Document:

exv10w1

Exhibit 10.1

CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

     This CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT, dated as of June 25, 2008 is made between
Robert Gipson (the “Purchaser”) and ALSERES PHARMACEUTICALS, INC., a Delaware corporation (the
“Company”).

RECITALS

     WHEREAS, the Company requires certain funds for the operation of its business; and

     WHEREAS, the Purchaser is willing to provide the Company with up to $5,000,000 through the
purchase of the Convertible Note (defined below) on the terms and conditions hereafter provided;

     NOW, THEREFORE, in order to induce the Purchaser to purchase the Convertible Note and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
and intending to be legally bound, the Purchaser and the Company hereby agree as follows:

     1. DEFINED TERMS. When used in this Agreement the following terms shall have the following
meanings (such meanings being equally applicable to both the singular and plural forms of the terms
defined):

     “Affiliates” shall mean any corporation, company, partnership, joint venture and/or firm that
controls, is controlled by, or is under common control with the Company. For purposes of this
definition, “control” shall mean (a) in the case of corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the
election of directors and (b) in the case of non-corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the equity interest with the power to direct the management and
policies of such non-corporate entities.

     “Agreement” means this Convertible Promissory Note Purchase Agreement, as it may be amended or
modified and in effect from time to time.

     “Closing” has the meaning set forth in Section 2.2 hereof.

     “Common Stock” means the common stock, $0.01 par value per share, of the Company.

     “Convertible Note” shall have the meaning set forth in Section 2.1 hereof.

     “Electing Purchaser” shall have the meaning set forth in Section 4.2 hereof.

     “Event of Default” shall have the meaning set forth in Section 9 hereof.

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

 

 

     “First Commercial Sale” shall mean, with respect to each Molecular Imaging Product, the first
commercial sale in a country as part of a nationwide introduction by the Company, its Affiliates or
its or its Affiliates’ licensees or sublicensees.

     “Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from
time to time may be contracted for, charged, or received under the laws applicable to the Purchaser
which are presently in effect or, to the extent allowed by law, under such applicable laws which
allow a higher maximum nonusurious interest rate than applicable laws now allow.

     “Loan Documents” means collectively, this Agreement and the Convertible Note.

     “Maturity Date” means the earliest to occur of (a) December 31, 2010 and (b) the date on which
the Purchaser declares an Event of Default to have occurred.

     “Molecular Imaging Products” shall mean products approved for sale by the appropriate U.S.
and/or foreign regulatory body containing as the active ingredient the Company’s radio-labeled
molecular imaging agents, currently in development or developed by the Company in the future,
including, without limitation, the ALTROPANE® and FLUORATEC molecular imaging agents, for the
diagnosis and monitoring of Parkinson’s Disease and Attention Deficit Hyperactivity Disorder using
SPECT or PET camera imaging techniques.

     “Net Sales” shall mean the gross amount received by the Company, its Affiliates and/or its or
its Affiliates’ licensees or sublicensees on sales or other dispositions of Molecular Imaging
Products to Third Parties (other than licensees or sublicensees) in bonafide, arm’s-length
transactions, less the following deductions:

     (a) Trade, cash and/or quantity discounts actually allowed and taken directly with respect to
such sales, as reflected in the amount invoiced;

     (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly by the
Company with respect to the production, sale, delivery or use of the Molecular Imaging Product
(excluding national, state or local taxes based on income), as reflected in the amount invoiced;

     (c) Amounts repaid or credited by reason of rejections, defects, recalls or returns, or
because of chargebacks, refunds, rebates, retroactive price reductions or delayed ship orders;

     (d) Amounts credited for uncollectible amounts on previously sold products;

     (e) Freight, insurance and other transportation charges incurred in shipping a Molecular
Imaging Product to Third Parties, as reflected in the amount invoiced;

     (f) Deduction of one percent (1%) for distribution and warehousing expenses; and

     (g) Any other reduction or specifically identifiable amounts included in the gross invoice
that are creditable for reasons substantially equivalent to those listed above.

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     Notwithstanding anything in this Agreement to the contrary, “Net Sales” shall exclude any
sales or other disposition of Molecular Imaging Products for test marketing, clinical trial
purposes or compassionate or similar use.

     Net Sales amounts shall be determined from the books and records of the Company, its
Affiliates and/or its or its Affiliates’ licensees or sublicensees, maintained in accordance with
generally accepted accounting principles, consistently applied.

     Sales between or among the Company, its Affiliates or their respective licensees and
sublicensees shall be disregarded for purposes of calculating Net Sales. In the case of any sale
or other disposal of a Molecular Imaging Product between or among the Company and its Affiliates,
licensees and sublicensees, for resale, Net Sales shall be calculated as above only on the value
charged or invoiced on the first arm’s-length sale thereafter to a Third Party.

     In the case of any sale or other disposal for value, such as barter or counter-trade, of any
Molecular Imaging Product, or part thereof, other than in an arm’s-length transaction exclusively
for money, Net Sales shall be calculated as above on the value of the non-cash consideration
received or the fair market price (if higher) of the Molecular Imaging Product in the country of
sale or disposal.

     In the event the Molecular Imaging Product is sold in a finished dosage form in combination
with one or more other active ingredients (a “Combination Product”), the Net Sales of the Molecular
Imaging Product, for the purposes of determining royalty payments, shall be determined by
multiplying the Net Sales (as defined above) of the Combination Product by the fraction, ‘A/(A+B)’
where ‘A’ is the weighted (by sales volume) average sale price in the relevant country of the
Molecular Imaging Product when sold separately in finished form and ‘B’ is the weighted average
sale price in that country of the other product(s) sold separately in finished form. In the event
that such average sale price cannot be determined for both the Molecular Imaging Product and the
other product(s) in the Combination Product, Net Sales for purposes of determining royalty payments
shall be agreed by the Parties based on the relative value contributed by each component, such
agreement not to be unreasonably withheld.

     “Obligations” means all unpaid principal of and accrued and unpaid interest on the Convertible
Note, and all other obligations, interest, fees, charges and expenses of the Company to the
Purchaser arising under the Loan Documents.

     “Pre-Commercial Income” shall mean, with respect to each Molecular Imaging Product, all
license fees, milestone payments and other amounts received by the Company and/or its Affiliates
from Third Parties in connection with or related to the licensing or sublicensing to such Third
Parties of the Company’s and/or its Affiliate’s rights under the intellectual property covering the
Molecular Imaging Product. Notwithstanding anything in the foregoing to the contrary,
“Pre-Commercial Income” shall exclude (a) any royalty payments or milestone payments based upon
commercial sales levels, (b) amounts received for research and development activities undertaken
for, or in collaboration with, such Third Parties, (c) amounts received for debt or equity
securities of the Company and/or its Affiliates, provided that any amounts received in excess of
the then current fair market value of such debt or equity securities

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shall, to the extent of such excess, be deemed to be Pre-Commercial Income, and (d) transfer
pricing amounts paid in respect of Molecular Imaging Products supplied to such Third Parties.

     “Purchaser” shall have the meaning set forth in the preamble to this Agreement.

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

     “Stockholder Approval” shall have the meaning set forth in Section 4.1(b) hereof.

     “Third Party” shall mean any person or entity other than the Company or any of its Affiliates.

     “Total Converted Balance” shall have the meaning set forth in Section 4.2 hereof.

     “Valid Claim” means a claim of any issued, unexpired United States or foreign patent, which
shall not be disclaimed, nor held invalid or unenforceable by a court of competent jurisdiction in
an unappealed or unappealable decision.

     2. CONVERTIBLE NOTE FACILITY.

          2.1 Purchase and Sale of the Convertible Note. At the Closing (as defined below), the
Purchaser agrees on the terms of and subject to the conditions specified in this Agreement, to
purchase from the Company, and the Company agrees to sell to the Purchaser, a convertible
promissory note dated as of the date of the Closing in the form attached to this Agreement as
Exhibit A (the “Convertible Note”); provided, however, that in no event shall the Purchaser be
obligated hereunder to purchase, in the aggregate, more than a principal amount of $5 million in
Convertible Notes.

          2.2 Closing. The closing of the issuance and sale of the Convertible Note issued
hereunder shall be held at the offices of counsel to the Company at 5:00 p.m. on the date and place
as the Company and the Purchaser mutually agree in writing (such date, a “Closing”).

          2.3 Payment of Convertible Note Purchase Price. At the Closing, (i) the Company shall
deliver to the Purchaser a Convertible Note, and (ii) as payment in full for the Convertible Note
being purchased by the Purchaser at the Closing, the Purchaser shall pay its purchase amount to the
Company by wire transfer of immediately available funds to an account designated by the Company.

          2.4 Interest. Interest shall accrue on the Convertible Note from the date of issuance
until the Convertible Note is paid in full or otherwise converted pursuant to Section 4 hereof.
The Company promises to pay interest on the outstanding principal amount of the Convertible Note
(i) until the Maturity Date, or if earlier, conversion pursuant to Section 4 hereof, at a per annum
interest rate equal to five percent (5%), (ii) from and after the Maturity Date, or during the
continuance of an Event of Default, at a per annum rate equal to ten percent (10%) or (iii) if less
than the rates applicable under both clauses (i) and (ii), the Highest Lawful Rate. Interest shall
be calculated on the basis of a 360-day year for the actual number of days elapsed. Interest shall
accrue until paid in full and all unpaid interest shall be due and payable on the Maturity Date,
unless otherwise converted pursuant to Section 4 hereof.

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          2.5 Method of Payment. All payments of principal, interest, and fees hereunder shall
be made on the date when due in immediately available funds in United States Dollars to the
Purchaser at his address specified on the signature page hereof, or at such other address as shall
be directed by the applicable Purchaser in a writing received by the Company.

          2.6 Prepayments. The Company may not prepay any amounts under the Convertible Note
whether principal or interest.

          2.7 Usury Savings Clause. Notwithstanding any other provision herein, the aggregate
interest rate charged with respect to any of the Obligations, shall not exceed the Highest Lawful
Rate. If the rate of interest (determined without regard to the preceding sentence) under this
Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount under the Convertible
Note issued hereunder shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due hereunder if the
stated rates of interest set forth in this Agreement had at all times been in effect. In addition,
if when the Convertible Note issued hereunder is repaid in full the total interest due hereunder is
less than the total amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to the extent permitted
by law, the Company shall pay to the Purchaser an amount equal to the difference between the amount
of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate
had at all times been in effect. Notwithstanding the foregoing, it is the intention of the
Purchaser and the Company to conform strictly to any applicable usury laws. Accordingly, if the
Purchaser contracts for, charges, or receives any consideration which constitutes interest in
excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if
previously paid, shall be applied to the outstanding principal amount of the Convertible Note
issued hereunder or be refunded to the Company.

     3. CONDITIONS PRECEDENT. The obligations of the Purchaser to purchase the Convertible Note
shall be subject to the following conditions precedent that on the date of the Closing:

          3.1 Each of the representations and warranties of the Company contained in this Agreement and
the Convertible Note shall be true and correct in all material respects; and

          3.2 At the time of, and immediately after giving effect to, the issuance of the Convertible
Note, no Event of Default shall have occurred and be continuing.

