be redeemed, may be exchanged, may expire or may be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company or
the Rights Agent will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement, Rights

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beneficially owned by or transferred to any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), and certain transferees thereof, will become null and void
and will no longer be transferable.

Each book-entry account for such shares of Common Stock that shall so become outstanding or shall
be transferred or exchanged after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date shall also be deemed to include the associated Rights, and the direct
registration transaction advice with respect to such shares shall bear a legend in substantially
the following form:

     Each security covered by this Advice entitles the holder thereof to certain
Rights as set forth in the Rights Agreement between Dawson Geophysical Company (the
“Company”) and Mellon Investor Services LLC (the “Rights Agent”) effective as of the
close of business on July 23, 2009 as it may from time to time be supplemented or
amended (the “Rights Agreement”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such Rights may
be redeemed, may be exchanged, may expire or may be evidenced by separate
certificates or be covered by separate book-entry credits and will no longer be
covered by this Advice or be evidenced by a certificate representing a security
covered by this Advice. The Company or the Rights Agent will mail to the holder of
the security covered by this Advice 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 set forth in the Rights Agreement, Rights
beneficially owned by or transferred to any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), and certain transferees thereof, will become null and void
and will no longer be transferable.

With respect to such shares of Common Stock described in this Section 3(c), until the earlier of
the Distribution Date or the Expiration Date, the Rights associated with the Common Stock
represented by such certificates or held in such book-entry accounts shall be evidenced by such
certificates or such book-entry accounts (together with the direct registration transaction advice
with respect to such shares) alone, and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any shares of Common Stock,
whether by transfer of physical certificates or book-entry transfer, shall also constitute the
transfer of the Rights associated with the Common Stock.

          Section 4. Form of Rights Certificates.

          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, duties or responsibilities of the Rights Agent) and

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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 quotation 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 11 and Section 22 hereof, the
Rights Certificates, whenever issued, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of Fractional Shares of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price per Fractional Share
(or, as set forth in this Agreement, for other securities), the “Purchase Price”), but the amount
and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.

          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by a Person described in the first sentence of Section 7(e),
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any such Rights, shall contain (to the extent that the
Rights Agent has knowledge thereof and to the extent feasible) a legend in substantially the
following form, modified as applicable to apply to such Person:

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

The provisions of Section 7(e) of this Agreement shall be operative whether or not the foregoing
legend is contained on any such Rights Certificate. The Company shall give notice to the Rights
Agent promptly after it becomes aware of the existence of any Acquiring Person or any Associate or
Affiliate thereof.

          Section 5. Countersignature and Registration.

          (a) The Rights Certificates shall be duly executed on behalf of the Company by its President
or any Vice President, either manually or by facsimile signature, and shall have affixed thereto
the Company’s seal or a facsimile thereof, which shall be attested by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the 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 Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.

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          (b) Following the Distribution Date and receipt by the Rights Agent of notice to that effect
and all other relevant information referred to in Section 3(a), the Rights Agent will keep or cause
to be kept, at its office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the certificate number 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 4(b), Section 7(e), Section 13(d), Section 14 and
Section 24 hereof, at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number of Fractional Shares
of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Rights Certificates 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 Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at
the principal 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 until the registered holder shall have properly
completed and duly signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) thereof or of the Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e), Section 13(d), Section 14 and Section 24 hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment by the holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split-up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty or obligation under any
Section of this Agreement which requires the payment by a Rights holder
of applicable taxes or charges unless and until the Rights Agent is satisfied that all such
taxes and/or charges have been paid.

          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company
will, subject to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section 24, execute and
deliver a new Rights Certificate of like tenor to the Rights Agent for

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countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.

          Section 7. Exercise of Rights; Purchase Price.

          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided in this Agreement including,
without limitation, the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase and the certificate
on the reverse side thereof properly completed and duly executed, to the Rights Agent at the office
or offices of the Rights Agent designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of Fractional Shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such surrendered Rights are then
exercisable, and an amount equal to any tax or charge required to be paid under Section 9(e)
hereof, by certified check, cashier’s check, bank draft or money order payable to the order of the
Company, at or prior to the Expiration Date.

          (b) The Purchase Price for each Fractional Share of Preferred Stock pursuant to the exercise
of a Right shall initially be $130.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c)
below.

          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof properly completed and duly
executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price
per Fractional Share of Preferred Stock (or other securities, cash or other assets, as the case may
be) to be purchased as set forth below and an amount equal to any applicable tax or charge required
to be paid under Section 9(e) hereof by certified check, cashier’s check, bank draft or money
order, payable to the order of the Company, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i)(A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates
for the total number of Fractional Shares of Preferred Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to
deposit the shares of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts representing interests
in such number of Fractional Shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated
by such holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made by certified

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check,
cashier’s check, bank draft or money order, payable to the order of the Company. In the event that
the Company is obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) or Section 13(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of a Triggering Event that, upon exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be
issued.

          (d) In case the registered holder of any Rights Certificate shall exercise fewer than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and 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, subject to the provisions of Section 14 hereof.

          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by or transferred to (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person other than any such Person
that became such pursuant to a Permitted Offer and the Board of Directors in good faith determines
was not involved in and did not cause or facilitate, directly or indirectly, such Triggering Event,
(ii) a direct or indirect transferee of such Rights from such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after such Triggering Event or (iii) a direct or
indirect transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Triggering Event and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from such Acquiring Person (or such
Affiliate or Associate) to holders of equity interests in such Acquiring Person (or such Affiliate
or Associate) or to any Person with whom such Acquiring Person (or such Affiliate or Associate) has
any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company determines is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise,
and such Rights shall not be transferable. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have
any liability to any holder of Rights Certificates or other Person as a result of any failure
to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.

          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder of the
Rights or other securities upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) properly completed and duly signed the
certificate contained in the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company or the Rights Agent shall reasonably request.

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

          Section 9. Reservation and Availability of Capital Stock.

          (a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued shares, or out of its authorized and issued shares held in its
treasury, the number of shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in this Agreement, including Section
11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights.

          (b) So long as any shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the
Rights are listed on any national securities exchange or quoted on any trading system, the Company
shall use its best efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange, or quoted on such system, upon
official notice of issuance upon such exercise. Following the occurrence of a Triggering Event,
the Company will use its best efforts to list (or continue the listing of) the Rights and the
securities issuable and deliverable upon the exercise of the Rights on one or more national
securities exchanges or to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by such transaction reporting system
then in use.

