Document:

exv10w1

Exhibit 10.1

AMENDMENT NO. 1 TO DEVELOPMENT AND MANUFACTURING AGREEMENT

     This Amendment No. 1 to Development and Manufacturing Agreement (this “Amendment”) is dated
June 16, 2009 (the “Amendment Date”), by and between Cornerstone BioPharma, Inc. a Nevada
corporation with its principal offices located at 1255 Crescent Green Drive, Suite 250, Cary, NC
27518 (“Company”), NEOS Therapeutics, L.P., a Texas limited partnership (“Manufacturer”) with its
principal offices located at 2940 N. Hwy. 360, Suite 100, Grand Prairie, TX 75050 and Coating
Place, Inc., a Wisconsin corporation (“Supplier”) with its principal offices located at 200 Paoli
Street, P.O. Box 930310, Verona, WI, 53593. Manufacturer, Supplier and Company sometimes are
referred to herein individually as a “Party” and collectively as the “Parties.”

     The effective date of this Amendment (the “Effective Date”) shall be [***].

     WHEREAS, the Parties previously entered into that certain Development and Manufacturing
Agreement dated as of February 27, 2008 (the “Development Agreement”), as supplemented by an
Addendum dated as of June 19, 2008 (the “Addendum”, together with the Development Agreement, are
referred herein to as the “Agreement”); and

     WHEREAS, the Parties desire to amend certain terms of the Agreement by way of this Amendment.

     NOW, THEREFORE, in consideration of the promises made herein and other good and valuable
consideration, the receipt and sufficiency of all of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:

     1. All capitalized terms used in this Amendment and not otherwise defined herein shall have
the meanings given to them in the Agreement.

     2. The following Definitions are hereby added to Section 1 of the Agreement:

“Billable Rate” means the rate at which work is billed and is less than or
equal to [***] per hour unless mutually agreed upon in writing by the
Parties in advance of work performed.

“Gross Revenues” means the gross amounts invoiced by Company and its
affiliates and/or sublicensees on sales of the Product. Transfers of
Product among Company and its affiliates and/or sublicensees for the purpose
of subsequent resale to third parties will not generate gross revenues with
respect to such transfers but the gross amounts invoiced in connection with
the subsequent resale of the Product to third parties will be included in
the calculation of Gross Revenues.

“Net Sales” means the Company’s Gross Revenues less customary reductions,
including but not limited to the following: discounts, launch

 

			
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or stocking discounts, returns, rebates, chargebacks, transportation and
insurance expenses, and tariffs, duties, excises and sales taxes imposed
upon and paid directly with respect to such sales, all calculated in
accordance with GAAP.

     3. The Definition in Section 1 for “Manufacturer Adjusted COGs” is hereby deleted in its
entirety and replaced with the following:

“Manufacturer Adjusted COGs” means [***]. Manufacturer may increase
Manufacturer Adjusted COGs up to [***] with at least [***] days written
notice to Company and Supplier prior to the increase. If, for any reason,
the Manufacturer desires to take an increase on Manufacturer Adjusted COGs
by an amount greater than [***], Manufacturer shall provide written notice
to Company and Supplier with appropriate justification for same, and Company
and Supplier must agree in writing to the increase. If the requested
increase is approved by Company and Supplier, such increase will not take
effect until [***] days after the date Manufacturer’s written notice to
Company and Supplier was delivered.

     4. The Definition in Section 1 for “Net Profits” is hereby deleted in its entirety and
replaced with the following:

“Net Profits” means [***], all calculated in accordance with GAAP.

     5. The Definition in Section 1 for “Supplier Adjusted COGs” is hereby deleted in its entirety
and replaced with the following:

“Supplier Adjusted COGs” means [***]. Supplier and Company further agree
that in no event will Supplier Adjusted COGS be greater than Supplier’s true
cost of manufacture of the Drug Resin Complex plus Supplier’s standard
mark-up which shall be evidenced to Company via documentation for comparable
Drug Resin Complexes, but in no event shall exceed [***] of Supplier’s true
cost of manufacture. If for any reason the Supplier desires to take an
increase Supplier Adjusted COGs by an amount greater than [***], Supplier
shall provide written notice to Company and Manufacturer with appropriate
justification for same, and Company and Manufacturer must agree in writing
to the increase. If the requested increase is approved by Company and
Manufacturer, such increase will not take effect until [***] days after the
date Supplier’s written notice to Company and Manufacturer was delivered.

     6. The Definition in Section 1 for “Territory” is hereby deleted in its entirety and replaced
with the following:

“Territory” means the United States of America, including each of the states
and commonwealths, the District of Columbia and the

 

			
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2

 

Commonwealth of Puerto Rico. Company has the right to expand the Territory
at any time to any country worldwide. For purposes of the Agreement, the
Development Work and Product Development Plan are specific to the Territory
described in the first sentence of this definition.

     7. Section 3.2 of the Agreement is hereby deleted in its entirety and replaced with the
following:

“Product Development Plan. The Parties agree to jointly develop a plan of
action and milestones to perform the Development Work (“the Product
Development Plan”), which will be negotiated in good faith, duly executed by
the Parties, and attached hereto as Exhibit A to this Agreement. All
development activities shall be performed and well documented by
Manufacturer in compliance with all applicable Laws. Manufacturer and
Supplier shall use commercially reasonable efforts to complete the
development of the Product in a timely fashion consistent with the Product
Development Plan, and keep Company informed of the progress and status of
the development activities. Upon successful completion of the Development
Work, the Parties’ mutually agreed specifications for the Product (the
“Specifications”) will be attached hereto as Exhibit B. Except as set forth
in Section 3.4, hourly resource requirements and fees for the development
activities for the Product shall be as provided in the Product Development
Plan. Manufacturer shall invoice Company for each of its completed steps of
the Product Development Plan monthly and at a Billable Rate. Invoices shall
contain details regarding the steps completed and the amount being charged
for such completed work. Attached to the invoice shall be a copy of the
Product Development Plan with updated timelines based off the billed
Development Work. Payments of invoices shall be in accordance with Section
7.5(a).”