     4. OPTIONAL CONVERSION.

          4.1 Conversion to Equity.

               (a) At any time during which the Convertible Note remains outstanding, up to all of the
outstanding principal and accrued interest under the Convertible Note then outstanding may be
converted, at the sole option of the holder thereof and by written notice to the Company, into
shares of Common Stock of the Company at a conversion price equal to $2.50 per share.

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               (b) Notwithstanding anything to the contrary contained herein, the Purchaser shall be
prohibited from effecting a conversion pursuant to this Section 4.1 if at the time of such
conversion (i) the Common Stock issuable to the Purchaser pursuant to such conversion or as a
result of such conversion, when taken together with all shares of Common Stock then held or
otherwise beneficially owned by the Purchaser exceeds 19.9% of the total number of issued and
outstanding shares of Common Stock of the Company immediately prior to such conversion, (ii) the
Common Stock issuable to the Purchaser pursuant to such conversion or as a result of such
conversion, exceeds 19.9% of the total number of issued and outstanding shares of Common Stock of
the Company immediately prior to such conversion, in each case unless the stockholders of the
Company have approved the conversion of all of the shares of Common Stock issuable hereunder and
the transactions contemplated hereby pursuant to Nasdaq Marketplace Rule 4350(i)(l)(D)(ii) and any
other applicable rules and regulations (“Stockholder Approval”). The foregoing provision however
shall not restrict the number of shares of Common Stock which the Purchaser may receive or
beneficially own in order to determine the amount of securities or other consideration that the
Purchaser may receive in the event of a merger, sale or other business combination involving the
Company.

               (c) The Company hereby covenants and agrees that in the event the Purchaser is prohibited from
effecting a conversion of the Convertible Note pursuant to this Section 4.1, then upon receipt of
written notice of such event from the Purchaser, the Company shall use its best efforts to seek
Stockholder Approval.

          4.2 Conversion to Royalty Stream.

               (a) At any time the Purchaser may elect (as such, the “Electing Purchaser”), at his sole
option and by written notice to the Company, to convert, in $1 million increments, up to the entire
amount of the principal and accrued interest then outstanding on the Convertible Note then held by
the Electing Purchaser (the “Total Converted Balance”), into the right to receive from the Company
the following payments related to the Company’s Molecular Imaging Products:

                    (i) For each One Million ($1,000,000) of Total Converted Balance,

                         (A) 2% of Pre-Commercial Income; plus

                         (B) a royalty at a rate of one half of one percent (0.5%) of Net Sales of Molecular Imaging
Products.

               By way of example only, if the Total Converted Balance being converted by the Electing
Purchaser is $3.5 million, the Company would be required to pay 7% of Pre-Commercial Income (2% x
3.5) to the Electing Purchaser plus a royalty of 1.75% on Net Sales of Molecular Imaging Products
(0.5% x 3.5).

                    (ii) The Company agrees to provide the Purchaser with at least 30 days prior written notice of
the execution of a partnership agreement for the Molecular Imaging products to enable them to make
an election to convert under this Section 4.2. Upon receipt of such notice, the Purchaser will
have 30 days to elect such conversion. For purposes of

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clarity, any amounts which may be owed by the Company under Section 4.2(a)(i) above after
proper notice is given and no election is made, shall be owed on a going-forward basis and shall
not apply retroactively to any Pre-Commercial Income received by the Company and/or its Affiliates
or Net Sales of Molecular Imaging Products prior to the date of such election to convert.

               (b) The Company shall make the payments set forth in Section 4.2(a)(i) above on a calendar
quarterly basis to the Electing Purchaser.

               (c) The Company shall deliver to the Electing Purchaser within sixty (60) days after the end
of each calendar quarter following the Electing Purchaser’s election to convert, reasonably
detailed written accountings of Pre-Commercial Income and Net Sales of Molecular Imaging Products
that are subject to payments due to the Electing Purchaser hereunder for such calendar quarter.
When the Company delivers such accountings to the Electing Purchaser, the Company shall also
deliver all payments due under Section 4.2(a)(i) for such calendar quarter.

               (d) On a country-by-country and Molecular Imaging Product-by-Molecular Imaging Product basis,
the royalty obligation of the Company hereunder shall cease at the expiration of the last-to-expire
Valid Claim covering a Molecular Imaging Product in said country or, in the case of countries where
no Valid Claims covering a Molecular Imaging Product have been granted, ten (10) years after the
First Commercial Sale of a Molecular Imaging Product in said country. In no event will the
Company’s royalty obligation hereunder cease so long as royalties in excess of those owed hereunder
are paid to the Company by its licensee of any or all of the Molecular Imaging Products.

     5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Purchaser that
on the date hereof:

          5.1 The Company is duly organized, validly existing, and in good standing under the laws of
its jurisdiction of incorporation and is duly qualified and in good standing in every other
jurisdiction where the nature of its business or the location or ownership of its properties
requires such qualification and where the failure to be so qualified would reasonably be expected
to have a material adverse effect on the Company’s business, operations, properties, assets or
condition (financial or otherwise).

          5.2 The Company has the corporate power and authority to execute and deliver this Agreement
and the Convertible Note and to perform all of the obligations hereunder, and all necessary
corporate action has been taken to execute and deliver this Agreement and the Convertible Note and
to issue and sell the Convertible Note hereunder.

          5.3 This Agreement and the Convertible Note constitute the legal, valid, and binding
obligations of the Company, enforceable against the Company in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws generally
affecting the enforcement of the rights of creditors.

          5.4 The execution, delivery and performance by the Company of this Agreement and the
Convertible Note does not (i) violate any provisions of the Company’s

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Certificate of Incorporation, as amended, bylaws, as amended, or any material contract,
agreement, law, regulation, order, decree or writ to which the Company or any of its properties are
subject or (ii) require the consent or approval of any person, entity or authority, including,
without limitation, any regulatory authority or governmental body of the United States of America
or any state thereof or any political subdivision of any of the foregoing.

     6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents and warrants to
the Company as follows:

          6.1 Investment Intent. The Purchaser understands that the Convertible Note has not
been registered under the Securities Act or any applicable state securities law and is acquiring
the Convertible Note as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling the Convertible Note, has no present intention of
distributing the Convertible Note and has no arrangement or understanding with any other persons
regarding the distribution of the Convertible Note. The Purchaser is acquiring the Convertible
Note hereunder in the ordinary course of its business. The Purchaser does not have any agreement
or understanding, directly or indirectly, with any person to distribute the Convertible Note.

          6.2 Purchaser Status. At the time the Purchaser was offered the Convertible Note, he
was, and at the date hereof he is an “accredited investor” as defined in Rule 501(a) under the
Securities Act. The Purchaser (if not already a registered broker-dealer under Section 15 of the
Exchange Act) is not required to be registered as a broker-dealer under Section 15 of the Exchange
Act.

          6.3 Experience of Purchaser. The Purchaser, either alone or together with his
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Convertible Note, and has so evaluated the merits and risks of such investment. The Purchaser is
able to bear the economic risk of an investment in the Convertible Note and, at the present time,
is able to afford a complete loss of such investment.

          6.4 General Solicitation. The Purchaser is not purchasing the Convertible Note as a
result of any advertisement, article, notice or other communication regarding the Convertible Note
published in any newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general advertisement.

          6.5 Certain Fees. No brokerage or finder’s fees or commissions are or will be payable
by the Purchaser to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other person with respect to the transactions contemplated by this
Agreement. The Company shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other persons for fees of a type contemplated in this Section 6.5
that may be due in connection with the transactions contemplated by this Agreement.

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     7. AFFIRMATIVE COVENANTS. During the term of this Agreement and while the Convertible Note
remains outstanding, unless the Purchaser consents thereto in writing:

          7.1 The Company shall maintain its corporate existence, business and assets, keep its business
and assets adequately insured and comply in all material respects with all requirements of
applicable law.

          7.2 The Company (a) shall provide the Purchaser at least 10 days prior written notice of the
Company’s intent to change its name or its mailing address and (b) shall not change its type of
organization or jurisdiction of organization.

     8. NEGATIVE COVENANTS. So long as any principal and interest remains outstanding under the
Convertible Note, the Company shall not:

          8.1 Create, incur, assume, guaranty, become liable with respect to (contingently or
otherwise), or permit to be outstanding any indebtedness for money borrowed (including, without
limitation, any indebtedness evidenced by any notes, instruments or agreements or in connection
with any capitalized lease), except for obligations under this Agreement and the Convertible Note;

          8.2 (i) Declare or pay any cash dividend, or make a distribution on, repurchase, or redeem,
any class of stock of the Company, other than pursuant to repurchase obligations under existing
employee stock purchase or option plans or (ii) sell, lease, transfer or otherwise dispose of any
material assets or property of the Company; or

          8.3 Dissolve or liquidate.

     9. DEFAULTS. The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

          9.1 The Company fails to pay any of the principal, interest or any other amounts payable under
this Agreement or the Convertible Note when and as the same becomes due and payable;

          9.2 The Company files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating to, Company, now or
hereafter in effect, or seeks the appointment of a custodian, receiver, trustee (or other similar
official) of the Company or all or any substantial portion of the Company’s assets, or makes any
assignment for the benefit of creditors or takes any action in furtherance of any of the foregoing,
or fails to generally pay its debts as they become due;

          9.3 An involuntary petition is filed, or any proceeding or case is commenced, against the
Company (unless such proceeding or case is dismissed or discharged within ninety (90) days of the
filing or commencement thereof) under any bankruptcy, reorganization, arrangement, insolvency,
adjustment of debt, liquidation or moratorium statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar official) is applied
for, appointed for the Company or to take possession, custody or control of

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any property of the Company, or an order for relief is entered against the Company in any of
the foregoing; or

          9.4 Any representation or warranty made by the Company under this Agreement shall have been
false or misleading in any material respect when made or deemed made.

     10. REMEDIES.

          10.1 Upon the occurrence and during the continuance of an Event of Default hereunder, the
Purchaser may, without notice or demand upon the Company, do any or all of the following:

               (a) Declare all unpaid principal and accrued interest owing under the Convertible Note held by
him, and, in the case of an Event of Default pursuant to Section 9.2 or 9.3 above, automatically,
to be immediately due, payable and collectible by him pursuant to applicable law;

               (b) Declare any and all unpaid principal and accrued interest due under the Convertible Note
held by him to thereafter bear interest at the maximum rate set forth in Section 2.4 hereof;

               (c) Terminate any and all of his obligations to purchase any additional Convertible Note
hereunder; and

               (d) Exercise any and all rights and remedies he may have under this Agreement, under the
Convertible Note held by him or under applicable law.

          10.2 All of the foregoing rights and remedies shall be cumulative and not exclusive. The
failure to exercise all or any rights, remedies, powers or privileges hereunder, under the
Convertible Note or under applicable law, in any instance shall not constitute a waiver thereof in
that or any other instance.