          (c) The Company shall use its best efforts to (i) prepare and file, as soon as practicable
following the first occurrence of a Flip-In Event or, if applicable, as soon as practicable
following the earliest date after the first occurrence of a Flip-In Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii) hereof), a registration
statement on an appropriate form under the Securities Act with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective
upon filing or as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various
states in connection with the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed 90 days after the date set forth in

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clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the Company shall
determine that the Securities Act requires an effective registration statement under the Securities
Act following the Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as such a registration statement has been declared or becomes effective.
Upon any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. The Company shall promptly notify the Rights
Agent in writing whenever it makes a public announcement pursuant to this Section 9(c) and give the
Rights Agent a copy of such announcement. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under
applicable law or any required registration statement shall not have been declared effective.

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

          (e) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a number of Fractional Shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax or charge that may be
payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of a number of Fractional Shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a
name other than that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of Fractional Shares
of Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such tax or charge shall
have 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 or the Rights Agent’s
satisfaction that no such tax or charge is due.

          Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for a number of Fractional
Shares 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 (fractional or otherwise) 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 evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes and charges) was duly made; provided, however,
that if the date of such surrender and payment is a date upon which the Preferred Stock (or Common
Stock and/or other securities, as the case may

-16-

 

be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred
Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a shareholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the Company, except as
provided herein.

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

     (ii) Subject to Sections 23 and 24 of this Agreement, in the event any Person shall, at
any time after the Rights Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of shares of Common Stock pursuant to a Permitted Offer (provided that this
clause (2) shall cease to apply if such Acquiring Person thereafter becomes the Beneficial
Owner of any additional shares of Common Stock other than pursuant to such Permitted Offer
or a transaction set forth in Section 13(a) or 13(d) hereof), then, (x) the Purchase Price
shall be adjusted to be the Purchase Price immediately prior to the first occurrence of a
Flip-In Event multiplied by the number of Fractional Shares of Preferred Stock for which a
Right was exercisable immediately prior

-17-

 

 to such first occurrence and (y) each holder of a
Right (except as provided below in Section 11(a)(iii) and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase
Price in accordance with the terms of this Agreement, in lieu of the shares of Preferred
Stock otherwise purchasable thereunder, such number of shares of Common Stock of the Company
as shall equal the result obtained by dividing the Purchase Price by 50% of the Current
Market Price per share of Common Stock on the date of such first occurrence (such number of
 shares, the “Adjustment Shares”); provided that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence. The Company shall give the Rights
Agent written notice of the identity of any such Acquiring Person, any Associate or
Affiliate of such Acquiring Person known to the Company, or any nominee of any of the
foregoing known to the Company, 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) In the event that the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company shall, to the extent permitted by applicable law and regulation, (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right
(computed using the Current Market Price used to determine the number of Adjustment Shares)
(the “Current Value”) over (2) the Purchase Price (such excess is herein referred to as the
“Spread”), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon the exercise of
the Rights and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock (including, without
limitation, the Preferred Stock) that the Board of Directors of the Company has determined
to have the same value as shares of Common Stock (such shares of preferred stock are herein
referred to as “Common Stock Equivalents”)), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B) above within 30
days following the later of (x) the first occurrence of a Flip-In Event and (y) the date on
which the Company’s right of redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the “Flip-In Trigger Date”), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company 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, the

-18-

 

30-day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Flip-In Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution Period”). To the extent that the Company
or the Board of Directors determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject
to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement (with prompt written notice thereof to the
Rights Agent) at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the Current Market Price per
share of the Common Stock on the Flip-In Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Stock on such date.

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

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          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be
the Purchase Price that would have been in effect if such record date had not been fixed.

          (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock of a Person on any
date shall be deemed to be the average of the daily Closing Prices per share of such Common Stock
for the 30 consecutive Trading Days immediately prior to but not including such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per
share of Common Stock on any date shall be deemed to be the average of the daily Closing Prices per
share of such Common Stock for the 10
consecutive Trading Days immediately following but not including such date; provided, however,
that in the event that the Current Market Price per share of Common Stock is determined during a
period following the announcement of (A) a dividend or distribution on such Common Stock other than
a regular quarterly cash dividend or the dividend of the Rights, or (B) any subdivision,
combination or reclassification of such Common Stock, and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification, shall not
have occurred prior to the commencement of the requisite 30 Trading Day or 10 Trading Day period,
as set forth above, then, and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. If the Common Stock is not publicly held or not
so listed or traded, “Current Market Price” per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

          (ii) For the purpose of any computation hereunder, the “Current Market Price” per share (or
Fractional Share) of Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the
Current Market Price per share (or Fractional Share) of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the “Current Market Price” per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such

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number may be
appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the Current Market Price of a
Fractional Share of Preferred Stock shall be equal to the Current Market Price of one share of
Preferred Stock divided by 100.

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

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

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

          (h) Unless the Company shall have exercised its election as provided in Section 11(i) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b)
and (c) hereof, each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of
Fractional Shares of Preferred Stock (calculated to the nearest one ten-thousandth of a Fractional
Share) obtained by (i) multiplying (x) the number of Fractional Shares of Preferred Stock covered
by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase Price.

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          (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in lieu of any adjustment in the number of Fractional Shares of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of Fractional Shares of
Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public announcement (with prompt
written notice thereof to the Rights Agent) of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(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 Section 14 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights Certificates so to be distributed
shall be issued and executed 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) Irrespective of any adjustment or change in the Purchase Price or the number of Fractional
Shares of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price per Fractional Share
and the number of Fractional Shares that were expressed in the initial Rights Certificates issued
hereunder.

          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, or the stated capital of the number of Fractional Shares of Preferred
Stock or of the number of shares of Common Stock or other securities issuable upon exercise of a
Right, the Company shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and nonassessable such
number of Fractional Shares of Preferred Stock or such number of shares of Common Stock or other
securities at such adjusted Purchase Price.

          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
(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 Fractional
Shares of Preferred Stock and other capital stock or securities of the Company, if any,

-22-

 

issuable
upon such exercise over and above the number of Fractional Shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares (fractional or otherwise) or securities upon the occurrence of the
event requiring such adjustment.