     8. The following sentence is hereby added to Section 6.4 of the Agreement following the last
sentence:

“For purposes of clarity, the parties acknowledge and agree that the [***].”

     9. Section 7.2 of the Agreement is hereby deleted in its entirety and replaced with the
following:

“Cost Determination. [***], all calculated in accordance with GAAP.”

     10. Section 7.5(a) of the Agreement is hereby deleted in its entirety and replaced with the
following:

“Supplier and Manufacturer will render invoices directly to Company for
Supplier Adjusted COGs and Manufacturer Adjusted COGs, respectively,

 

			
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in connection with their shipments of Drug Resin Complex and Product,
respectively, hereunder. Invoices shall be due and payable by Company
within [***] days after receipt of invoice for first commercial batch and
[***] days after receipt of invoice for all subsequent batches.”

     11. Section 7.5(b) of the Agreement is hereby deleted in its entirety and replaced with the
following:

“After Product is launched, a third of Net Profits shall be paid by Company
to Supplier and a third of the Net Profits shall be paid by Company to
Manufacturer, which payments shall be accompanied by a report detailing the
calculation of such Net Profits and paid within [***] days of the end of the
calendar quarter in which the first sale of the Product occurs and [***]
days after the end of each calendar quarter thereafter.”

     12. A new Section 7.6 shall be added to the Agreement to read in its entirety as follows:

7.6 [***].

     13. The following new language is added to Section 9.7 of the Agreement following the last
sentence:

“Any additional patent applications that are divisional or continuations of
the Manufacturer’s patent applications that have valid claims relating to
the Product or any additional patent applications that are filed by the
Manufacturer that have claims that have valid claims covering the Product
will also be included under this Agreement.”

     14. The following new language is added to Section 9.9 of the Agreement following the last
sentence:

“Any additional patent applications that are divisional or continuations of
the Supplier’s patent applications that have valid claims relating to the
Product or any additional patent applications that are filed by the Supplier
that have valid claims covering the Product will also be included under this
Agreement.”

     15. The first sentence of Section 11.3 of the Agreement is hereby deleted in its entirety and
replaced with the following:

“This Agreement may be terminated immediately by written notice of any Party
to the other Parties hereto if the Product is not commercially launched
within the Territory by the seventh anniversary of this Agreement.”

 

			
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     16. The following new language shall replace the Company’s mailing information for “If to
Company, to:” in Section 14 of the Agreement:

Cornerstone BioPharma, Inc.

1255 Crescent Green Drive, Suite 250

Cary, NC 27518

Attention: President

With a copy to General Counsel

     17. Manufacturer and Company hereby agree to amend that certain Amended and Restated Products
Development Agreement dated as of August 27, 2008, between Company and Manufacturer (the “Products
Development Agreement”) to provide that, notwithstanding anything to the contrary in the Products
Development Agreement, Company may, via written notice to Manufacturer elect to have any three of
the four products covered by the Products Development Agreement manufactured by a third party and
not by Manufacturer; provided that Manufacturer’s technology is not used or incorporated in the
development or manufacturing of such product.

     18. Except as specifically amended herein, all other terms and conditions of the Agreement and
the Products Development Agreement remain in full force and effect.

     19. This Amendment shall be governed by the laws of the State of New York without reference to
any rules of conflict of laws. Any dispute arising in relation to this Amendment shall be resolved
in the same manner as a dispute under the Agreement.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

SIGNATURE PAGE TO AMENDMENT NO. 1

TO DEVELOPMENT AND MANUFACTURING AGREEMENT

     In WITNESS of the agreement to the terms and conditions contained herein, the Parties have
caused the following signatures to be affixed hereto to become effective as of the Effective Date:

	 	 	 	 	 	 	 
	CORNERSTONE BIOPHARMA, INC. (COMPANY)	 	 
	 
	 	 	 	 	 	 
	BY:

	 	 	 	/s/ Craig A. Collard
 

	 	 
	PRINT NAME:	 	Craig A. Collard	 	 
	TITLE:

	 	 	 	President and Chief Executive Officer	 	 
	DATE:

	 	 	 	June 16, 2009	 	 
	 
	 	 	 	 	 	 
	NEOS THERAPEUTICS, L.P. (MANUFACTURER)	 	 
	 
	 	 	 	 	 	 
	BY:

	 	 	 	/s/ Mark Tengler
 

	 	 
	PRINT NAME:	 	Mark Tengler	 	 
	TITLE:

	 	 	 	President	 	 
	DATE:

	 	 	 	June 16, 2009	 	 
	 
	 	 	 	 	 	 
	COATING PLACE, INC. (SUPPLIER)	 	 
	 
	 	 	 	 	 	 
	BY:

	 	 	 	/s/ Tim A. Breunig
 

	 	 
	PRINT NAME:	 	Tim A. Breunig	 	 
	TITLE:

	 	 	 	President	 	 
	DATE:

	 	 	 	June 16, 2009	 	 

6exv4w1

Exhibit 4.1

 

 

Opnext, Inc.

and

American Stock Transfer & Trust Company, LLC

as Rights Agent

Rights Agreement

Dated as of June 18, 2009

 

 

 

 

RIGHTS AGREEMENT

          Rights Agreement, dated as of June 18, 2009 (this “Agreement”), between Opnext, Inc., a
Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, a New York
limited liability trust company, as Rights Agent (the “Rights Agent”).