     11. WAIVERS, AMENDMENTS AND OTHER PROVISIONS.

          11.1 Entire Agreement; Amendments; Invalidity. This Agreement and the Convertible
Note constitute the entire agreement and understanding of the parties, and supersede and replace in
their entirety any prior discussions or agreements, all of which are merged herein and therein.
None of the terms of this Agreement or the Convertible Note may be amended or otherwise modified
except by an instrument executed by the Company and the Purchaser. If any term of this Agreement
or the Convertible Note shall be held to be invalid, illegal or unenforceable, the validity of all
other terms hereof shall in no way be affected thereby, and this Agreement and the Convertible Note
shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not
been included herein.

          11.2 Expenses. The Company agrees to and shall pay to the Purchaser on demand, any
and all expenses, including, without limitation, reasonable attorney’s fees and disbursements,
incurred or paid by the Purchaser in connection with the collection on or

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enforcement of amounts outstanding hereunder, for protecting, preserving or enforcing the
Purchaser’s rights or remedies (including fees, costs and expenses relating to any proceedings with
respect to the bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation of the Company).

          11.3 Nonliability of the Purchaser; Several Obligation. The relationship between the
Company, on the one hand, and the Purchaser, on the other hand, shall be solely that of Company and
Purchaser. The Purchaser shall have no fiduciary responsibilities to the Company as holder of the
Convertible Note.

          11.4 Governing Law: Consent to Jurisdiction. THIS AGREEMENT AND THE CONVERTIBLE NOTE
ARE INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS (AND NOT THE LAWS OF CONFLICT) OF THE COMMONWEALTH OF MASSACHUSETTS. THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR THE COMMONWEALTH OF MASSACHUSETTS FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE CONVERTIBLE NOTE AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE PURCHASER TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY AGAINST THE PURCHASER OR ANY AFFILIATE OF THE
PURCHASER UNDER OR INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT OR THE CONVERTIBLE NOTE SHALL BE BROUGHT ONLY IN A COURT IN
THE COMMONWEALTH OF MASSACHUSETTS.

          11.5 Waiver of Jury Trial and Certain Damages. EACH OF THE COMPANY AND THE PURCHASER
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT OR ANY CONVERTIBLE NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Company waives any right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages. The Company (i) certifies that neither the Purchaser nor
any representative, agent or attorney of the Purchaser has represented, expressly or otherwise,
that the Purchaser would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that, in entering into this Agreement and the Convertible Note, the Purchaser is
relying upon, among other things, the foregoing waivers and certifications.

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          11.6 Successors and Assigns. This Agreement and the other Loan Documents and all
obligations of the Company hereunder and thereunder shall be binding upon the successors and
assigns of the Company, and shall, together with the rights and remedies of the Purchaser
hereunder, inure to the benefit of the Purchaser, any future holder of this Agreement or any other
Loan Document and their respective successors and assigns, provided, however, the Company may not
transfer or assign its rights or obligations hereunder or thereunder without the express written
consent of the Purchaser, and any purported transfer or assignment by the Company without the
approval of the Purchaser shall be null and void. The Purchaser may assign, transfer, participate
or endorse his rights under this Agreement or any of the other Loan Documents without the consent
or approval of the Company, and all such rights shall inure to the Purchaser’s successors and
assigns; provided, that such transferee agrees in writing to be bound by all of the terms of this
Agreement. No sales of participations, other sales, assignments, transfers, endorsements or other
dispositions of any rights hereunder or thereunder or any portion hereof or thereof or interest
herein or therein shall in any manner affect the obligations of the Company under this Agreement or
the other Loan Documents. The Company agrees that in connection with any such assignment, to
execute and deliver such additional documents or agreements, including, without limitation, a new
Convertible Note, as may be reasonably requested.

          11.7 Counterparts. This Agreement may be executed in any number of separate
counterparts, all of which, when taken together, shall constitute one and the same instrument,
notwithstanding the fact that all parties did not sign the same counterpart.

          11.8 No Reliance. The Purchaser hereby acknowledges (i) that Wilmer Cutler Pickering
Hale and Dorr LLP has served as counsel solely to the Company in connection with entering into this
Agreement and the Convertible Note and the transactions contemplated hereby and thereby and not as
counsel to the Purchaser, and (ii) that the Purchaser (a) has sought the advice of his own legal
counsel and has not relied upon Wilmer Cutler Pickering Hale and Dorr LLP, (b) has had an
opportunity to fully discuss and review the terms of this Agreement and the Convertible Note and
the transactions contemplated hereby and thereby with the Purchaser’s counsel, and (c) understands
the contents herein and freely and voluntarily assents to all of the terms and conditions hereof
and the transactions contemplated hereby.

[Remainder of Page Intentionally Left Blank]

12

 

     IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument under seal as of
the date first set forth above.

	 	 	 	 	 
	 	COMPANY:

ALSERES PHARMACEUTICALS, INC.

 	 
	 	By:  	Kenneth L. Rice, Jr.
 	 
	 	Printed Name:  	Kenneth L. Rice, Jr. 	 	 
	 	Title:  

Address:	EVP & CFO

 85 Main Street

Hopkinton, Massachusetts 01748 	 	 
	 

	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 
	ROBERT GIPSON	 	 
	 
	 	 	 	 
	Signature:

	 	Robert L. Gipson
 

	 	 
	Address:

	 	c/o Ingalls & Snyder LLC	 	 
	 

	 	 61 Broadway, NY, NY 10006	 	 

13

 

EXHIBIT A

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE
SECURITIES LAWS AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1)
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE
WITH RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION WITH THE PROPOSED TRANSFER.

CONVERTIBLE PROMISSORY NOTE

			
	 	 	 
	 $[                    ]
	 	 , 2008

Hopkinton, Massachusetts

     FOR VALUE RECEIVED, on the Maturity Date, Alseres Pharmaceuticals, Inc., a Delaware
corporation having a principal place of business at 85 Main Street, Hopkinton, Massachusetts 01748
(the “Company”), hereby unconditionally promises to pay to [Purchaser] (the “Purchaser”),
or order, at
[                    ], or such other place as Purchaser or any holder hereof may from time to time
designate, the principal sum of
[                    ] Dollars
[($                    )], in United States Dollars and in
immediately available funds as provided in the Convertible Promissory Note Purchase Agreement of
even date between the Company and the Purchaser (the “Agreement”), together with interest on the
unpaid principal amount hereof from time to time outstanding at the rate and on the dates set forth
in the Agreement. This Convertible Promissory Note may be one of a series of Convertible
Promissory Notes issued pursuant to the Agreement and each such Convertible Promissory Note shall
rank pari passu in right of repayment to such other Convertible Promissory Note.

     This Convertible Promissory Note is issued pursuant to, and is entitled to the benefits of,
the Agreement, as it may be amended from time to time. Reference is hereby made thereto for a
statement of the terms and conditions under which this Convertible Promissory Note may be
converted, prepaid or its maturity date accelerated. This Convertible Promissory Note is
convertible at the election of the Purchaser pursuant to Sections 4.1 and 4.2 of the Agreement.
Capitalized terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.

     No delay or omission on the part of the Purchaser in exercising any right hereunder shall
operate as a waiver of such right or of any other right of Purchaser, nor shall any delay, omission
or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Company and every endorser or guarantor of this Convertible Promissory Note
regardless of the time, order or place of signing waives presentment, demand, protest and notices
of every kind and assents to any extension or postponement of the time of

 

 

payment or any other indulgence, and to the addition or release of any other party or person
primarily or secondarily liable.

     The terms and provisions of this Convertible Promissory Note may be excluded, modified, or
amended only as set forth in the Agreement. This Convertible Promissory Note shall be binding upon
the successors and assigns of the Company and inure to the benefit of Purchaser and its successors,
endorsees and assigns as set forth in the Agreement. If any term or provision of this Convertible
Promissory Note shall be held to be invalid or unenforceable, in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall only effect such term or provision,
and shall not effect such term or provision in any other jurisdiction or any other term or
provision of this Convertible Promissory Note.

     The Company hereby waives its right to a jury trial with respect to any action or claim
arising out of any dispute in connection with this Convertible Promissory Note or any of the other
Loan Documents, any rights or obligations hereunder or thereunder or the performance of such rights
and obligations.

     All rights and obligations hereunder shall be governed by the laws of the Commonwealth of
Massachusetts (without giving effect to principles of conflicts or choice of laws) and this
Convertible Promissory Note shall be deemed to be made under seal.

	 	 	 	 	 	 	 
	 	 	Alseres Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	 

	 	 
	 

	 		 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

2exv4w1

Execution Version

 

RIGHTS AGREEMENT

between

ARLINGTON TANKERS LTD.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

as Rights Agent

Dated June 26, 2008

 

 

 

Table of Contents

	 	 	 	 	 
	Section 1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	5	 
	 
	 	 	 	 
	Section 3. Issuance of Rights
	 	 	6	 
	 
	 	 	 	 
	Section 4. Form of Rights Certificates
	 	 	8	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	9	 
	 
	 	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates
	 	 	9	 
	 
	 	 	 	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	10	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	12	 
	 
	 	 	 	 
	Section 9. Reservation and Availability of Capital Shares
	 	 	12	 
	 
	 	 	 	 
	Section 10. Preference Share Record Date
	 	 	14	 
	 
	 	 	 	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	14	 
	 
	 	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	21	 
	 
	 	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	24	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	25	 
	 
	 	 	 	 
	Section 16. Agreement of Rights Holders
	 	 	25	 
	 
	 	 	 	 
	Section 17. Rights Certificate Holder Not Deemed a Shareholder
	 	 	26	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	26	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	27	 
	 
	 	 	 	 
	Section 20. Duties of Rights Agent
	 	 	27	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	29	 
	 
	 	 	 	 
	Section 22. Issuance of New Rights Certificates
	 	 	30	 
	 
	 	 	 	 
	Section 23. Redemption; Independent Director Review
	 	 	30	 

- i -

 

	 	 	 	 	 
	Section 24. Exchange
	 	 	31	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	32	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	33	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	34	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	35	 
	 
	 	 	 	 
	Section 29. Actions by the Board, etc
	 	 	35	 
	 
	 	 	 	 
	Section 30. Benefits of this Agreement
	 	 	35	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	35	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	35	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	35	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	36	 

 

 

RIGHTS AGREEMENT

RIGHTS AGREEMENT, dated June 26, 2008 (the “Agreement”), between Arlington Tankers Ltd., a company
incorporated in the Islands of Bermuda (the “Company”), and American Stock Transfer & Trust
Company, LLC, a New York limited liability trust company, as Rights Agent (the “Rights Agent”).