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

          (n) The Company covenants and agrees that it shall not, at any time that there is an Acquiring
Person, (i) consolidate with any other Person, (ii) merge with or into or be acquired pursuant to a
share exchange by any other Person or (iii) sell, lease or transfer (or permit one or more
Subsidiaries to sell, lease or transfer), in one transaction or a series of related transactions,
assets, earning power or cash flow aggregating 50% or more of the assets, earning power or cash
flow of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons, if (x)
at the time of or immediately after such consolidation, merger, share exchange,
sale, lease or transfer there are any rights, warrants or other instruments or securities of
the Company or any other Person outstanding or agreements, arrangements or understandings in effect
that would substantially diminish or otherwise eliminate the benefits intended to be afforded by
the Rights, (y) prior to, simultaneously with or immediately after such consolidation, merger,
share exchange, sale, lease or transfer, the shareholders or other equity owners of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates or
Associates, or (z) the identity, form or nature of organization of the Principal Party (including,
without limitation, the selection of the Person that will be the Principal Party as a result of the
Company’s entering into one or more consolidations, mergers, exchanges, sales, leases or transfers
with more than one party) would preclude or limit the exercise of Rights or otherwise diminish
substantially or eliminate the benefits intended to be afforded by the Rights.

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

          (p) Notwithstanding Section 3(c) hereof or any other provision of this Agreement to the
contrary, in the event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the

-23-

 

outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of shares or (iv)
otherwise reclassify 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 with Rights, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction (the “Adjustment Fraction”), the numerator of which
shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. In lieu of such adjustment in the
number of Rights associated with one share of Common Stock, the Company may elect (with prompt
written notice thereof to the Rights Agent) to adjust the number of Fractional Shares of Preferred
Stock purchasable, and the amount payable, upon the exercise of one Right. If the Company makes
such election, the number of Rights associated with one share of Common Stock shall remain
unchanged, and the number of Fractional Shares of Preferred Stock purchasable upon exercise of one
Right and the portion of the Purchase Price payable upon exercise of one Right shall be
proportionately adjusted so that (i) the number of Fractional Shares of Preferred Stock purchasable
upon exercise of a Right following such adjustment shall equal the product of the number of
Fractional Shares of Preferred Stock purchasable upon exercise of a Right immediately prior to such
adjustment multiplied by the Adjustment Fraction and (ii) the Purchase Price per Fractional Share
of Preferred Stock following such adjustment shall remain unchanged, with the effect that the
amount payable to exercise each Right will be changed to be
equal the product of the Purchase Price immediately prior to such adjustment multiplied by the
Adjustment Fraction.

          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 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment or
describing such event and a brief statement of the applicable facts, computations and methodology
accounting for such adjustment containing sufficient information to allow the Rights Agent to take
action with respect to such adjustment or event, (b) promptly file with the Rights Agent, and with
each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate and
(c) mail a brief summary thereof to each registered holder of a Rights Certificate (or, if prior to
the Distribution Date, to each registered holder of a certificate representing shares of Common
Stock) in accordance with 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 any knowledge of, any adjustment or
any such event unless and until it shall have received such a certificate.

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

-24-

 

          (a) In the event that, from and after the time an Acquiring Person has become such, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person,
and the Company shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or merger, or the Company
shall be party to a share exchange, and, in connection with such consolidation or merger or share
exchange, all or part of the outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of the Company or any other Person or cash or any other property, or
(z) the Company shall sell, lease or otherwise transfer (or one or more of its Subsidiaries shall
sell, lease or otherwise transfer), in one transaction or a series of related transactions, assets,
cash flow or earning power aggregating 50% or more of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or
any wholly owned Subsidiary of the Company or any combination thereof in one or more transactions
each of which complies (and all of which together comply) with Section 11(o) hereof), then, and in
each such case (except as may be contemplated by Section 13(d) hereof), proper provision shall be
made so that: (i) the Purchase Price shall be adjusted to be the Purchase Price immediately prior
to the first occurrence of a Triggering Event multiplied by the number of Fractional Shares of
Preferred Stock for which a Right was exercisable immediately prior to such first occurrence; (ii)
on and after the Distribution Date, each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof at the Purchase Price
in accordance with the terms of this Agreement, in lieu of shares of Preferred Stock or Common
Stock of the Company, such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the Purchase Price by 50% of the
Current Market Price per share of the Common Stock of such Principal Party on the date of
consummation of such Flip-Over Event; provided that the Purchase Price and the number of shares of
Common Stock of such Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of such first
occurrence of a Triggering Event or after the date of such Flip-Over Event, as applicable; (iii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Flip-Over
Event, all the obligations and duties of the Company pursuant to this Agreement; (iv) the term
“Company” shall thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Flip-Over Event; (v) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and
(vi) the provisions of Section 11(a)(ii) hereof shall be of no effect following the occurrence of
any Flip-Over Event.

          (b) “Principal Party” shall mean

     (i) in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger or consolidation

-25-

 

or share exchange,
or, if there is more than one such issuer, the issuer the Common Stock of which has the
greatest aggregate market value, or (B) if no securities are so issued, (x) the Person that
survives such consolidation or is the other party to the merger and survives such merger,
or, if there is more than one such Person, the Person the Common Stock of which has the
greatest aggregate market value or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including the Company
if it survives); and

     (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of the assets,
cash flow or earning power transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions receives the same portion of
the assets, cash flow or earning power so transferred, or if the Person receiving the
greatest portion of the assets, cash flow or earning power cannot be determined, the Person
the Common Stock of which has the greatest aggregate market value;

provided, however, that in any such case, if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve-month period registered under Section 12 of
the Exchange Act, and if (1) such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, “Principal Party” shall refer to such other
Person; (2) such Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of all of which are and have been so registered, “Principal Party” shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market
value; and (3) such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a “Subsidiary” of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person
bear to the total of such interests.

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

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

-26-

 

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

     (iii) use its best efforts, if the Common Stock of the Principal Party is or shall
become listed on a national securities exchange, to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities purchasable upon exercise of the
Rights to be reported by such transaction reporting system then in use; and

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

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

          (d) Notwithstanding anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to
a Permitted Offer (or a wholly owned Subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer, and (iii) the form of consideration being offered to
the remaining holders of shares of Common Stock pursuant to such transaction is the same as the
form of consideration paid pursuant to such Permitted Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall expire.

          Section 14. Fractional Rights and Fractional Shares.