RECITALS

          WHEREAS, on June 11, 2009, the Board of Directors (the “Board”) of the Company adopted this
Agreement, and has authorized and declared a dividend of one preferred stock purchase right (a
“Right”) for each share of Common Stock (as defined in Section 1.6) of the Company
outstanding at the close of business on June 22, 2009 (the “Record Date”) and has authorized and
directed the issuance of one Right (subject to adjustment as provided herein) with respect to each
share of Common Stock that shall become outstanding between the Record Date and the earliest of the
Distribution Date and the Expiration Date (as such terms are defined in Sections 3.1 and
7.1), each Right initially representing the right to purchase one one-hundredth (subject to
adjustment) of a share of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of
the Company having the rights, powers and preferences set forth in the form of Certificate of
Designations of Series A Junior Participating Preferred Stock attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth, provided, however, that Rights
may be issued with respect to Common Stock that shall become outstanding after the Distribution
Date and prior to the Expiration Date in accordance with Section 22;

          WHEREAS, if the Company experiences an “ownership change,” as defined in Section 382 of the
Internal Revenue Code of 1986, as amended (the “Code”), its ability to use its net operating losses
and certain other tax attributes (collectively, “NOLs”) for income tax purposes could be
substantially limited or lost altogether; and

          WHEREAS, the Company views its NOLs as a valuable asset of the Company, which is likely to
inure to the benefit of the Company and its shareholders, and the Company believes that it is in
the best interests of the Company and its shareholders that the Company provide for the protection
of the Company’s NOLs on the terms and conditions set forth herein.

          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:

          1.1. “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, from and after the date of this Agreement shall be the Beneficial Owner
of 4.99% or more of the Common Stock then outstanding, but shall not include (i) an Exempt Person
or (ii) any Existing Holder, unless and until such time as such Existing Holder shall become the
Beneficial Owner of (A) a percentage of the Common Stock then outstanding that is more than the
aggregate percentage of the outstanding Common Stock that such Existing Holder Beneficially Owns
immediately prior to the first public announcement of the adoption of this Agreement (such
aggregate amount being the “Exempt Ownership

 

 

Percentage”) or (B) less than 4.99% of the Common Stock then outstanding (after which time, if
such Person shall be the Beneficial Owner of 4.99% or more of the Common Stock then outstanding,
such Person shall be or become deemed an “Acquiring Person”). Notwithstanding the foregoing, no
Person shall become an “Acquiring Person” as the result of an acquisition of Common Stock by the
Company which, by reducing the number of shares outstanding, increases the proportionate number of
shares Beneficially Owned by such Person to 4.99% (or, in the case of an Existing Holder, the
Exempt Ownership Percentage) or more of the Common Stock then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 4.99% (or, in the case of an Existing Holder, the
Exempt Ownership Percentage) or more of the Common Stock then outstanding solely by reason of share
purchases by the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of one or more additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common Stock in Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock), then such Person
shall be deemed to be an “Acquiring Person” unless, upon becoming the Beneficial Owner of such
additional Common Stock, such Person does not Beneficially Own 4.99% (or, in the case of an
Existing Holder, the Exempt Ownership Percentage) or more of the Common Stock then outstanding.
Notwithstanding the foregoing, 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
Section 1.1, has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it Beneficially Owned a percentage of Common Stock that would otherwise
cause such Person to be an “Acquiring Person” or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this Section 1.1, then such
Person shall not be deemed to be or have become an “Acquiring Person” at any time for any purposes
of this Agreement. For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, for purposes of determining the particular
percentage of such outstanding Common Stock of which any Person is the Beneficial Owner, shall be
made pursuant to and in accordance with Section 382 of the Code and the Treasury Regulations
promulgated thereunder.

          1.2. “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, and to the extent not
included within the foregoing clause of this Section 1.2, shall also include, with respect to any
Person, any other Person (other than an Exempt Person or an Existing Holder) whose Common Stock
would be deemed constructively owned by such first Person for purposes of Section 382 of the Code
and Treasury Regulations promulgated thereunder.

          1.3. A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “Beneficially
Own” or have “Beneficial Ownership” of any securities:

          1.3.1. which such Person or any of such Person’s Affiliates or Associates directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise has or shares: (A) voting power which includes the power to vote, or to direct the

2

 

voting of, such security (except that a Person shall not be deemed to be the Beneficial Owner of
any security under this clause (A) if such voting power arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, Section 14(a) of the Exchange Act by means of a solicitation
statement filed on Schedule 14A), and/or (B) investment power which includes the power to dispose,
or to direct the disposition of such security;

          1.3.2. which such Person or any of such Person’s Affiliates or Associates directly or
indirectly, has the Right to Acquire; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, (w) 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, (x) securities which such
Person has a Right to Acquire upon the exercise of Rights at any time prior to the time that any
Person becomes an Acquiring Person, or (y) securities issuable upon the exercise of Rights from and
after the time that any Person becomes an Acquiring Person if such Rights were acquired by such
Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3.1 or Section 22 (“Original Rights”) or pursuant to Section
11.9 or Section 11.15 with respect to an adjustment to Original Rights;