W I T N E S S E T H

WHEREAS, on June 26, 2008 the Board of Directors of the Company (the “Board”) authorized and
declared a dividend distribution of one Right for each Common Share (as hereinafter defined) of the
Company outstanding at the close of business on July 7, 2008 (the “Record Date”), and authorized
the issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(i) or Section 11(p) hereof) for each Common Share of the Company issued between the
Record Date (whether originally issued or delivered from the Company’s treasury) and the earlier of
the Distribution Date or the Expiration Date, each Right initially representing the right to
purchase one one-thousandth of a Series A Junior Participating Preference Share of the Company
having the rights, powers and preferences set forth in the form of Certificate of Designation of
Terms attached hereto as Exhibit A, 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
have the meanings indicated:

     (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of the Common Shares then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company, or (iv) any Person
organized, appointed or established by the Company for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, (x) no Person shall become an “Acquiring Person” as the result of an
acquisition of Common Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person to 20% or more of
the Common Shares of the Company then outstanding; provided, however that if a Person shall become
the Beneficial Owner of 20% or more of the Common Shares of the Company then outstanding as the
result of an acquisition of Common Shares by the Company and shall, following written notice from,
or public disclosure by the Company of such share purchases by the Company become the Beneficial
Owner of any additional Common Shares of the Company and shall then beneficially own 20% or more of
the Common Shares then outstanding, then such Person shall be deemed to be an “Acquiring Person”
and (y) if the Board determines in good faith that a Person who would

 

 

otherwise be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as promptly as practicable
(as determined in good faith by the Board of Directors), but in any event within 15 Business Days,
following receipt of written notice from the Company of such event, of Beneficial Ownership of a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an “Acquiring Person” for any purposes of this Agreement unless and until such Person
shall again become an “Acquiring Person.”

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

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

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

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

          (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities or agreements with or between Persons and the Company with
respect to any other bona fide issuance of securities by the Company to such Persons for resale
within 40 days, including without limitation pursuant to Section 4(2) of the Act or Rule 144A or
Regulation S promulgated under the Act), 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 or on
behalf of such Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (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 Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any Original Rights;

          (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or any
comparable or successor rule), including pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities or agreements with or between Persons and the
Company with respect to any other bona fide issuance of securities by

-2-

 

the Company to such Persons for resale within 40 days, including without limitation pursuant
to Section 4(2) of the Act or Rule 144A or Regulation S promulgated under the Act), 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 (ii) 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
proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

          (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or
Associates) has any agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide public offering of
securities or agreements with or between Persons and the Company with respect to any other bona
fide issuance of securities by the Company to such Persons for resale within 40 days, including
without limitation pursuant to Section 4(2) of the Act or Rule 144A or Regulation S promulgated
under the Act) 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 (ii) of this
paragraph (e)) or disposing of any voting securities of the Company.

For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(l)(i) of the General Rules and Regulations under the
Exchange Act.

     (f) “Board” shall have the meaning set forth in the WHEREAS clause at the beginning of this
Agreement.

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

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

     (i) “Common Shares” shall mean the common shares, $0.01 par value, of the Company, except that
“Common Shares” when used with reference to any Person other than the Company shall mean the share
capital or 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.

     (j) “Common share equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

-3-

 

     (k) “Company” shall have the meaning set forth in the introductory paragraph hereof.

     (l) “Current market price” shall have the meaning set forth in Section 11(d)(i) hereof.

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

     (n) “Distribution Date” shall have the meaning set forth in Section 3(a) hereof.

     (o) “Equivalent preference shares” shall have the meaning set forth in Section 11(b) hereof.

     (p) “Exchange Act” shall have the meaning set forth in Section 1(c) hereof.

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

     (r) “Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

     (s) “Final Expiration Date” shall mean the close of business on June 26, 2018.

     (t) “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding
Common Shares at a price and on terms determined, prior to the consummation of such tender offer or
exchange offer, by directors constituting at least 75% of all of the members of the Board, after
receiving advice from a nationally recognized investment banking firm selected by the Board, to be
(a) at a price that is fair to shareholders (taking into account all factors which such members of
the Board deem relevant including, without limitation, prices which 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.

     (u) “Person” shall mean any individual, firm, corporation, partnership, trust, association,
limited liability company or other entity.

     (v) “Preference Shares” shall mean Series A Junior Participating Preference Shares, $0.01 par
value, of the Company having the rights and preferences set forth in the form of Certificate of
Designations of Terms attached to this Agreement as Exhibit A and, to the extent that there
is not a sufficient number of Series A Junior Participating Preference Shares authorized to permit
the full exercise of the Rights, any other series of preference shares, $0.01 par value, of the
Company designated for such purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preference Shares.

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

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

     (y) “Record Date” shall have the meaning set forth in the WHEREAS clause at the beginning of
this Agreement.

     (z) “Redemption Date” shall have the meaning set forth in Section 7(a) hereof.

-4-

 

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

     (bb) “Rights” shall have the meaning set forth in the WHEREAS clause at the beginning of this
Agreement.

     (cc) “Rights Agent” shall have the meaning set forth in the introductory paragraph hereof.

     (dd) “Rights Certificates” shall have the meaning set forth in Section 3(a) hereof.

     (ee) “Section 11(a)(ii) Event” shall mean an acquisition of Common Shares described in the
first sentence of Section 11(a)(ii) hereof.

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

     (gg) “Section 13 Event” shall mean any event described in clauses (x), (y) or (z) of Section
13(a) hereof.

     (hh) “Share Acquisition Date” shall mean the later of (i) the first date of public
announcement (which, for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such or (ii) the first date on which an executive officer of the
Company has actual knowledge that an Acquiring Person has become such; provided,
however that, if such Person is deemed not to be an Acquiring Person pursuant to clause (y)
of Section 1(a) hereof, no Share Acquisition Date shall be deemed to have occurred.

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

     (jj) “Subsidiary” shall mean, with reference to any Person, any corporation or other entity of
which an amount of voting securities sufficient to elect at least a majority of the directors (or
comparable body) of such corporation or other entity is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.

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

     (ll) “Trading Day” shall have the meaning set forth in Section 11(d)(i) hereof.

     (mm) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event.

     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common Shares) in
accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days’ prior written notice to the Rights Agent. The

-5-

 

Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agent.

     Section 3. Issuance of Rights.

     (a) Until the earlier of (i) the close of business on the tenth Business Day (or such later
date as may be determined by the Board) after the Share Acquisition Date (or, if the tenth Business
Day after the Share 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 action of the Board) after the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2 of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of 20% or
more of the Common Shares then outstanding, (the earlier of (i) and (ii) being herein referred to
as the “Distribution Date”), (x) the Rights will be evidenced by the certificates for the Common
Shares registered in the names of the holders of the Common Shares (which certificates for Common
Shares shall be deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of
the Common Shares as of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more rights certificates, in substantially the
form of Exhibit B hereto (the “Rights Certificates”), evidencing one Right for Common Share
so held, subject to adjustment as provided herein. With respect to certificates for the Common
Shares outstanding as of the close of business on the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Shares and the registered holders of
the Common Shares shall also be the registered holders of the associated Rights. In addition, in
connection with the issuance or sale of Common Shares following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (i) shall, with respect to Common Shares so
issued or sold pursuant to the exercise of share options or under any employee benefit plan or
arrangement, or upon the exercise, conversion or exchange of securities granted or issued by the
Company prior to the Distribution Date, and (ii) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (x) 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 (y) 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. In the event that an adjustment in the number of Rights per Common Share has
been made pursuant to Sections 11(i) or 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing only whole

-6-

 

numbers of Rights are distributed 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.

     (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preference Shares, in substantially the form attached hereto as
Exhibit C, by first-class, postage prepaid mail, to each record holder of the Common Shares
as of the close of business on the Record Date, at the address of such holder shown on the records
of the Company. The failure to send a copy of the Summary of Rights shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder of the Rights.

     (c) Rights shall be issued (i) in respect of all Common Shares that are issued (either as an
original issuance or from the Company’s treasury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date and (ii) in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the redemption or expiration of the
Rights (x) with respect to Common Shares so issued or sold pursuant to the exercise of share
options or under any employee benefit plan or arrangement, or upon the exercise, conversion or
exchange of securities, granted or issued by the Company prior to the Distribution Date and (y)
with respect to Common Shares so issued or sold in any other case, if deemed necessary or
appropriate by the Board. Certificates representing such Common Shares (including, without
limitation, certificates issued upon transfer or exchange of Common Shares) shall also be deemed to
be certificates for Rights, and shall bear the following legend:

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between
Arlington Tankers Ltd. (the “Company”) and American Stock Transfer &
Trust Company, LLC (the “Rights Agent”) dated June 26, 2008, as the
same may be amended, restated or renewed from time to time (the
“Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement, 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
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may
become null and void.

With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date and (ii) the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of the associated Rights.

-7-

 

Notwithstanding this Section 3(c), the omission of a legend shall not affect the enforceability of
any part of this Rights Agreement or the rights of any holder of the Rights.

     (d) Until the earlier of the Distribution Date and the Expiration Date, the transfer of any
certificates representing Common Shares in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such Common Shares. In the event that the
Company purchases or acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.

     Section 4. Form of Rights Certificates.

     (a) The Rights Certificates (and the forms of election to purchase, certification and
assignment to be printed on the reverse thereof) shall each 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 and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or over-the-counter market on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 7, 11 and 22 hereof, the
Rights Certificates, whenever distributed, shall entitle the holders thereof to purchase such
number of one one-thousandths of a Preference Share as shall be set forth therein at the price set
forth therein (such exercise price per one one-thousandth of a share, 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, Section 11(i) or Section 22 hereof
that represents Rights beneficially owned by persons known to be: (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding (whether or not in writing) that has as a primary purpose
or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible) the following
legend:

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

-8-

 

The provisions of Section 7(e) hereof shall be operative whether or not the foregoing legend is
contained on any such Rights Certificate.

     Section 5. Countersignature and Registration.

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

     (b) Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
office 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, the Rights 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) and Section 14 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 Certificates (other than Rights Certificates
representing Rights that have become void pursuant to Section 7(e) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder to purchase a like
number of one one-thousandths of a Preference Share (or, following a Triggering Event, Common
Shares, other securities, cash or other assets, as the case may be) as the Rights Certificate or
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 Certificates shall make such request in writing delivered to the Rights

-9-

 

Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged, with the form of assignment and certificate appropriately executed, at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 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 of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.

     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and 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 execute and deliver a new Rights Certificate of like tenor to the Rights Agent for
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; Expiration Date of Rights.

     (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23 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 duly executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a Preference Share (or other shares, securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior
to the earliest of (i) the Final Expiration Date, (ii) the time at which the Rights expire as
provided in Section 13(d) hereof, (iii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the “Redemption Date”) and (iv) the time at which such Rights are exchanged as
provided in Section 24 hereof (the earliest of (i), (ii), (iii) and (iv) being herein referred to
as the “Expiration Date”).

     (b) The Purchase Price for each one one-thousandth of a Preference Share pursuant to the
exercise of a Right shall initially be $95.00 and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

-10-

 

     (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandth of a Preference Share (or
other shares, securities, cash or other assets, as the case may be) to be purchased and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the Preference Shares (or make
available, if the Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a Preference Share to be purchased and the Company hereby
authorizes its transfer agent to comply with such requests, or (B) if the Company shall have
elected to deposit the total number of Preference Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preference Share as are to be purchased (in
which case certificates for the Preference Shares represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such requests, (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 in cash or by
certified bank check or money order payable to the order of the Company. In the event that the
Company is obligated to issue other securities (including Common Shares) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company shall make all
arrangements necessary so that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.