          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates or
scrip evidencing fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the Closing Price of one
Right for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that are integral multiples of a
Fractional Share of Preferred Stock) upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Preferred Stock (other than, except as provided in
Section 7(c) hereof, fractions that are integral multiples of a

-27-

 

Fractional Share of Preferred
Stock). Interests in fractions of shares of Preferred Stock in integral multiples of a Fractional
Share of Preferred Stock may, at the election of the Company in its sole discretion, be evidenced
by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such depositary receipts. In lieu
of fractional shares of Preferred Stock that are not integral multiples of a Fractional 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 one
one-hundredth of the Closing Price of a share of Preferred Stock for the Trading Day immediately
prior to the date of such exercise.

          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the Closing Price of
one share of Common Stock for the Trading Day immediately prior to the date of such exercise.

          (d) The holder of a Right by the acceptance of the Right expressly waives his 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 under any section of this Agreement, 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 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. All rights of action in respect of this Agreement, other than rights
of action vested in the Rights Agent pursuant to Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock) and, where applicable, the Company; and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the 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 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

-28-

 

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. After a Triggering Event, holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys’ fees, incurred by them in any
action to enforce the provisions of this Agreement.

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

          (a) prior to the Distribution Date, the Rights will not be evidenced by Rights Certificates
and will be transferable only in connection with the transfer of Common Stock;

          (b) after the Distribution Date, the Rights Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the certificate contained
therein duly completed and fully executed;

          (c) subject to Section 6(a) and Section 7(f) hereof, 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 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 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) 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, the Company must use its best efforts to have
any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as
possible.

          Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of
the number of Fractional Shares of Preferred Stock or any other securities of the Company that may
at any time be issuable upon the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in

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Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions hereof.

          Section 18. Concerning the Rights Agent.

          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other reasonable disbursements incurred in the
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 (including, without limitation, the reasonable fees and
expenses of legal counsel), 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 this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the
Company. The provisions of this Section 18 and Section 20 below shall survive the termination
of this Agreement, the exercise or expiration of the Rights and the resignation, removal or
replacement of the Rights Agent.

          (b) The Rights Agent shall 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 and
administration of this Agreement and the exercise and performance of its duties hereunder, in
reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document believed by it, in
the absence of bad faith, to be genuine and to be signed, executed and, where necessary,
guaranteed, 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.

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

          (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; provided, however, that such Person would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent

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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 in case at that time any of the Rights Certificates
shall not have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

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

          Section 20. Duties of Rights Agent. The Rights Agent undertakes to perform only 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 for, and the Rights Agent shall incur no
liability for or in respect of, any action taken, suffered or omitted by it in the absence of bad
faith and 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 “Current 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 the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate 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 the absence of bad faith under the provisions of this Agreement in reliance upon such
certificate.

          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable judgment of a court of competent
jurisdiction). Anything to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the

-31-

 

Rights Agent has been advised
of the likelihood of such loss or damage and regardless of the form of action. 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 or be required to verify the
same (except as to its countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.

          (e) The Rights Agent shall not have any 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 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 the Rights becoming null and void or any change or adjustment
required under the provisions of Section 11 or Section 13 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 adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt of the certificate described in Section 12
hereof, upon which the Rights Agent may rely); 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 Preferred
Stock or Common Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or Common Stock or other securities
will, when so issued, be validly authorized and issued, fully paid and nonassessable.

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

          (g) The Rights Agent is hereby authorized and directed to accept advice or instructions with
respect to the performance of its duties hereunder from the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions shall be full authorization and
protection to the Rights Agent and it shall not be liable for or in respect of any action taken,
suffered or omitted to be taken by it, other than in bad faith, in accordance with advice or
instructions of any such officer or for any delay while waiting for those instructions. The Rights
Agent shall be fully authorized and protected in relying upon the most recent instructions received
by any such officer.

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

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not an Acquiring
Person) 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 and 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, omission, default, neglect or
misconduct, absent gross negligence, bad faith or willful misconduct in the selection and continued
employment thereof (which gross negligence, bad faith or willful misconduct must be determined by a
final, non-appealable judgment of a court of competent jurisdiction).

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

          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.

          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and the Preferred Stock known to the Rights
Agent, by registered or certified mail, and to the registered holders, if any, of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and the
Preferred Stock, by registered or certified mail, and to the registered holders of the Rights
Certificates, if any, by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, and other than as set forth in Section
31, in no event shall the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If the Company shall
fail to make such appointment within a period of 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 registered holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection by the Company), then the Rights Agent or
the 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 any state of the United States so long as such Person is in good standing,
is authorized under such laws to exercise corporate trust or stock transfer powers and is subject
to

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supervision or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $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 Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the registered holders, if any, of
the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.

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

          Section 23. Redemption and Termination.

          (a) The Board of Directors of the Company may, at its option, by action of a majority of the
whole Board of Directors at any time prior to the earlier of (i) the close of business on the tenth
day following the first date of public announcement of the occurrence of a Flip-In Event (or, if
such date shall have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date) (in either event, subject to acceleration to such earlier date as may be
determined by the Company’s Board of Directors as set forth below) and (ii) the Expiration Date,
cause the Company to redeem all but not less than all the then outstanding Rights at a redemption
price of $0.01 per Right, as such amount may be appropriately adjusted, if necessary, to reflect
any stock split, stock dividend or similar transaction occurring after the Rights Dividend
Declaration Date (such redemption price being

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hereinafter referred to as the “Redemption Price”);
provided, however, that if there is an Acquiring Person the Rights may not be redeemed (i) if from
and after the time a Person became an Acquiring Person, an Acquiring Person has caused the
composition of the Board of Directors to be changed with the result that a majority of its members
are representatives, nominees, designees, Affiliates or Associates of an Acquiring Person
(including the Acquiring Person as a designee of the Acquiring Person), or (ii) following any
merger to which the Company is a party that (i) occurs when there is an Acquiring Person and
(ii) was not approved (x) prior to the time such Person became an Acquiring Person by the Board of
Directors of the Company and (y) prior to such merger by the shareholders of the Company at a
shareholders’ meeting (and not by written consent). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a
Flip-In Event until such time as the Company’s right of redemption hereunder has expired. The
Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors. The Board of Directors of the Company may, to the extent set forth in the
first sentence of this Section 23(a), irrevocably accelerate the time set forth in clause (i) of
such sentence to a specified earlier time or to an unspecified earlier time to be determined by a
subsequent action or event (but in no event to a time later than the time otherwise specified in
clause (i)), in which event the Rights shall not be redeemable from and after such specified time.
Notwithstanding the foregoing provisions of this Section 23(a), the Board of Directors may not
effect any such redemption at any time after (i) any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the shares of Common Stock then outstanding or (ii) the occurrence of a Flip-Over Event.