          1.3.3. which are Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with whom such Person or any of such Person’s Affiliates or
Associates, has an agreement, arrangement or understanding to act together for the purpose of
acquiring, holding, voting or disposing of any securities of the Company (except that a Person
shall not be deemed to be the Beneficial Owner of any security under this clause 1.3.3 if
such voting power arises solely from a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to, and in accordance with, Section 14(a)
of the Exchange Act by means of a solicitation statement filed on Schedule 14A);

          1.3.4. of which such Person would otherwise be deemed to be the beneficial owner pursuant to
Rule 13d-3 under the Exchange Act; or

          1.3.5. which such Person would be deemed to actually or constructively own for purposes of
Section 382 of the Code, or any successor provision or replacement provision.

          No Person shall be deemed to be the “Beneficial Owner” of, to have “Beneficial Ownership” of
or to “Beneficially Own” any securities which such Person or any of such Person’s Affiliates or
Associates would otherwise be deemed to “Beneficially Own” pursuant to this Section 1.3 (x)
solely as a result of any merger or other acquisition agreement between the Company and such Person
(or one or more of such Person’s Affiliates or Associates), or any tender, voting or support
agreement entered into by such Person (or one or more of such Person’s Affiliates or Associates) in
connection therewith, if, prior to such Person becoming an Acquiring Person, the Board has approved
such merger or other acquisition agreement, or such tender, voting or support agreement, (y) solely
as a result of the Right to Acquire such securities unless the acquisition or transfer of such
Right to Acquire would be deemed, on the date of such acquisition or transfer, to constitute the
exercise of such Right to Acquire for purposes of Section 1.382-4(d) of the Treasury Regulations
promulgated under Section 382 of the Code, or (z) solely as a result of any agreement, arrangement, understanding or relationship unless the effect
thereof

3

 

is to treat such Person, or any of such Person’s Affiliates or Associates, as an “entity”
under Section 1.382-3(a)(1) of the Treasury Regulations promulgated under Section 382 of the Code.

          No Person who is an officer, director or employee of an Exempt Person shall be deemed, solely
by reason of such Person’s status or authority as such, to be the “Beneficial Owner” of, to have
“Beneficial Ownership” of or to “Beneficially Own” any securities that are “Beneficially Owned” (as
defined in this Section 1.3), including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or employee of an Exempt Person.

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

          1.5. “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.

          1.6. “Common Stock” when used with reference to the Company shall mean the common stock, par
value $0.01 per share, of the Company. “Common Stock” when used with reference to any Person other
than the Company shall mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the management, of such other
Person or, if such Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person, and which has issued and outstanding such capital stock,
equity securities or equity interest.

          1.7. “Exempt Person” shall mean (i) the Company, any Subsidiary of the Company, in each case
including, without limitation, the officers and board of directors thereof acting in their
fiduciary capacity, or any employee benefit plan of the Company or of any Subsidiary of the Company
or any entity or trustee holding shares of capital stock of the Company for or pursuant to the
terms of any such plan, or for the purpose of funding other employee benefits for employees of the
Company or any Subsidiary of the Company, and (ii) any Person deemed to be an “Exempt Person” in
accordance with Section 28.

          1.8. “Existing Holder” shall mean (i) Hitachi, Ltd. together with its Affiliates and
Associates, Clarity Partners, L.P. together with its Affiliates and Associates and Marubeni
Corporation together with its Affiliates and Associates, and (ii) any other Person who, immediately
prior to the first public announcement of the adoption of this Agreement, is the Beneficial Owner
of 4.99% or more of the Common Stock then outstanding, together with any Affiliates and Associates
of such Person.

          1.9. “Person” shall mean any individual, partnership, joint venture, limited liability
company, firm, corporation, unincorporated association, trust or other entity (including any group
of persons treated as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations
promulgated by the Code), and shall include any successor (by merger or otherwise) of such entity.

4

 

          1.10. “Right to Acquire” shall mean a legal, equitable or contractual right to acquire any
securities (whether directly or indirectly and whether exercisable immediately, or only after the
passage of time, compliance with regulatory requirements, fulfillment of a condition or otherwise),
pursuant to any agreement, arrangement or understanding, whether or not in writing (excluding
customary agreements entered into in good faith with and between an underwriter and selling group
members in connection with a firm commitment underwriting registered under the Securities Act of
1933, as amended (the “Securities Act”)), or upon the exercise of any option, warrant or right,
through conversion of a security, pursuant to the power to revoke a trust, discretionary account or
similar arrangement, pursuant to the power to terminate a repurchase or similar so-called “stock
borrowing” agreement or arrangement, or pursuant to the automatic termination of a trust,
discretionary account or similar arrangement.

          1.11. “Stock Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, the filing of a report pursuant to
Section 13(d) of the Exchange Act or pursuant to a comparable successor statute) by the Company or
an Acquiring Person that an Acquiring Person has become such or that discloses information which
reveals the existence of an Acquiring Person or such earlier date as a majority of the Board shall
become aware of the existence of an Acquiring Person.

          1.12. “Subsidiary” of any Person shall mean any partnership, joint venture, limited liability
company, firm, corporation, unincorporated association, trust or other entity of which a majority
of the voting power of the voting equity securities or equity interests is owned, of record or
beneficially, directly or indirectly, by such Person.