     (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent 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 Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding (whether or not in writing) that has as a primary purpose
or effect avoidance of this Section 7(e), shall become null and void without any further action and
no holder of such Rights shall have any rights

-11-

 

whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. No Rights Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and any
Rights Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be cancelled. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.

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

     Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

     Section 9. Reservation and Availability of Share Capital.

     (a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preference Shares (and, following the occurrence of a Triggering
Event, out of its authorized and unissued Common Shares and/or other securities or out of its
authorized and issued shares held in its treasury), the number of Preference Shares (and, following
the occurrence of a Triggering Event, Common Shares 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 the Preference Shares (and, following the occurrence of a Section 11(a)(ii)
Event, Common Shares and/or other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange or automated quotation system, the Company
shall use its best efforts to cause, from and after such time as the Rights

-12-

 

become exercisable, all shares reserved for such issuance to be so listed upon official notice
of issuance upon such exercise.

     (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of the 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, and (iv) obtain such other regulatory approvals as may be necessary for it
to issue securities purchasable upon the exercise of the Rights. 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 ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become effective or to obtain any
other required regulatory approval in connection with the exercisability of the Rights. Upon any
such suspension, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite registration
or qualification in such jurisdiction shall have been effected or obtained.

     (d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all one one-thousandths of a Preference Share (and, following the occurrence of a
Triggering Event, Common Shares 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 one one-thousandths of
a Preference Share (or Common Shares and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required (i) to pay any transfer tax 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 one one-thousandths of a Preference Share (or Common Shares
and/or other securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for exercise or (ii) to
issue or deliver any certificates for a number of one one-thousandths of a Preference Share (or
Common Shares 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 shall have been paid (any such tax
being payable by the holder of such Rights Certificate at

-13-

 

the time of surrender) or until it has been established to the Company’s satisfaction that no
such tax is due.

     Section 10. Preference Share Record Date. Each Person in whose name any certificate
for a number of one one-thousandths of a Preference Share (or Common Shares 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 fractional Preference Shares (or Common Shares
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 with
the forms of election and certification duly executed and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preference Shares (or Common Shares and/or other securities, as
the case may 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 Preference Shares (or Common Shares 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 securities 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 covered by each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

     (a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preference Shares payable in Preference Shares, (B) subdivide the
outstanding Preference Shares, (C) combine the outstanding Preference Shares into a smaller number
of shares, or (D) issue any shares of its capital stock in a reclassification of the Preference
Shares (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 Preference Shares or capital stock, 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 Preference Shares or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preference Shares 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)

-14-

 

shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.

          (ii) Subject to Section 24 of this Agreement, in the event that any Person, alone or together
with its Affiliates or Associates, becomes an Acquiring Person (other than pursuant to a Permitted
Offer), then, promptly following the first occurrence of such event, proper provision shall be made
so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive (subject to the last sentence of Section 23(a)), upon exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-thousandths of a Preference Share, such number of Common Shares of the
Company that equals the result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-thousandths of a Preference Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred to as the “Purchase
Price” for each Right and for all purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d) hereof) per Common Share on the date of such first occurrence
(such number of shares, the “Adjustment Shares”).

          (iii) In the event that the number of Common Shares that are authorized by the Company’s
Memorandum of Association but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”) over (2) the Purchase Price (such excess, the “Spread”), and (B) with
respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including, without limitation, preference
shares, or units of preference shares, which the Board has deemed to have the same value as Common
Shares (such preference shares, “common share 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 based upon the advice of
a nationally recognized investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as the “Section 11(a)(ii)
Trigger Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price, Common Shares (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 shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such period, as it may be
extended in accordance with this sentence until up to ninety (90) days after the Section 11(a)(ii)
Trigger Date, the “Substitution Period”). To the

-15-

 

extent that the Company determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current market price (as determined pursuant to Section 11(d) hereof)
per Common Share on the Section 11(a)(ii) Trigger Date and the value of any “common share
equivalent” shall be deemed to have the same value as the Common Shares 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 Preference Shares entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record date) Preference Shares (or
shares having the same rights, privileges and preferences as the Preference Shares (“equivalent
preference shares”)) or securities convertible into Preference Shares or equivalent preference
shares at a price per Preference Share or per equivalent preference share (or having a conversion
price per share, if a security convertible into Preference Shares or equivalent preference shares)
less than the current market price (as determined pursuant to Section 11(d) hereof) per Preference
Share 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 Preference Shares outstanding on such
record date, plus the number of Preference Shares which the aggregate offering price of the total
number of Preference Shares and/or equivalent preference shares 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 Preference Shares
outstanding on such record date, plus the number of additional Preference Shares and/or equivalent
preference shares 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, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.
Preference Shares owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made successively whenever such
a record date is fixed, and in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

     (c) In case the Company shall fix a record date for a distribution to all holders of
Preference Shares (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing 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 Preference Shares, but including any dividend
payable in shares other than Preference Shares) or subscription rights or warrants

-16-

 

(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
(as determined pursuant to Section 11(d) hereof) per Preference Share on such record date, less the
fair market value (as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all purposes) 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 Preference Share and the denominator of which shall be such
current market price (as determined pursuant to Section 11(d) hereof) per Preference Share on such
record date. 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 which 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 Common Share on any date shall be deemed
to be the average of the daily closing prices per such Common Share for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the “current market price” per Common
Share on any date shall be deemed to be the average of the daily closing prices per such Common
Share for the ten (10) consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price per Common Share is determined
during a period following the announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in shares of such Common Shares or securities
convertible into shares of such Common Shares (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Shares, and prior to the expiration of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the “current market price” shall be properly
adjusted to take into account ex-dividend or post record date trading. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the principal national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
the low asked prices in the over-the-counter market, as reported by the New York Stock Exchange
(“NYSE”) or such other system then in use, or, if on any such date the Common Shares are not quoted
by any such organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Shares selected by the Board. All
references in this Section to closing prices, last quoted prices or other share prices mean prices
during regular trading hours, without giving effect to any after-hours or extended hours trading.
If on any such date no market maker is making a market in the Common Shares, the fair value of such
shares on such date shall be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

-17-

 

The term “Trading Day” shall mean a day on which NYSE or any national securities exchange on
which the Common Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on NYSE or any national securities
exchange, a Business Day. If the Common Shares 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, 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 Preference
Share shall be determined in the same manner as set forth above for the Common Shares in clause (i)
of this Section 11(d) (other than the last sentence thereof). If the current market price per
Preference Share cannot be determined in the manner provided above or if the Preference Shares are
not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d),
the “current market price” per Preference Share shall be conclusively deemed to be an amount equal
to 1000 (as such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Shares occurring after the date of this
Agreement) multiplied by the current market price per Common Share. If neither the Common Shares
nor the Preference Shares is publicly held or so listed or traded, “current market price” per
Preference Share shall mean the fair value per share as determined in good faith by the Board,
which 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 one
one-thousandth of a Preference Share shall be equal to the “current market price” of one Preference
Share divided by 1000.

     (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 one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-millionth of a Preference Share, or hundred-thousandth of a Common Share
or other security, as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date.

     (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to receive any
securities other than Preference Shares, thereafter the number of such other securities 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 Preference Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preference Shares shall apply on like terms to any such other securities; provided,
however, that the Company shall not be liable for its inability to reserve and keep
available for issuance upon exercise of the Rights pursuant to Section 11(a)(ii) a number of Common
Shares greater than the

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number then authorized by the Company’s Memorandum of Association but not outstanding or
reserved for other purposes.

     (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 one one-thousandths of a Preference Share 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), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths
of a Preference Share (calculated to the nearest ten-millionth) obtained by (i) multiplying (x) the
number of one one-thousandths of a share 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.

     (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 one one-thousandths of a
Preference Share 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 one one-thousandths
of a Preference Share for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-hundred- thousandth) obtained by dividing the Purchase Price
in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. 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 ten (10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(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, executed and countersigned
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.

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     (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a Preference Share issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of a share which 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, of the number of one one-thousandths of a Preference Share issuable
upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally issue such number of
one one-thousandths of a fully paid and nonassessable Preference Share 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
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date the number of one one-thousandths of a Preference Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of one
one-thousandths of a Preference Share 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 shall
determine to be advisable in order that any (i) consolidation or subdivision of the Preference
Shares, (ii) issuance wholly for cash of any Preference Shares at less than the current market
price, (iii) issuance wholly for cash of Preference Shares or securities which by their terms are
convertible into or exchangeable for Preference Shares, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preference Shares shall not be taxable to such shareholders.

     (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any charter or bylaw provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect that would substantially

-20-

 

diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or sale, the
shareholders 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. The Company shall not consummate any consolidation,
merger, sale or transfer described in clause (i), (ii) or (iii) of the prior sentence unless prior
thereto the Company and such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).

     (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 at the time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

     (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Record Date and prior to the Distribution Date (i) declare or pay any
dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of shares, the
number of Rights associated with each Common Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number
of Rights thereafter associated with each Common Share following any such event shall equal the
result obtained by multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction, the numerator of which shall be the number of Common Shares
outstanding immediately prior to the occurrence of such event and the denominator of which shall be
the number of Common Shares outstanding immediately following the occurrence of such event.

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall promptly (a)
prepare a certificate setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) file with the Rights Agent, and with each transfer agent for the
Preference Shares and the Common Shares, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing Common Shares) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.

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

     (a) In the event that, at any time after a Person has become an Acquiring Person, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction that complies with

-21-

 

Section 11(o) hereof) 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 and, in
connection with such consolidation or merger, all or part of the outstanding Common Shares shall be
changed into or exchanged for shares or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section 11(o) hereof), then,
and in each such case and except as contemplated by Section 13(d) hereof, proper provision shall be
made so that: (i) 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 then current Purchase Price
in accordance with the terms of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable Common Shares of the Principal Party (as such term is
hereinafter defined), which shall not be subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths of a Preference Share for which a
Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and (2) dividing that product (which, following
the first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each
Right and for all purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that, subject to clause (v) below, the provisions
of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares) in connection with the consummation of
any such transaction as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 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), the Person that is the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and

-22-

 

          (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 or earning
power transferred pursuant to such transaction or transactions;

provided, however, that in any such case, (1) if the Common Shares of such Person
are not at such time and have not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Shares of which are and have been so registered, “Principal Party”
shall refer to such other Person; (2) in case such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Shares of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the Common Shares
having the greatest aggregate market value; and (3) in case 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 ventures 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 such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its Common Shares which
have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall
have 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 any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will

          (i) prepare and file a registration statement under the 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 Act) until the Expiration Date;

          (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; and

          (iii) 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 Section 13 Event shall occur at the same time as, or
at any time after, the occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner described in
Section 13(a).