          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights (the effectiveness of which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may be effective at
some future time), evidence of which shall be filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the effectiveness of the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and
the registered holders of the then outstanding Rights 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 Company for the Common Stock. Any notice that
is mailed in the manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption shall state the method by which the payment of the
Redemption Price will be made.

          Section 24. Exchange.

          (a) The Board of Directors of the Company may, at its option, at any time and from time to
time after the occurrence of a Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock or Common Stock Equivalents or any combination
thereof, at an exchange ratio of one share of Common

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Stock, or such number of Common Stock Equivalents or units representing fractions thereof as would
be deemed to have the same value as one share of Common Stock, per Right, appropriately adjusted,
if necessary, to reflect any stock split, stock dividend or similar transaction occurring after the
Rights Dividend Declaration Date (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors may not effect such
exchange at any time after (i) any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the shares
of Common Stock then outstanding or (ii) the occurrence of a Flip-Over Event.

          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to and in accordance with subsection (a) of this
Section 24 (the effectiveness of which action may be conditioned on the occurrence of one or more
events or on the existence of one or more facts or may be effective at some future time) 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 and/or Common Stock Equivalents equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of
any such exchange (with prompt written notice thereof to the Rights Agent); provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the registered holders of
such Rights at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock and/or Common Stock Equivalents for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected as nearly pro rata as possible based on the number of Rights
(other than Rights that have become null and void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.

          (c) In the event that the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company may, at its option, take all such
action as may be necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.

          (d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates or scrip evidencing fractional shares of Common Stock upon exchange of the
Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the value of a whole share of Common
Stock. For purposes of this Section 24, the value of a whole share of Common Stock shall be the
Closing Price per share of Common Stock for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.

-36-

 

          (e) Upon or prior to ordering the exchange of Rights pursuant to this Section 24, or as
promptly as reasonably practicable thereafter, the Board of Directors of the Company may direct the
Company to enter into a Trust Agreement (the “Trust Agreement”) in such form and with such terms as
the Board of Directors shall then approve. If the Board of Directors so directs, (1) the Company
shall enter into the Trust Agreement and shall issue to the trust created by the Trust Agreement
(the “Trust”) all the shares of Common Stock and/or Common Stock Equivalents (the “Trust Shares”)
issuable upon exchange of the Rights in accordance with this Section 24 to (x) all holders of
outstanding and exercisable Rights subject to exchange in accordance with Section 24(a) (which
shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof),
or (y) some portion of such holders (which may consist of holders who have not taken proper steps
to certify or otherwise demonstrate to the satisfaction of the Company that the Rights held by them
have not become void pursuant to the provisions of Section 7(e) hereof), and (2) all holders
referred to in clause (1) shall be entitled to receive Common Stock and/or Common Stock Equivalents
pursuant to this Section 24 only from the Trust and only upon compliance with the relevant terms
and provisions of the Trust Agreement. The Trust Shares shall also include any dividends or
distributions made on the Trust Shares after the deposit of the Trust Shares.

          Section 25. Notice of Certain Events.

          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), or to effect any sale, lease or other
transfer of 50% or more of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than a wholly owned
Subsidiary of the Company in a transaction that complies with Section 11(o) hereof), or (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to be acquired pursuant
to a share exchange, then, in each such case, the Company shall give to the Rights Agent and to
each holder of record of a Rights Certificate, to the extent feasible and 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 of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, lease, 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 20 days prior to the record date for determining
holders of the shares of Preferred Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the shares of Preferred Stock, whichever shall be the
earlier. The failure to give notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote upon any such
action.

-37-

 

          (b) In case any Flip-In Event or Flip-Over Event shall occur, then (i) the Company shall as
soon as practicable thereafter give to each registered holder of a Rights Certificate (or if
occurring prior to the Distribution Date, the registered holders of Common Stock), in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or Section 13(a) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, other securities.

          Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:

Dawson Geophysical Company

508 West Wall, Suite 800

Midland, Texas 79701

Attention: President and CEO

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 if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:

Mellon Investor Services LLC

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. Except as provided in the last sentence of this Section 27, at any time when the Rights are then
redeemable, 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

-38-

 

holders of Rights or holders of Common Stock. At any time when the Rights are not
redeemable, except as provided in the last sentence of this Section 27, 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) to correct or supplement
any provision contained herein that may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or desirable; provided that
no such amendment or supplement shall materially adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person); and
further provided that this Agreement may not be supplemented or amended pursuant to this sentence
to lengthen (A) a time period relating to when the Rights may be redeemed or (B) any other time
period unless the lengthening of such other time period is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights (other than any
Acquiring Person and its Affiliates and Associates). 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; provided, however, that the Rights Agent may, but shall not be obligated to, enter into
any such supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement. Action by the Company to approve any amendment or supplement to
this Agreement must be approved by the majority of the whole Board of Directors. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment shall be made that
decreases the Redemption Price.

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

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

-39-

 

the Rights. The Rights Agent is
entitled always to assume the Company’s Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.

          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 the Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).

          Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of this Agreement, then,
unless there is an Acquiring Person and there has occurred either a change in composition of the
Board of Directors or a merger in either case of the type referred to in the proviso to the first
sentence of Section 23(a), the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day following the date of
such determination by the Board of Directors of the Company or, if earlier, immediately prior to
any such change in composition or merger; provided further, that if such excluded provision shall
affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be
entitled to resign immediately. Without limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board of Directors of the Company is held by a court
of competent jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the entire Board of Directors of the Company.

          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 Texas 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 and to be performed entirely within
such State.

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

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

-40-

 

          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.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on July
8, 2009 to be effective as of the close of business on July 23, 2009.