          1.13. A “Trigger Event” shall be deemed to have occurred upon any Person becoming an Acquiring
Person.

          1.14. The following terms shall have the meanings defined for such terms in the Sections set
forth below:

	 	 	 
	Term	 	Section
	 
	 	 
	Adjustment Shares
	 	11.1.2
	Agreement
	 	Preamble
	Board
	 	Recitals
	Book Entry Shares
	 	3.1
	Code
	 	Recitals
	common stock equivalent
	 	11.1.3
	Company
	 	Preamble
	current per share market price
	 	11.4.1
	Current Value
	 	11.1.3
	Distribution Date
	 	3.1
	equivalent preferred stock
	 	11.2
	Exchange Act
	 	1.2
	Exchange Consideration
	 	27.1
	Exempt Ownership Percentage
	 	1.1
	Exemption Request
	 	28

5

 

	 	 	 
	Term	 	Section
	Expiration Date
	 	7.1
	Final Expiration Date
	 	7.1
	NOLs
	 	Recitals
	Original Rights
	 	1.3.2
	Preferred Stock
	 	Recitals
	Principal Party
	 	13.2
	Purchase Price
	 	4
	Record Date
	 	Recitals
	Redemption Date
	 	7.1
	Redemption Price
	 	23.1
	Requesting Person
	 	28
	Right
	 	Recitals
	Right Certificate
	 	3.1
	Rights Agent
	 	Preamble
	Securities Act
	 	1.10
	Security
	 	11.4.1
	Spread
	 	11.1.3
	Substitution Period
	 	11.1.3
	Summary of Rights
	 	3.2
	Trading Day
	 	11.4.1
	Trust
	 	27.1
	Trust Agreement
	 	27.1

          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, shall prior to the Distribution Date also be the holders of the Common Stock) 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.
In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights
Agent and any co-Rights Agent shall be as the Company shall determine. Contemporaneously with such
appointment, if any, the Company shall notify the Rights Agent thereof.

          Section 3. Issuance of Right Certificates.

          3.1. Rights Evidenced by Stock Certificates. Until the earlier of (i) the tenth
(10th) Business Day after the Stock Acquisition Date or (ii) the tenth (10th)
Business Day after the date of the commencement of, or first public announcement of, the intent of
any Person (other than an Exempt Person) to commence, a tender or exchange offer the consummation
of which would result in any Person (other than an Exempt Person) becoming the Beneficial Owner of
Common Stock aggregating 4.99% or more of the then outstanding Common Stock (the earlier of (i) and
(ii) being herein referred to as the “Distribution Date”), (x) the Rights (unless earlier expired,
redeemed or terminated) will be evidenced (subject to the provisions of Section 3.2) by the
certificates for Common Stock registered in the names of the holders thereof or, in the case of
uncertificated shares of Common Stock registered in book entry form (“Book Entry
Shares”), by notation in book entry (which certificates for Common Stock and Book Entry Shares
shall also be deemed to be Right Certificates) and not by separate certificates, and (y) the

6

 

Rights
(and the right to receive certificates therefor) will be transferable only in connection with the
transfer of the underlying Common Stock. The preceding sentence notwithstanding, prior to the
occurrence of a Distribution Date specified as a result of an event described in clause (ii) (or
such later Distribution Date as the Board may select pursuant to this sentence), the Board may
postpone, one or more times, the Distribution Date which would occur as a result of an event
described in clause (ii) beyond the date set forth in such clause (ii). Nothing herein shall
permit such a postponement of a Distribution Date after a Person becomes an Acquiring Person,
except as a result of the operation of the third sentence of Section 1.1. As soon as
practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign and the Company (or, if requested, the Rights Agent) will send, by first-class,
postage-prepaid mail, to each record holder of Common Stock as of the close of business on the
Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, one or more
certificates for Rights, in substantially the form of Exhibit B hereto (a “Right
Certificate”), evidencing one Right (subject to adjustment as provided herein) for each share of
Common Stock so held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.

          3.2. Summary of Rights. On the Record Date or as soon as practicable thereafter, the
Company will send or cause to be sent a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C (the “Summary of Rights”), by
first-class, postage-prepaid mail, to each record holder of Common Stock as of the close of
business on the Record Date (other than any Acquiring Person or any Associate or Affiliate of any
Acquiring Person), at the address of such holder shown on the records of the Company. With respect
to certificates for Common Stock and Book Entry Shares outstanding as of the close of business on
the Record Date, until the Distribution Date (or the earlier Expiration Date), the Rights will be
evidenced by such certificates for Common Stock registered in the names of the holders thereof or
Book Entry Shares, as applicable, together with a copy of the Summary of Rights and the registered
holders of the Common Stock shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier Expiration Date), the surrender for transfer of any certificate
for Common Stock or Book Entry Shares outstanding at the close of business on the Record Date, with
or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby and the Book Entry Shares, as applicable.

          3.3. New Certificates After Record Date. Certificates for Common Stock which become
outstanding after the Record Date but prior to the earliest of the Distribution Date or the
Expiration Date, shall have impressed, printed, stamped, written or otherwise affixed onto them the
following legend:

This certificate also evidences and entitles the holder hereof to certain rights as
set forth in an Agreement between Opnext, Inc. (the “Company”) and American Stock
Transfer & Trust Company, as Rights Agent, dated as of June 18, 2009, as the same
may be amended from time to time (the “Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances,
as set forth in the Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company will

7

 

mail to the holder of this certificate a copy of the Agreement without charge after
receipt of a written request therefor. As described in the Agreement, Rights which
are owned by, transferred to or have been owned by Acquiring Persons or Associates
or Affiliates thereof (as defined in the Agreement) shall become null and void and
will no longer be transferable.