-23-

 

     (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 (or a wholly owned subsidiary of any such
Person or Persons) who acquired Common Shares pursuant to a Permitted Offer, (ii) the price per
Common Share paid in such transaction is not less than the price per Common Share paid to all
holders of Common Shares whose shares were purchased pursuant to such Permitted Offer, and (iii)
the form of consideration paid in 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(i) or (p) hereof, or to distribute Rights Certificates
that evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the principal national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and the low asked
prices in the over-the-counter market, as reported by NYSE or such other system then in use or, if
on any such date the Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in the Rights selected
by the Board. All references in this Section to closing prices, last quoted prices or other share
prices means prices during regular trading hours, without giving effect to any after-hours or
extended hours trading. If on any such date no such market maker is making a market in the Rights,
the fair value of the Rights on such date as determined in good faith by the Board shall be used,
which determination shall be described in a statement filed with Rights Agent and shall be
conclusive for all purposes.

     (b) The Company shall not be required to issue fractions of Preference Shares (other than
fractions which are integral multiples of one one-thousandth of a Preference Share) upon exercise
of the Rights or to distribute certificates that evidence fractional Preference Share (other than
fractions which are integral multiples of one one-thousandth of a Preference Share). Fractional
Preference Shares in integral multiples of one one-thousandth of a Preference Share may, at the
election of the Company, be evidenced by depositary receipts; provided, however, that holders of
such depositary receipts shall have all of the designations and the powers, preferences and rights,
and the qualifications, limitations and restrictions to which they are entitled as beneficial
owners of the Preference Shares represented by such depositary receipts. In lieu of fractional
Preference Shares (other than fractions which are integral multiples of one one-

-24-

 

thousandth of a Preference Share), the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one one-thousandth of a Preference Share. For
purposes of this Section 14(b), the current market value of one one-thousandth of a Preference
Share shall be one one-thousandth of the closing price of a Preference Share (as determined
pursuant to Section 11(d)(ii) hereof) 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 Common Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market price of one (1) Common Share
(as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise.

     (d) The holder of a Right by the acceptance of such 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.

     Section 15. Rights of Action. All rights of action in respect of this Agreement,
except the rights of action expressly given to the Rights Agent in Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Shares); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his 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 of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

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

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

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

-25-

 

     (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 Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates
or the associated Common Share certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the
penultimate sentence of Section 7(e) hereof, shall be required to 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, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the
Company must use its best efforts to prevent the issuance of any such order, decree or ruling and
to have any such order, 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 one one-thousandths of a Preference Share or any other securities of
the Company which may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a 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 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 disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.

-26-

 

     (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20
hereof.

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

     (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided,
however, that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of 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 the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

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

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the

-27-

 

identity of any Acquiring Person and the determination of “current market price”) be proved or
established by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of the Board, 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 authorization to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

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

     (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates 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 be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11, Section 13 or
Section 24 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 a certificate
describing any such adjustment, delivered pursuant to Section 12); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or reservation
of any Common Shares or Preference Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares or Preference Shares 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 instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, 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 it shall not be liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its duties or
obligations under this Rights Agreement and the date on and/or after which such action shall

-28-

 

be taken or omitted and the Rights Agent shall not be liable for any action taken or omitted
in accordance with a proposal included in any such application on or after the date specified
therein (which date shall not be less than five Business Days after the date any such officer
actually receives such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the Rights Agent has received
written instructions in response to such application specifying the action to be taken or omitted.

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

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

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

     (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has not been completed, the Company and the Rights Agent will deem the beneficial
owner of the rights evidenced by such Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof and such assignment or election to purchase will not be honored.

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Shares and Preference
Shares, by registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Preference Shares, by registered
or certified mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) 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

-29-

 

Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States (or of any state of
the United States) in good standing, which is authorized under such laws to exercise corporate
trust or share transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a corporation 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 Shares and the Preference Shares, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

     Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. 

     Section 23. Redemption; Independent Director Review.

     (a) The Board may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth Business Day (or such later date as may be determined by the Board pursuant
to clause (i) of the first sentence of Section 3(a) with respect to the Distribution Date)
following the Share Acquisition Date (or, if the Share Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth Business Day following the Record Date) and
(ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.00001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the “Redemption Price”). The redemption of the Rights by
the Board may be made effective at such time, on such basis and with such conditions as the Board
in its sole discretion may establish. The Company may, at its option, pay the Redemption Price in
cash, Common Shares (based on the “current market price,” as defined in Section 11(d)(i) hereof, of
the Common Shares at the time of redemption) or any other form of consideration, or any combination
of any of the foregoing, deemed appropriate by the Board. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be

-30-

 

exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the
Company’s right of redemption hereunder has expired.

     (b) Immediately upon the action of the Board ordering the redemption of the Rights, evidence
of which shall have been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights shall 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 action of the Board ordering the redemption of the Rights, the Company shall give notice of
such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder’s last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent
for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.

     (c) In the event of a redemption of the Rights in accordance with this Agreement, the Company
may, at its option, discharge all of its obligations with respect to the Rights by (i) issuing a
press release announcing the manner of redemption of the Rights in accordance with this Agreement
and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent of the Common Shares, and upon such
action, all outstanding Rights and Right Certificates shall be null and void without any further
action by the Company.

     (d) At least once every three years, a committee of directors who are independent of the
management of the Company and free from any relationship that, in the opinion of the Board would
interfere with their exercise of independent judgment, shall review and evaluate this Rights
Agreement in order to consider whether the maintenance of this Rights Agreement continues to be in
the interests of the Company and its shareholders. Following each such review, the committee will
communicate its conclusions to the full Board, including any recommendation in light thereof as to
whether this Rights Agreement should be modified or the Rights should be redeemed.

     Section 24. Exchange.

     (a) The Board may, at its option, at any time after a Section 11(a)(ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which (i) shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof, and (ii) shall include, without
limitation, any Rights issued after the Distribution Date) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan),

-31-

 

together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the Common Shares then outstanding.

     (b) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24, evidence of which shall have been filed with the Rights Agent,
and without any further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to receive that number
of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange shall state the method
by which the exchange of Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.

     (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute
Preference Shares (or equivalent preference shares, as such term is defined in Section 11(b)
hereof) for Common Shares exchangeable for Rights, at the initial rate of one one-thousandth of a
Preference Share (or equivalent preference shares) for each Common Share, as appropriately adjusted
to reflect adjustments in the voting rights of the Preference Shares pursuant to Section 3(A) of
the Certificate of Designation of Terms attached hereto as Exhibit A, so that the fraction
of a Preference Share (or equivalent preference shares) delivered in lieu of each Common Share
shall have the same voting rights as one Common Share.

     (d) In the event that there shall not be sufficient Common Shares or Preference Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares or Preference Shares for issuance upon exchange of the Rights.

     (e) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares,
there shall be paid to the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Common Shares. For the purposes of this subsection (e), the
current market value of a whole Common Shares shall be the closing price per Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events.

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     (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in shares of any class to the holders of Preference Shares or to make any other
distribution to the holders of Preference Shares (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the holders of Preference
Shares rights or warrants to subscribe for or to purchase any additional Preference Shares or
shares of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preference Shares (other than a reclassification involving only the
subdivision of outstanding Preference Shares), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v)
to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the
Company shall give to each holder of a 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, transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the holders of the Preference Shares, 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 twenty (20) days prior to the record date for determining holders
of the Preference Shares for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preference Shares, whichever shall be the earlier.

     (b) In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent
feasible and 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) hereof, and (ii) all references in the preceding paragraph to Preference Shares
shall be deemed thereafter to refer also to Common Shares and/or, if appropriate, other securities;
provided that the failure to give such notice shall not affect the validity of such consent.

     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:

Arlington Tankers Ltd.

First Floor, The Hayward Building

22 Bermudiana Road

Hamilton HM 11, Bermuda

Attention: Chief Executive Officer

-33-

 

with a copy to:

WilmerHale

60 State Street

Boston, MA 02109

Attention: John Burgess

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:

American Stock Transfer & Trust Company, LLC

59 Maiden Lane, Plaza Level

New York, New York 10038

Attention: Client Administration

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 Common Shares) 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 penultimate
sentence of this Section 27, for so long as 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 holders of the
Rights. At any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, by approval of at least 75% of the
members of the Board, 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 or
(ii) to correct or supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, provided that no such supplement or amendment shall adversely
affect the interests of the holders of Rights as such (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an
appropriate officer of 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. Any supplement or amendment that the Rights Agent is required to sign pursuant to this
Section 27 shall be effective upon execution by the Company (whether or not then executed by the
Rights Agent or the certificate referred to in the immediately preceding sentence has been
delivered). Notwithstanding anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests of the holders of
Common Shares.

-34-

 

     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. Actions by the Board, etc. The Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board or to the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including 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) which
are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the
Board to any liability to the holders of the Rights.

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

     Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board determines in its good faith judgment that severing the invalid, void
or unenforceable language from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such determination by the
Board.

     Section 32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance with the laws of Delaware
applicable to contracts made and to be performed entirely within Delaware.

     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.

-35-

 

     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.

-36-

 

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

	 	 	 	 	 	 	 
	Attest:	 	ARLINGTON TANKERS LTD.
	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Stuart Nayman
	 	By:
	 	/s/ Edward Terino
	 

	 	 
	 	 	 	 
	Name:

	 	Stuart Nayman
	 	Name:
	 	Edward Terino
	Title:

	 	Partner, Wilmer Cutler
Pickering Hale & Dorr
LLP, Counsel
to Arlington Tankers Ltd.
	 	Title:
	 	President, Chief Executive
Officer and Chief Financial Officer
	 
	 	 	 	 	 	 
	Attest:	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
	 
	 	 	 	 	 	 
	By:

	 	/s/ Paula Caroppoli
	 	By:
	 	/s/ Herbert J. Lemmer
	 

	 	 
	 	 	 	 
	Name:

	 	Paula Caroppoli
	 	Name:
	 	Herbert J. Lemmer
	Title:

	 	Vice President
	 	Title:
	 	Vice President

-37-

 

FORM OF

CERTIFICATE OF DESIGNATION

OF

SERIES A JUNIOR PARTICIPATING PREFERENCE SHARES

OF

ARLINGTON TANKERS LTD.

 

Arlington Tankers Ltd., a corporation organized and existing under the laws of Bermuda (hereinafter
called the “Corporation”), hereby certifies that the following resolution was adopted by the Board
of Directors of the Corporation at a meeting duly called and held on June 26, 2008:

RESOLVED: That pursuant to the authority granted to and vested in the Board of Directors of the
Corporation (hereinafter called the “Board”) in accordance with the provisions of the Memorandum of
Association, the Board hereby creates a series of Preference Shares, $0.01 par value per share (the
“Preference Shares”), of the Corporation and hereby states the designation and number of shares,
and fixes the relative rights, preferences and limitations thereof as follows:

     Series A Junior Participating Preference Shares:

     Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preference Shares” (the “Series A Preference Shares”) and the number
of Series A Preference Shares shall be sixty thousand (60,000). Such number of shares may be
increased or decreased by resolution of the Board prior to issuance; provided, that no decrease
shall reduce the number of Series A Preference Shares to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preference Shares.