	 	 	 	 	 
	 	 	DAWSON GEOPHYSICAL COMPANY
	 
	 	 	 	 
	 

	 	By	 	/s/ Stephen C. Jumper
	 

	 	 	 	 
	 

	 	Name:
	 	Stephen C. Jumper
	 

	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 
	 	 	MELLON INVESTOR SERVICES LLC,
	 	 	as Rights Agent
	 
	 	 	 	 
	 

	 	By	 	/s/ Jane A. Marten
	 

	 	 	 	 
	 

	 	Name:	 	Jane A. Marten
	 

	 	Title:	 	Relationship Manager

-41-

 

Exhibit A

FORM OF

STATEMENT OF RESOLUTION ESTABLISHING SERIES OF SHARES

designating

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

DAWSON GEOPHYSICAL COMPANY

Pursuant to Article 2.13 of the Texas Business Corporation Act

          Pursuant to the provisions of Article 2.13 of the Texas Business Corporation Act, the
undersigned corporation submits the following statement for the purpose of establishing and
designating a series of shares of Preferred Stock, par value $1.00 per share, designated as “Series
A Junior Participating Preferred Stock” and fixing and determining the relative rights and
preferences thereof to become effective as of 5:00 p.m., Dallas, Texas time on July 23, 2009:

          I. The name of the corporation is Dawson Geophysical Company (the “Corporation”).

          II. The following resolution, establishing and designating a series of shares and fixing and
determining the relative rights and preferences thereof, was duly adopted by all necessary action
on the part of the Corporation, consisting of due adoption by the Board of Directors of the
Corporation at a meeting duly held on July 8, 2009:

     RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of the Second Restated Articles
of Incorporation, and effective as of 5:00 p.m. on July 23, 2009, a series of
Preferred Stock, par value $1.00 per share, of the Corporation be and hereby is
created, and that the designation and number of shares thereof and the preferences,
limitations and relative rights, including voting, of the shares of such series, and
the qualifications, limitations and restrictions thereof are as follows:

Series A Junior Participating Preferred Stock

          1. Designation and Amount. There shall be a series of Preferred Stock that shall be designated as “Series A Junior
Participating Preferred Stock,” and the number of shares constituting such series shall be 500,000.
Such number of shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of  Series A Junior
Participating Preferred Stock to less than the number of shares then issued and outstanding plus
the number of shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.

A-1

 

          2. Dividends and Distributions.

          (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of any class or series of stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally available for the purpose,
(1) quarterly dividends payable in cash on March 31, June 30, September 30 and December 31 in each
year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 and (b) the Adjustment Number (as defined below)
times the aggregate per share amount of all cash dividends, and (2) the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $0.33 1/3
per share, of the Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. The
“Adjustment Number” shall initially be 100. In the event the Corporation shall at any time after
July 8, 2009 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

          (B) The Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

          (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend

A-2

 

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

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

          (A) Each share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters submitted to a vote of
the shareholders of the Corporation.

          (B) Except as otherwise provided herein, in the Second Restated Articles of Incorporation or
by law, the holders of shares of Series A Junior Participating Preferred Stock, the holders of
shares of any other class or series entitled to vote with the Common Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.

          (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a “default period”) that shall extend
until such time when all accrued and unpaid dividends for all previous quarterly dividend periods
and for the current quarterly dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and paid or set apart for payment.
During each default period, (1) the number of Directors shall be increased by two, effective as of
the time of election of such Directors as herein provided, and (2) the holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock) upon which these or like
voting rights have been conferred and are exercisable (the “Voting Preferred Stock”) with dividends
in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect such two Directors.

          (ii) During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders, and thereafter at
annual meetings of shareholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Voting Preferred Stock of such voting right.

          (iii) Unless the holders of Voting Preferred Stock shall, during an existing default period,
have previously exercised their right to elect Directors, the Board of Directors

A-3

 

may order, or any
shareholder or shareholders owning in the aggregate not less than ten percent of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series, may request, the calling
of a special meeting of the holders of Voting Preferred Stock, which meeting shall thereupon be
called by the Chairman of the Board, the Chief Executive Officer, the President, a Vice President
or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which
holders of Voting Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Voting Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such order or request or, in
default of the calling of such meeting within 60 days after such order or request, such meeting may
be called on similar notice by any shareholder or shareholders owning in the aggregate not less
than ten percent of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed for the next annual meeting
of the shareholders.

          (iv) In any default period, after the holders of Voting Preferred Stock shall have exercised
their right to elect Directors voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their successors shall have been elected by
such holders or until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors theretofore elected by the
holders of the class or classes of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.

          (v) Immediately upon the expiration of a default period, (x) the right of the holders of
Voting Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Second Restated Articles of
Incorporation or By-Laws irrespective of any increase made pursuant to the provisions of paragraph
(C) of this Section 3 (such number being subject, however, to change thereafter in any manner
provided by law or in the Second Restated Articles of Incorporation or By-Laws). Any vacancies in
the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors.

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

          4. Certain Restrictions.

          (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared,

A-4

 

on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation
shall not

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

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

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

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

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

          6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation,
no distribution shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of such payment (the
“Series A Junior Participating Preferred Stock Liquidation Preference”). Following the payment of
the full amount of the Series A Junior Participating Preferred Stock Liquidation Preference, no
additional distributions shall be made to

A-5

 

the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series
A Junior Participating Preferred Stock Liquidation Preference by (ii) the Adjustment Number.
Following the payment of the full amount of the Series A Junior Participating Preferred Stock
Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall, subject to the prior
rights of all other series of Preferred Stock, if any, ranking prior thereto, receive their ratable
and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Series A Junior Participating Preferred Stock and Common Stock, on
a per share basis, respectively.

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

          (C) Neither the merger or consolidation of the Corporation into or with another corporation
nor the merger or consolidation of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 6, but the sale, lease or conveyance of all or substantially all the Corporation’s assets
shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.

          7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, share
exchange or other transaction in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any such case each share of
Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to the Adjustment Number 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.

          8. Redemption. (A) The Corporation, at its option, may redeem shares of the Series A Junior Participating
Preferred Stock in whole at any time and in part from time to time, at a redemption price equal to
the Adjustment Number times the current per share market price (as such term is hereinafter
defined) of the Common Stock on the date of the mailing of the notice of redemption, together with
unpaid accumulated dividends to the date of such redemption. The “current per share market price”  on
any date shall be deemed to be the average of the closing price per share of such Common Stock for
the ten consecutive Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market price of the Common
Stock is determined during a period

A-6

 

following the announcement of (A) a dividend or distribution on
the Common Stock other than a regular quarterly cash dividend or (B) any subdivision, combination
or reclassification of such Common Stock and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification, shall not
have occurred prior to the commencement of such ten Trading Day period, then, and in each such
case, the current per share market price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sales 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 transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by such self-regulatory organization or
registered securities information processor (as such terms are used under the Securities Exchange
Act of 1934, as amended) that then reports information concerning the Common Stock, or, if sales
price information is not so reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by such entity, or, if on any such date the Common
Stock is not quoted by any such entity, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock selected by the Board
of Directors of the Corporation. If on any such date no such market maker is making a market in
the Common Stock, the fair value of the Common Stock on such date as determined in good faith by
the Board of Directors of the Corporation shall be used. The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange but is quoted by such a self-regulatory organization
or registered securities information processor, a day on which such entity reports trades, or, if
the Common Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or Friday on which
banking institutions in the State of New Jersey are not authorized or obligated by law or executive
order to close.