With respect to any Book Entry Shares, such legend shall be included in a notice to the record
holder of such shares in accordance with applicable law. Until the Distribution Date (or the
earlier Expiration Date), the Rights associated with the Common Stock represented by such
certificates and such Book Entry Shares shall be evidenced by such certificates and the Book Entry
Shares alone, and the surrender for transfer of any such certificates or Book Entry Shares, except
as otherwise provided herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the shares of Common Stock that are no longer outstanding.

          Notwithstanding this Section 3.3, neither the omission of the legend, nor the failure
to provide the notice thereof, shall affect the enforceability of any part of this Agreement or the
rights of any holder of the Rights.

          Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase shares, certification and assignment to be printed on the reverse thereof)
shall be substantially the same as 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 trading system on which the Rights
may from time to time be listed or quoted, or to conform to usage. Subject to the terms and
conditions hereof, the Right Certificates, whenever issued, shall be dated as of the Record Date,
and shall show the date of countersignature by the Rights Agent, and on their face shall entitle
the holders thereof to purchase such number of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price per one one-hundredth of a share of Preferred Stock set
forth therein (the “Purchase Price”), but the number of such one one-hundredths of a share of
Preferred Stock and the Purchase Price shall be subject to adjustment as provided herein.

          Section 5. Countersignature and Registration. The Right Certificates shall be
executed on behalf of the Company by the President and Chief Executive Officer, the Chief Financial
Officer and Senior Vice President, Finance or the Senior Vice President and General Counsel of the
Company, 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 any Assistant Secretary of
the Company or by such officers as the Board may designate, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or by facsimile
signature, by an authorized signatory of the Rights Agent, but it shall
not be necessary for the same signatory to countersign all of the Right Certificates
hereunder. No Right Certificate shall be valid for any purpose unless so countersigned. In case
any officer

8

 

of the Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right 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 Right Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such person was not such
an officer.

          Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right Certificates.

          Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section
11.1.2 and Section 14, 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 Right Certificate or
Right Certificates (other than Right Certificates representing Rights that have become void
pursuant to Section 11.1.2 or that have been exchanged pursuant to Section 27) may
be transferred, split up or combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a
share of Preferred Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up or combine or
exchange any Right Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender, together with any required form of assignment and certificate duly completed,
the Right Certificate or Right Certificates to be transferred, split up or combined or exchanged 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 Right Certificate or Right Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the reverse side of
such Right Certificate or Right Certificates 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 countersign and
deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment from the holders of Right Certificates of a
sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up or combination or exchange of such Right Certificates.

          Subject to the provisions of Section 11.1.2, at any time after the Distribution Date
and prior to the Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation

9

 

of
the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of
like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.

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

          7.1. Exercise of Rights. Subject to Section 11.1.2 and except as otherwise
provided herein, the registered holder of any Right Certificate may exercise the Rights evidenced
thereby in whole or in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and certification 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 for the total number of one one-hundredths of
a share of Preferred Stock (or other securities, cash or other assets) as to which the Rights are
exercised, at or prior to the time (the “Expiration Date”) that is the earliest of (i) the close of
business on June 22, 2012 (the “Final Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the “Redemption Date”), (iii) the closing of any merger
or other acquisition transaction involving the Company pursuant to an agreement of the type
described in Section 13.3 at which time the Rights are deemed terminated, (iv) the time at
which the Rights are exchanged as provided in Section 27, or (v) the time at which the
Board determines that the NOLs are fully utilized or no longer available under Section 382 of the
Code.

          7.2. Purchase. The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall be initially $17.00, shall be subject to adjustment
from time to time as provided in Sections 11, 13 and 26 and shall be payable in
lawful money of the United States of America in accordance with Section 7.3.

          7.3. Payment Procedures. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and certification duly executed, accompanied by
payment of the aggregate Purchase Price for the total number of one one-hundredths of a share of
Preferred Stock to be purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9, in cash or by
certified or cashier’s check or money order payable to the order of the Company, the Rights Agent
shall thereupon promptly (i)(A) requisition from any transfer agent of the Preferred Stock (or make
available, if the Rights Agent is the transfer agent) certificates for the number of shares of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depository
agent, requisition from the depositary agent depositary receipts representing interests in such
number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock 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 all such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of the issuance of fractional shares in accordance with Section 14
or otherwise in accordance with Section 11.1.3, (iii) promptly 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 Right Certificate, registered
in such name or names as may be designated by such holder and (iv) when appropriate, after

10

 

receipt,
promptly deliver such cash to or upon the order of the registered holder of such Right Certificate.
In the event that the Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11.1.3, the Company will make all
arrangements necessary so that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.

          7.4. Partial Exercise. In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to
the registered holder of such Right Certificate or to his or her duly authorized assigns, subject
to the provisions of Section 14.

          7.5. Full Information Concerning Ownership. Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder of Rights upon the occurrence of any purported
exercise as set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate surrendered for such
exercise shall have been duly completed and executed by the registered holder thereof and the
Company shall have been provided with 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.

          Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right 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 Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.

          Section 9. Reservation and Availability of Capital Stock. The Company covenants and
agrees that, from and after the Distribution Date, it will cause to be reserved and kept available
out of its authorized and unissued Preferred Stock (and, following the occurrence of a Trigger
Event, out of its authorized and unissued Common Stock or other securities or out of its shares
held in its treasury) the number of shares of Preferred Stock (and, following the occurrence of a
Trigger Event, Common Stock and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.