     Section 2. Dividends and Distributions.

     (A) Subject to the rights of the holders of any shares of any series of Preference Shares (or
any similar shares) ranking prior and superior to the Series A Preference Shares with respect to
dividends, the holders of Series A Preference Shares, in preference to the holders of Common
Shares, par value $0.01 per share (the “Common Shares”), of the Corporation, and of any other
junior shares, shall be entitled to receive, when, as and if declared by the Board out of funds of
the Corporation legally available for the payment of dividends, quarterly dividends payable in cash
on the last day of each fiscal quarter of the Corporation in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first

A-1

 

Quarterly Dividend Payment Date after the first issuance of a share or fraction of a Series A
Preference Share, in an amount per share (rounded to the nearest cent) equal to the greater of
(a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a dividend payable
in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or
otherwise), declared on the Common Shares 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 Series A Preference Share. In the event the Corporation
shall at any time declare or pay any dividend on the Common Shares payable in Common Shares, or
effect a subdivision, combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount to which holders of Series A
Preference Shares were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately prior to such event. In the event
the Corporation shall at any time declare or pay any dividend on the Series A Preference Shares
payable in Series A Preference Shares, or effect a subdivision, combination or consolidation of the
outstanding Series A Preference Shares (by reclassification or otherwise than by payment of a
dividend in Series A Preference Shares) into a greater or lesser number of Series A Preference
Shares, then in each such case the amount to which holders of Series A Preference Shares were
entitled immediately prior to such event under clause (b) of the first sentence of this Section
2(A) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Series A Preference Shares that were outstanding immediately prior to such event and the
denominator of which is the number of Series A Preference Shares outstanding immediately after such
event.

     (B) The Corporation shall declare a dividend or distribution on the Series A Preference Shares
as provided in paragraph (A) of this Section immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend payable in Common Shares) and the
Corporation shall pay such dividend or distribution on the Series A Preference Shares before the
dividend or distribution declared on the Common Shares is paid or set apart; provided that, in the
event no dividend or distribution shall have been declared on the Common Shares during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $10 per Series A Preference Share shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

     (C) Dividends shall begin to accrue and be cumulative on outstanding Series A Preference
Shares from the Quarterly Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of Series A Preference Shares 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

A-2

 

Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A Preference Shares 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 may fix a record
date for the determination of holders of Series A Preference Shares entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more than 60 days prior
to the date fixed for the payment thereof.

     Section 3. Voting Rights. The holders of Series A Preference Shares shall have the
following voting rights:

     (A) Subject to the provision for adjustment hereinafter set forth, each Series A Preference
Share shall entitle the holder thereof to 1000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in Common Shares, or effect a subdivision, combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of
a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such
case the number of votes per share to which holders of Series A Preference Shares were entitled
immediately prior to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding immediately prior to such
event. In the event the Corporation shall at any time declare or pay any dividend on the Series A
Preference Shares payable in Series A Preference Shares, or effect a subdivision, combination or
consolidation of the outstanding Series A Preference Shares (by reclassification or otherwise than
by payment of a dividend in Series A Preference Shares) into a greater or lesser number of Series A
Preference Shares, then in each such case the number of votes per share to which holders of Series
A Preference Shares were entitled immediately prior to such event shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Series A Preference Shares that
were outstanding immediately prior to such event and the denominator of which is the number of
Series A Preference Shares outstanding immediately after such event.

     (B) Except as otherwise provided herein, in the Memorandum of Association or Bye-Laws, the
holders of Series A Preference Shares and the holders of Common Shares and any other capital stock
of the Corporation having general voting rights 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 Preference Shares shall be in arrears in an
amount equal to six quarterly dividends thereon, the holders of the Series A Preference Shares,
voting as a separate series from all other series of Preference Shares and classes of capital
stock, shall be entitled to elect two members of the Board in addition to any Directors elected by
any other series, class or classes of securities and the authorized number of Directors will
automatically be increased by two. Promptly thereafter, the Board of the Corporation shall, as
soon as may be practicable, call a special meeting of holders of Series A Preference Shares for the
purpose of electing such members of the Board. Such special meeting shall in any event be held
within 45 days of the occurrence of such arrearage.

A-3

 

          (ii) During any period when the holders of Series A Preference Shares, voting as a separate
series, shall be entitled and shall have exercised their right to elect two Directors, then, and
during such time as such right continues, (a) the then authorized number of Directors shall be
increased by two, and the holders of Series A Preference Shares, voting as a separate series, shall
be entitled to elect the additional Directors so provided for, and (b) each such additional
Director shall not be a member of any existing class of the Board, but shall serve until the next
annual meeting of shareholders for the election of Directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates pursuant to the
provisions of this Section 3(C).

          (iii) A Director elected pursuant to the terms hereof may be removed with or without cause by
the holders of Series A Preference Shares entitled to vote in an election of such Director.

          (iv) If, during any interval between annual meetings of shareholders for the election of
Directors and while the holders of Series A Preference Shares shall be entitled to elect two
Directors, there is no such Director in office by reason of resignation, death or removal, then,
promptly thereafter, the Board shall call a special meeting of the holders of Series A Preference
Shares for the purpose of filling such vacancy and such vacancy shall be filled at such special
meeting. Such special meeting shall in any event be held within 45 days of the occurrence of such
vacancy.

          (v) At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on
any Series A Preference Shares outstanding are paid, and, in addition thereto, at least one regular
dividend has been paid subsequent to curing such arrearage, the term of office of any Director
elected pursuant to this Section 3(C), or his successor, shall automatically terminate, and the
authorized number of Directors shall automatically decrease by two, the rights of the holders of
the Series A Preference Shares to vote as provided in this Section 3(C) shall cease, subject to
renewal from time to time upon the same terms and conditions, and the holders of the Series A
Preference Shares shall have only the limited voting rights elsewhere herein set forth.

     (D) Except as set forth herein, or as otherwise provided by law, holders of Series A
Preference Shares 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 Shares as set forth herein)
for taking any corporate action.

     Section 4. Certain Restrictions.

     (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Preference Shares as provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series A Preference Shares
outstanding shall have been paid in full, the Corporation shall not:

          (i) declare or pay dividends, or make any other distributions, on any shares ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preference
Shares;

A-4

 

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

          (iii) redeem or purchase or otherwise acquire for consideration any shares ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preference
Shares, provided that the Corporation may at any time redeem, purchase or otherwise acquire any
such junior shares in exchange for any shares of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A Preference Shares; or

          (iv) redeem or purchase or otherwise acquire for consideration any Series A Preference Shares,
or any shares ranking on a parity with the Series A Preference Shares, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board) to all holders of
such shares upon such terms as the Board, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and classes, 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 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.

     Section 5. Reacquired Shares. Any Series A Preference Shares purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon their cancellation become authorized but
unissued Preference Shares and may be reissued as part of a new series of Preference Shares subject
to the conditions and restrictions on issuance set forth herein, in the Memorandum of Association,
or in any other Certificate of Designation of Terms creating a series of Preference Shares or any
similar shares or as otherwise required by law.

     Section 6. Liquidation, Dissolution or Winding Up.

     (A) Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preference Shares unless, prior thereto, the holders of
Series A Preference Shares shall have received $1000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of Series A Preference Shares shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1000
times the aggregate amount to be distributed per share to holders of Common Shares, or (2) to the
holders of shares ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preference Shares, except distributions made ratably on the Series A
Preference Shares and all such parity shares in

A-5

 

proportion to the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.

     (B) Neither the consolidation, merger or other business combination of the Corporation with or
into any other corporation nor the sale, lease, exchange or conveyance of all or any part of the
property, assets or business of the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation for purposes of this Section 6.

     (C) In the event the Corporation shall at any time declare or pay any dividend on the Common
Shares payable in Common Shares, or effect a subdivision, combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common
Shares) into a greater or lesser number of Common Shares, then in each such case the aggregate
amount to which holders of Series A Preference Shares were entitled immediately prior to such event
under the proviso in clause (1) of paragraph (A) of this Section 6 shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event. In the event the Corporation shall at any time
declare or pay any dividend on the Series A Preference Shares payable in Series A Preference
Shares, or effect a subdivision, combination or consolidation of the outstanding Series A
Preference Shares (by reclassification or otherwise than by payment of a dividend in Series A
Preference Shares) into a greater or lesser number of Series A Preference Shares, then in each such
case the aggregate amount to which holders of Series A Preference Shares were entitled immediately
prior to such event under the proviso in clause (1) of paragraph (A) of this Section 6 shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the number of Series A
Preference Shares that were outstanding immediately prior to such event and the denominator of
which is the number of Series A Preference Shares outstanding immediately after such event.

     Section 7. Consolidation, Merger, etc. Notwithstanding anything to the contrary
contained herein, in case the Corporation shall enter into any consolidation, merger, combination
or other transaction in which the Common Shares are exchanged for or changed into other shares or
securities, cash and/or any other property, then in any such case each Series A Preference Share
shall at the same time be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of
shares, securities, cash and/or any other property (payable in kind), as the case may be, into
which or for which each Common Share is changed or exchanged. In the event the Corporation shall
at any time declare or pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision, combination or consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common
Shares, then in each such case the amount set forth in the preceding sentence with respect to the
exchange or change of Series A Preference Shares shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common Shares that were outstanding immediately
prior to such event. In the event the Corporation shall at any time declare or pay any dividend on
the Series A Preference Shares payable in Series A Preference Shares, or effect a subdivision,
combination or consolidation of

A-6

 

the outstanding Series A Preference Shares (by reclassification or otherwise than by payment
of a dividend in Series A Preference Shares) into a greater or lesser number of Series A Preference
Shares, then in each such case the amount set forth in the first sentence of this Section 7 with
respect to the exchange or change of Series A Preference Shares shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Series A Preference Shares that
were outstanding immediately prior to such event and the denominator of which is the number of
Series A Preference Shares outstanding immediately after such event.

     Section 8. No Redemption. The Series A Preference Shares shall not be redeemable.

     Section 9. Rank. The Series A Preference Shares shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any other class of the
Preference Shares issued either before or after the issuance of the Series A Preference Shares,
unless the terms of any such series shall provide otherwise.

     Section 10. Amendment. At such time as any Series A Preference Shares are
outstanding, the Memorandum of Association 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
Preference Shares so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding Series A Preference Shares, voting together as a single class.

     Section 11. Fractional Shares. Series A Preference Shares may be issued in fractions
of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and have the benefit of all
other rights of holders of Series A Preference Shares.

     IN WITNESS WHEREOF, this Certificate of Designation of Terms is executed on behalf of the
Corporation by its Chief Executive Officer this 26 day of June, 2008.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ARLINGTON TANKERS LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

A-7

 

Form of Rights Certificate

			
	Certificate No. R-
	 	                     Rights

NOT EXERCISABLE AFTER JUNE 26, 2018 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION AT $0.00001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]

Arlington Tankers Ltd.