          (B) In the event that fewer than all the outstanding shares of the Series A Junior
Participating Preferred Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be determined by lot or
pro rata as may be determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.

          (C) Notice of any such redemption shall be given by mailing to the holders of the shares of
Series A Junior Participating Preferred Stock to be redeemed a notice of such redemption, first
class postage prepaid, not later than the fifteenth day and not earlier than the sixtieth day
before the date fixed for redemption, at their last address as the same shall appear upon the books
of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the number of
shares to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place
or places where certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue on the close of
business on such redemption date. Any notice that is mailed in the manner herein

A-7

 

provided shall be
conclusively presumed to have been duly given, whether or not the shareholder received such notice,
and failure duly to give such notice by mail, or any defect in such notice, to any holder of Series
A Junior Participating Preferred Stock shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Junior Participating Preferred Stock that are to be
redeemed. On or after the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be entitled to receive
payment of the redemption price. If fewer than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

The shares of Series A Junior Participating Preferred Stock shall not be subject to the operation
of any purchase, retirement or sinking fund.

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

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

          11. Fractional Shares. Series A Junior Participating Preferred Stock 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 A Junior Participating Preferred Stock.

          III. The following resolution amending a series of shares was duly adopted by all necessary
action on the part of the Corporation, consisting of due adoption by the Board of Directors of the
Corporation at a meeting duly held on July 8, 2009:

     RESOLVED, that this Statement of Resolution shall supersede and replace in its
entirety the Corporation’s prior Statement of Resolution related to Series A Junior
Participating Preferred Stock, of which no shares have been issued, filed by the
Company with the Secretary of State of the State of Texas on July 15, 1999, which
prior Statement of Resolution is hereby cancelled by the Corporation and shall be of
no further force or effect as of 5:00 p.m. on July 23, 2009.

A-8

 

     IN WITNESS WHEREOF, the undersigned has executed this Statement of Resolution and does affirm
the foregoing as true this 8th day of July, 2009.

	 	 	 
	 

	 	 
	 

	 	Christina W. Hagan, Executive Vice President,
	 

	 	Secretary, and Chief Financial Officer

A-9

 

Exhibit B

[Form of Rights Certificate]

			
	 	 	 
	Certificate No. R-
	 	                     Rights

NOT EXERCISABLE AFTER JULY 23, 2019 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Rights Certificate

DAWSON GEOPHYSICAL COMPANY

          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, effective as of the close of business on
July 23, 2009 as it may from time to time be supplemented or amended (the “Rights Agreement”),
between Dawson Geophysical Company, a Texas corporation (the “Company”), and Mellon Investor
Services LLC, a New Jersey limited liability company (the “Rights Agent”), to purchase from the
Company at any time prior to 5:00 p.m. (Jersey City, New Jersey time) on July 23, 2019 at the
office or offices of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully paid, nonassessable share (a “Fractional Share”) of Series A
Junior Participating Preferred Stock, par value $1.00 per share (the “Preferred Stock”), of the
Company, at a purchase price of $130.00 per one one-hundredth of a share (the “Purchase Price”),
upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate set forth on the reverse hereof duly executed. The Purchase Price may be
paid in cash or by certified check, cashier’s or official bank check or bank draft payable to the
order of the Company or the Rights Agent. The number of Rights evidenced by this Rights
Certificate (and the number of shares that may be purchased upon exercise thereof) set forth above,
and the Purchase Price per Fractional Share set forth above, are the number and Purchase Price as
of the close of business on July 23, 2009, based on the Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.

          From and after the first occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by or
transferred to (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such

B-1

 

Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of a person who, concurrently with or after such transfer, became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person, such Rights shall, with certain exceptions,
become null and void in the circumstances set forth in the Rights Agreement, and no holder hereof
shall have any rights whatsoever with respect to such Rights from and after the occurrence of such
Triggering Event.

          As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities or assets that may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.

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

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

          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at its option at a redemption price of $0.01 per Right, payable,
at the election of the Company, in cash or shares of Common Stock or such other consideration as
the Board of Directors may determine, at any time prior to the earlier of the close of business on
(a) the tenth day following the first public announcement of the occurrence of a Flip-In Event (as
such time period may be extended or shortened pursuant to the Rights Agreement) and (b) the
Expiration Date (as such term is defined in the Rights Agreement) or (ii) may be exchanged in whole
or in part for shares of Common Stock and/or other equity securities of the Company deemed to have
the same value as shares of Common Stock, at any time prior to a person’s becoming the beneficial
owner of 50% or more of the shares of Common Stock outstanding or the occurrence of a Flip-Over
Event.

          No fractional shares of Preferred Stock are required to be issued upon the exercise of any
Right or Rights evidenced hereby (other than, except as set forth above, fractions that are
integral multiples of a Fractional Share of Preferred Stock, which may, at the election of the

B-2

 

Company, be evidenced by depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.

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

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

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

Dated as of the close of business on July 23, 2009

	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	DAWSON GEOPHYSICAL COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Christina W. Hagan	 	 	 	 	 	Stephen C. Jumper	 	 
	Secretary	 	 	 	 	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Countersigned:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MELLON INVESTOR SERVICES LLC,	 	 	 	 	 	 	 	 
	as Rights Agent	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Authorized Signature	 	 	 	 	 	 	 	 

B-3

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires

to transfer any Rights evidenced by the Rights Certificate.)

FOR VALUE RECEIVED                                          hereby sells, assigns and transfers unto                                                             

                                                           
                                                                     
                                                                           
                                                               

(Please print name and address of transferee)

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

Dated:                     , 20___

	 	 	 	 	 
	 

	 	

                                                                      
Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

B-4

 

Certificate

          The undersigned hereby certifies by checking the appropriate boxes that:

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

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

	 	 	 	 	 
	Dated:                     , 20___

	 	

                                                                      

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

NOTICE

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

B-5

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)

To: DAWSON GEOPHYSICAL COMPANY

          The undersigned hereby irrevocably elects to exercise                      Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares (or other 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 shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in the name of and
delivered to:

Please insert social security

or other identifying number

 

(Please print name and address)

 

Dated:                     , 20___

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

B-6

 

Certificate

          The undersigned hereby certifies by checking the appropriate boxes that:

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

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

	 	 	 	 	 
	Dated:                     , 20___

	 	

                                                                      
Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

NOTICE

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

B-7

 

Exhibit C

Under certain circumstances set forth in the Rights Agreement, Rights beneficially owned by or
transferred to any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), and certain transferees thereof, will
become null and void and will no longer be transferable.