          So long as the Preferred Stock (and, following the occurrence of a Trigger Event, Common Stock
and/or other securities) issuable upon the exercise of Rights may be listed on any national
securities exchange or traded in the over-the-counter market, the Company shall use its
best efforts to cause, from and after such time as the Rights become exercisable, all shares

11

 

reserved for such issuance to be listed or admitted to trading on such exchange or market upon
official notice of issuance upon such exercise.

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

          From and after such time as the Rights become exercisable, the Company shall use its
reasonable efforts, if then necessary to permit the issuance of Preferred Stock upon the exercise
of Rights, to register and qualify such Preferred Stock under the Securities Act and any applicable
state securities or “Blue Sky” laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as possible after such
filing and keep such registration and qualifications effective until the earlier of the date as of
which the Rights are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed one hundred twenty (120) days,
the exercisability of the Rights in order to prepare and file a registration statement under the
Securities Act and permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Securities Act (if required) shall have
been declared effective.

          The Company further covenants and agrees that it will pay when due and payable any and all
Federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or delivery of certificates for the
Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise
or to issue or deliver any certificates for Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until any such tax shall have been paid (any such tax being payable by the
registered holder of such Right Certificate at the time of surrender) or until it has been
established to the Company’s satisfaction that no such tax is due.

          Section 10. Preferred Stock Record Date. Each person in whose name any certificate
for Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the holder of record of the
Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender

12

 

and payment is a date upon which the Preferred Stock (or Common Stock 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 Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Stock for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions, 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 of Shares or Number of Rights. The
Purchase Price, the number of shares of Preferred Stock or other securities or property purchasable
upon exercise of each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.

          11.1. Post-Execution Events.

          11.1.1. Corporate Dividends, Reclassifications, Etc. In the event the Company shall,
at any time after the date of this Agreement, (A) declare and pay a dividend on the Preferred Stock
payable in Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this Section 11.1.1,
the Purchase Price in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately prior to such date and
at a time when the Preferred Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If an event occurs which would require
an adjustment under both Section 11.1.1 and Section 11.1.2, the adjustment provided
for in this Section 11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to, Section 11.1.2.

          11.1.2. Acquiring Person Events; Triggering Events. Subject to Section
27, in the event that a Trigger Event occurs, then, from and after the first occurrence of
such event, each holder of a Right, except as provided below, shall thereafter have a right to
receive, upon exercise thereof at a price per Right equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a share of Preferred Stock for which a Right is
then exercisable (without giving effect to this Section 11.1.2), in accordance with the
terms of this Agreement and in lieu of Preferred Stock, such number of shares of Common Stock as
shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one
one-

13

 

hundredths of a share of Preferred Stock for which a Right is then exercisable (without giving
effect to this Section 11.1.2) and (y) dividing that product by 50% of the current per
share market price of the Common Stock (determined pursuant to Section 11.4) on the first
of the date of the occurrence of, or the date of the first public announcement of, a Trigger Event
(the “Adjustment Shares”); provided that the Purchase Price and the number of Adjustment Shares
shall thereafter be subject to further adjustment as appropriate in accordance with Section
11.6. Notwithstanding the foregoing, upon the occurrence of a Trigger Event, any Rights that
are or were acquired or Beneficially Owned by (1) any Acquiring Person or any Associate or
Affiliate thereof, (2) a transferee of any Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (3) a transferee of any
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 regarding the transferred Rights or (B) a
transfer which the Board has determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect avoidance of this Section 11.1.2, and subsequent
transferees, shall become void without any further action, and any holder (whether or not such
holder is an Acquiring Person or an Associate or Affiliate of an Acquiring Person) of such Rights
shall thereafter have no right to exercise such Rights under any provision of this Agreement or
otherwise. From and after the Trigger Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 that represents Rights that are or have become void pursuant
to the provisions of this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of this paragraph shall
be canceled.

          The Company shall use all reasonable efforts to ensure that the provisions of this Section
11.1.2 are complied with, but shall have no liability to any holder of Right Certificates or
any other Person as a result of its failure to make any determinations with respect to any
Acquiring Person or its Affiliates, Associates or transferees hereunder.

          From and after the occurrence of an event specified in Section 13.1, any Rights that
theretofore have not been exercised pursuant to this Section 11.1.2 shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11.1.2.

          11.1.3. Insufficient Shares. The Company may at its option substitute for Common
Stock issuable upon the exercise of Rights in accordance with the foregoing Section 11.1.2
a number of shares of Preferred Stock or fraction thereof such that the current per share market
price of one share of Preferred Stock multiplied by such number or fraction is equal to the current
per share market price of one share of Common Stock. In the event that upon the occurrence of a
Trigger Event there shall not be sufficient Common Stock authorized but unissued, or held by the
Company as treasury shares, to permit the exercise in full of the Rights in accordance with the
foregoing Section 11.1.2, the Company shall take all such action as may be necessary to
authorize additional Common Stock for issuance upon exercise of the Rights, provided, however, that
if the Company determines that it is unable to cause the authorization of a sufficient number of
additional shares of Common Stock, then, in the event the Rights become exercisable, the Company, with respect to each Right and to the extent necessary and permitted