Rights Certificate

This certifies that [                    ], or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated June 26, 2008 (the “Rights Agreement”),
between Arlington Tankers Ltd., a Bermuda corporation (the “Company”), and American Stock Transfer
& Trust Company, LLC (the “Rights Agent”), to purchase from the Company after the Distribution Date
(as such term is defined in the Rights Agreement) and at any time prior to 5:00 p.m. (New York
time) on June 26, 2018 at the office of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth of a fully paid, non-assessable Series A Junior
Participating Preference Share (the “Preference Shares”) of the Company, $0.01 par value per share,
at a purchase price of $95.00 in cash per one one-thousandth of a share (the “Purchase Price”),
upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this Rights Certificate
(and the number of one one-thousandth of a Preference Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price
as of the close of business on June 26, 2008, based on the Preference Shares as constituted at such
date. Capitalized terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.

Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes an Acquiring Person, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such transfer, became an

B-1

 

Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become
null and void and no holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.

As provided in the Rights Agreement, the Purchase Price and the number and kind of Preference
Shares or other securities which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the happening of certain events,
including Section 11(a)(ii) Events.

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

This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of
the Rights Agent designated for such purpose, with the Form of Election and Certificate set forth
on the reverse side duly executed, 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 one one-thousandths of a Preference Share 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 may be
redeemed by the Company at its option at a redemption price of $.001 per Right at any time prior to
the earlier of (i) the close of business on the tenth Business Day (or such later date as may be
determined by the Board pursuant to clause (i) of the first sentence of Section 3(a) with respect
to the Distribution Date) following the Share Acquisition Date (or, if the Share Acquisition Date
shall have occurred prior to the Record Date, the close of business on the tenth Business Day
following the Record Date) and (ii) the Final Expiration Date.

Subject to the provisions of the Rights Agreement, the Company may, at its option, at any time
after a Section 11(a)(ii) Event, exchange all or part of the Rights evidenced by this Certificate
for the Company’s Common Shares or for Preference Shares (or shares of a class or series of the
Company’s preference shares having the same rights, privileges and preferences as the Preference
Shares).

No fractional Preference Shares will be issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples of one one-thousandth of a Preference
Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.

B-2

 

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 Preference Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a 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                     

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	ARLINGTON TANKERS LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
Secretary

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	COUNTERSIGNED:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	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 the Rights Certificate.)

FOR VALUE RECEIVED                                          hereby sells, assigns and
transfers unto                                                             

	 	 	 
	 
	 	 
	 

(Please print name and address of transferee)

	 	 
	 
	 	 
	 

	 	 

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

Dated:                                         

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Certificate

The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by, or being assigned to, an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined pursuant to the Rights Agreement).

Dated:                                         

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

NOTICE

The signature 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-4

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)

To: American Stock Transfer & Trust Company, LLC

The undersigned hereby irrevocably elects to exercise                      Rights represented by this Rights
Certificate to purchase the Preference Shares issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares 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:                                         

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

B-5

 

Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                                         

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

NOTICE

The signature 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-6

 

SUMMARY OF RIGHTS TO

PURCHASE PREFERENCE SHARES

On June 26, 2008, the Board of Directors of Arlington Tankers Ltd. (the “Company”), declared a
dividend of one Right for each outstanding Common Share of the Company to shareholders of record at
the close of business on July 7, 2008 (the “Record Date”). Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a Series A Junior Participating
Preference Share, $0.01 par value per share (the “Preference Shares”), at a Purchase Price of
$95.00 in cash, subject to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated June 26, 2008 (the “Rights Agreement”) between the Company and American
Stock Transfer & Trust Company, LLC, as Rights Agent.

Initially, the Rights are not exercisable and will be attached to all certificates representing
outstanding Common Shares, and no separate Rights Certificates will be distributed. The Rights
will separate from the Common Shares, and the Distribution Date will occur, upon the earlier of (i)
10 business days following the later of (a) the first date of 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 20% or more of the outstanding Common Shares or (b) the
first date on which an executive officer of the Company has actual knowledge that an Acquiring
Person has become such (the “Share Acquisition Date”), or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of the outstanding Common Shares. The Distribution Date may be
deferred in circumstances determined by the Board of Directors. In addition, certain inadvertent
acquisitions will not trigger the occurrence of the Distribution Date. Until the Distribution Date
(or earlier redemption or expiration of the Rights), (i) the Rights will be evidenced by the Common
Share certificates outstanding on the Record Date, together with this Summary of Rights, or by new
Common Share certificates issued after the Record Date which contain a notation incorporating the
Rights Agreement by reference, (ii) the Rights will be transferred with and only with such Common
Share certificates; and (iii) the surrender for transfer of any certificates for Common Shares
outstanding (with or without a copy of this Summary of Rights or such notation) will also
constitute the transfer of the Rights associated with the Common Shares represented by such
certificate.

The Rights are not exercisable until the Distribution Date and will expire upon the close of
business on June 26, 2018 (the “Final Expiration Date”) unless earlier redeemed or exchanged as
described below. As soon as practicable after the Distribution Date, separate Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will represent the
Rights. Except as otherwise determined by the Board of Directors, and except for Common Shares
issued upon exercise, conversion or exchange of then outstanding options, convertible or
exchangeable securities or other contingent obligations to issue shares or pursuant to any employee
benefit plan or arrangement, only Common Shares issued prior to the Distribution Date will be
issued with Rights.

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In the event that any Person becomes an Acquiring Person, unless the event causing the 20%
threshold to be crossed is a Permitted Offer (as defined in the Rights Agreement), then, promptly
following the first occurrence of such event, each holder of a Right (except as provided below and
in Section 7(e) of the Rights Agreement) shall thereafter have the right to receive, upon exercise,
that number of Common Shares of the Company (or, in certain circumstances, cash, property or other
securities of the Company) which equals the exercise price of the Right divided by 50% of the
current market price (as defined in the Rights Agreement) per Common Share at the date of the
occurrence of such event. However, Rights are not exercisable following such event until such time
as the Rights are no longer redeemable by the Company as described below. Notwithstanding any of
the foregoing, following the occurrence of such event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. The event summarized in this paragraph is referred to as a “Section
11(a)(ii) Event.”

For example, at an exercise price of $95 per Right, each Right not owned by an Acquiring Person (or
by certain related parties) following a Section 11(a)(ii) Event would entitle its holder to
purchase for $95 such number of Common Shares (or other consideration, as noted above) as equals
$95 divided by one-half of the current market price (as defined in the Rights Agreement) of the
Common Shares. Assuming that such Common Shares had a market price of $23.75 per share at such
time, the holder of each valid Right would be entitled to purchase eight Common Shares, having a
market value of 8 x $23.75, or $190, for $95.

In the event that, at any time after any Person becomes an Acquiring Person, (i) the Company is
consolidated with, or merged with and into, another entity and the Company is not the surviving
entity of such consolidation or merger (other than a consolidation or merger which follows a
Permitted Offer) or if the Company is the surviving entity, but its outstanding Common Shares are
changed or exchanged for shares or securities (of any other person) or cash or any other property,
or (ii) more than 50% of the Company’s assets or earning power is sold or transferred, each holder
of a Right (except Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, that number of Common Shares of the acquiring company
which equals the exercise price of the Right divided by 50% of the current market price (as defined
in the Rights Agreement) of such Common Shares at the date of the occurrence of the event. The
events summarized in this paragraph are referred to as “Section 13 Events.” A Section 11(a)(ii)
Event and Section 13 Events are collectively referred to as “Triggering Events.”

For example, at an exercise price of $95 per Right, each valid Right following a Section 13 Event
would entitle its holder to purchase for $95 such number of Common Shares of the acquiring company
as equals $95 divided by one-half of the current market price (as defined in the Rights Agreement)
of such Common Shares. Assuming that such Common Shares had a market price of $23.75 per share at
such time, the holder of each valid Right would be entitled to purchase eight Common Shares of the
acquiring company, having a market value of 8 x $23.75, or $190, for $95.

At any time after the occurrence of a Section 11(a)(ii) Event, when no person owns a majority of
the Common Shares, the Board of Directors of the Company may exchange the Rights (other

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than Rights owned by such Acquiring Person which have become void), in whole or in part, at an
exchange ratio of one Common Share, or one one-thousandth of a Preference Share (or of a share of a
class or series of the Company’s preference shares having equivalent rights, preferences and
privileges), per Right (subject to adjustment).

The Purchase Price payable, and the number of units of Preference Shares or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preference Shares, (ii) if holders of the Preference Shares are granted
certain rights or warrants to subscribe for Preference Shares or convertible securities at less
than the then-current market price (as defined in the Rights Agreement) of the Preference Shares,
or (iii) upon the distribution to holders of the Preference Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or retained earnings) or of
subscription rights or warrants (other than those referred to above). The number of Rights
associated with each Common Share is also subject to adjustment in the event of a stock split of
the Common Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

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 Preference Shares (other
than fractions which are integral multiples of one one-thousandth of a Preference Share) will be
issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the
Preference Shares on the last trading date prior to the date of exercise.

Preference Shares purchasable upon exercise of the Rights will not be redeemable. Each Preference
Share will be entitled to receive, when, as and if declared by the Board of Directors, a minimum
preferential quarterly dividend payment of $10 per share or, if greater, an aggregate dividend of
1000 times the dividend declared per Common Share. In the event of liquidation, the holders of the
Preference Shares will be entitled to a minimum preferential liquidation payment of $1000 per
share, plus an amount equal to accrued and unpaid dividends, and will be entitled to an aggregate
payment of 1000 times the payment made per Common Share. Each Preference Share will have 1000
votes, voting together with the Common Shares. In the event of any merger, consolidation or other
transaction in which Common Shares are changed or exchanged, each Preference Share will be entitled
to receive 1000 times the amount received per Common Share. These rights are protected by
customary antidilution provisions. Because of the nature of the Preference Shares’ dividend,
liquidation and voting rights, the value of one one-thousandth of a Preference Share purchasable
upon exercise of each Right should approximate the value of one Common Share.

At any time prior to the earlier of the tenth Business Day (or such later date as may be determined
by the Board of Directors of the Company) after the Share Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a price of $0.00001 per Right (the “Redemption Price”),
payable in cash or shares. Immediately upon the redemption of the Rights or such earlier time as
established by the Board in the resolution ordering the redemption of the

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Rights, the Rights will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

At least once every three years, a committee of independent directors will evaluate the Rights
Agreement in order to consider whether the maintenance of the Rights Agreement continues to be in
the interests of the Company and its shareholders.

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. Although
the distribution of the Rights should not be taxable to shareholders or to the Company,
shareholders may, depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other consideration) of the Company or for Common
Shares of the acquiring company as set forth above.

Any provision of the Rights Agreement, other than the redemption price, may be amended by the Board
prior to such time as the Rights are no longer redeemable. Once the Rights are no longer
redeemable, the Board’s authority to amend the Rights is limited to correcting ambiguities or
defective or inconsistent provisions in a manner that does not adversely affect the interest of
holders of Rights.

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an
Exhibit to the Company’s Current Report on Form 8-K dated                     , 2008. A copy of the Rights
Agreement is available free of charge from the Company. 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.

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