SUMMARY OF RIGHTS

          On July 8, 2009, the Board of Directors of Dawson Geophysical Company (the “Company”) declared
a dividend of one right (“Right”) for each outstanding share of the Company’s Common Stock, par
value $0.33 1/3 per share (“Common Stock”), to shareholders of record at the close of business on
July 23, 2009. Each Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundredth of a share (a “Fractional Share”) of Series A Junior Participating
Preferred Stock, par value $1.00 per share (the “Preferred Stock”), at a purchase price of $130.00
per Fractional Share, subject to adjustment (the “Purchase Price”). The description and terms of
the Rights are set forth in a Rights Agreement effective as of the close of business on July 23,
2009 as it may from time to time be supplemented or amended (the “Rights Agreement”) between the
Company and Mellon Investor Services LLC, as Rights Agent.

          Initially, the Rights will be attached to all certificates representing outstanding shares of
Common Stock, and no separate certificates for the Rights (“Rights Certificates”) will be
distributed. The Rights will separate from the Common Stock and a “Distribution Date” will occur,
with certain exceptions, upon the earlier of (i) ten days following a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the date of the announcement being the “Stock Acquisition Date”), or (ii) ten
business days following the commencement of a tender offer or exchange offer that would result in a
person’s becoming an Acquiring Person. In certain circumstances, the Distribution Date may be
deferred by the Board of Directors. Certain inadvertent acquisitions will not result in a person’s
becoming an Acquiring Person if the person promptly divests itself of sufficient Common Stock. If
at the time of the adoption of the Rights Agreement, any person or group of affiliated or
associated persons is the beneficial owner of 15% or more of the outstanding shares of Common
Stock, such person shall not become an Acquiring Person unless and until certain increases in such
person’s beneficial ownership occur or are deemed to occur. Until the Distribution Date, (a) the
Rights will be evidenced by the Common Stock certificates (together with a copy of this Summary of
Rights or bearing the notation referred to below) and will be transferred with and only with such
Common Stock certificates, (b) new Common Stock certificates issued after the close of business on
July 23, 2009 will contain a notation incorporating the Rights Agreement by reference and (c) the
surrender for transfer of any certificate for Common Stock (with or without a copy of this Summary
of Rights) will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.

C-1

 

          The Rights are not exercisable until the Distribution Date and will expire at the close of
business on July 23, 2019, unless earlier redeemed or exchanged by the Company as described below.

          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Common Stock as of the close of business on the Distribution Date and, from
and after the Distribution Date, the separate Rights Certificates alone will represent the Rights.
All shares of Common Stock issued prior to the Distribution Date will be issued with Rights.
Shares of Common Stock issued after the Distribution Date in connection with certain employee
benefit plans or upon conversion of certain securities will be issued with Rights. Except as
otherwise determined by the Board of Directors, no other shares of Common Stock issued after the
Distribution Date will be issued with Rights.

          In the event (a “Flip-In Event”) that a person becomes an Acquiring Person (except pursuant to
a tender or exchange offer for all outstanding shares of Common Stock at a price and on terms that
a majority of the directors of the Company who are not, and are not representatives, nominees,
Affiliates or Associates of, an Acquiring Person or the person making the offer determines to be
fair to and otherwise in the best interests of the Company and its shareholders (a “Permitted
Offer”)), each holder of a Right will thereafter have the right to receive, upon exercise of such
Right, a number of shares of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a Current Market Price (as defined in the Rights Agreement) equal
to two times the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of any Triggering Event, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by or transferred to an Acquiring Person (or by
certain related parties) will be null and void in the circumstances set forth in the Rights
Agreement. However, Rights are not exercisable following the occurrence of any Flip-In Event until
such time as the Rights are no longer redeemable by the Company as set forth below.

          In the event (a “Flip-Over Event”) that, at any time from and after the time an Acquiring
Person becomes such, (i) the Company is acquired in a merger or other business combination
transaction (other than certain mergers that follow a Permitted Offer), or (ii) 50% or more of the
Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except
Rights that are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a Current Market Price
equal to two times the exercise price of the Right. Flip-In Events and Flip-Over Events are
collectively referred to as “Triggering Events.”

          The number of outstanding Rights associated with a share of Common Stock, or the number of
Fractional Shares of Preferred Stock issuable upon exercise of a Right and the Purchase Price, are
subject to adjustment in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock occurring prior to the Distribution Date. The Purchase Price
payable, and the number of Fractional Shares of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution in the event of certain transactions affecting the Preferred Stock.

C-2

 

          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional shares of Preferred Stock
that are not integral multiples of a Fractional Share are required to be issued upon exercise of
Rights and, in lieu thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.

          At any time until ten days following the first date of public announcement of the occurrence
of a Flip-In Event, the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right, payable, at the option of the Company, in cash, shares of Common Stock or such
other consideration as the Board of Directors may determine. After a person becomes an Acquiring
Person, the right of redemption is subject to certain limitations in the Rights Agreement.
Immediately upon the effectiveness of the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of Rights will be to
receive the $0.01 redemption price. The Rights Agreement does not prevent a shareholder from
conducting a proxy contest to remove and replace the Board with directors who then vote to redeem
the Rights, if such actions are taken prior to the time that such shareholder becomes an Acquiring
Person.

          At any time after the occurrence of a Flip-In Event and prior to a person’s becoming the
beneficial owner of 50% or more of the shares of Common Stock then outstanding or the occurrence of
a Flip-Over Event, the Company may exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person, which will have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, and/or other equity securities
deemed to have the same value as one share of Common Stock, per Right, subject to adjustment.

          Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive dividends.

          Other than the redemption price, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company as long as the Rights are redeemable. Thereafter, the
provisions of the Rights Agreement other than the redemption price may be amended by the Board of
Directors in order to cure any ambiguity, defect or inconsistency, to make changes that do not
materially adversely affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to lengthen the time period governing redemption shall be made at such
time as the Rights are not redeemable.

          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an exhibit to a Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Company and the Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which
is incorporated herein by reference.

C-3

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