14

 

by applicable law and any agreements or instruments in effect on the date hereof to which it is a
party, 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 (other than Rights which have become void pursuant to
Section 11.1.2), 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)
Preferred Stock, (4) other equity securities of the Company (including, without limitation, shares,
or fractions of shares, of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the Common Stock, the Board has deemed in
good faith to have substantially the same value as the Common Stock) (each such share of preferred
stock or fractions of shares of preferred stock constituting a “common stock equivalent”)), (5)
debt securities of the Company, (6) other assets or (7) 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 in good
faith by the Board; provided, however, that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days following the occurrence of a
Trigger Event, then the Company shall be obligated to deliver, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on the date hereof to which
it is a party, upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Stock (to the extent available) and then, if necessary, such number or
fractions of Preferred Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board shall determine in good
faith that it is unlikely that sufficient additional Common Stock would be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety (90) days following the occurrence of
a Trigger Event, in order that the Company may seek shareholder approval for the authorization of
such additional shares (such period as may be extended, the “Substitution Period”). To the extent
that the Company determines that some actions need be taken pursuant to the second and/or third
sentences of this Section 11.1.3, the Company (x) shall provide 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 the first
sentence of this Section 11.1.3 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 11.1.3, the value of a
share of Common Stock shall be the current per share market price (as determined pursuant to
Section 11.4) on the date of the occurrence of a Trigger Event and the value of any “common
stock equivalent” shall be deemed to have the same value as the Common Stock on such date. The
Board may, but shall not be required to, establish procedures to allocate the right to receive
Common Stock upon the exercise of the Rights among holders of Rights pursuant to this Section
11.1.3.

          11.2. Dilutive Rights Offering. In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Stock (or securities having the same rights, privileges and preferences as
the

15

 

Preferred Stock (“equivalent preferred stock”)) or securities convertible into Preferred Stock
or equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion or exercise price per share, if a security convertible into
or exercisable for Preferred Stock or equivalent preferred stock) less than the current per share
market price of the Preferred Stock (as determined pursuant to Section 11.4) on such record
date, the Purchase Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock and shares of equivalent preferred stock
outstanding on such record date plus the number of shares of Preferred Stock and shares of
equivalent preferred stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or shares of equivalent preferred stock to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would purchase at such
current per share market price and the denominator of which shall be the number of shares of
Preferred Stock and shares of equivalent preferred stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or shares of equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall 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 binding on the Rights Agent and
the holders of the Rights. Preferred Stock and shares of equivalent preferred stock owned by or
held for the account of the Company or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

          11.3. Distributions. In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the last regular periodic
cash dividend theretofore paid or, in case regular periodic cash dividends have not theretofore
been paid, at a rate not in excess of 50% of the average net income per share of the Company for
the four quarters ended immediately prior to the payment of such dividend, or a dividend payable in
Preferred Stock (which dividend, for purposes of this Agreement, shall be subject to the provisions
of Section 11.1.1(A))) or convertible securities, or subscription rights or warrants
(excluding those referred to in Section 11.2), 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 per share market
price of the Preferred Stock (as determined pursuant to Section 11.4) 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) of the portion of the cash, assets,
securities or evidences of indebtedness so to be distributed or of such subscription rights or
warrants
applicable to one share of Preferred Stock and the denominator of which shall be such current

16

 

per share market price of the Preferred Stock (as determined pursuant to Section 11.4);
provided, however, that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in effect if such record date
had not been fixed.

          11.4. Current Per Share Market Value.

          11.4.1. General. For the purpose of any computation hereunder, the “current per share
market price” of any security (a “Security” for the purpose of this Section 11.4.1) on any
date shall be deemed to be the average of the daily closing prices per share of such Security for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current per share market price of the
Security is determined during any period following the announcement by the issuer of such Security
of (i) a dividend or distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the “current per share market price” shall be
appropriately adjusted to reflect the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported thereby or such other system then in
use, or, if on any such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker making a market in the
Security selected by the Board. If on any such date no such market maker is making a market in the
Security, the fair value of the Security on such date as determined in good faith by the Board
shall be used. The term “Trading Day” shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held or not so listed or traded, or if
on any such date the Security is not so quoted and no such market maker is making a market in the
Security, “current per share market price” shall mean the fair value per share as determined in
good faith by the Board or, if at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board, which shall have the duty to
make such determination in a reasonable and objective manner, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

          11.4.2. Preferred Stock. Notwithstanding Section 11.4.1, for the purpose of
any computation hereunder, the “current per share market price” of the Preferred Stock shall be

17

 

determined in the same manner as set forth above in Section 11.4.1 (other than the last
sentence thereof). If the current per share market price of the Preferred Stock cannot be
determined in the manner described in Section 11.4.1, the “current per share market price”
of the Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current per share market price of the Common Stock (as determined pursuant to
Section 11.4.1). If neither the Common Stock nor the Preferred Stock are publicly held or
so listed or traded, or if on any such date neither the Common Stock nor the Preferred Stock are so
quoted and no market maker is making a market in either the Common Stock or the Preferred Stock,
“current per share market price” of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board, or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm selected by the Board, which
shall have the duty to make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. For purposes of this Agreement, the “current per share market price” of one
one-hundredth of a share of Preferred Stock shall be equal to the “current per share market price”
of one share of Preferred Stock divided by 100.

          11.5. Insignificant Changes. No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price.
Any adjustments which by reason of this Section 11.5 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-hundred thousandth of a
share of Preferred Stock or the nearest ten-thousandth of a share of Common Stock or other share or
security, as the case may be.

          11.6. Shares Other Than Preferred Stock. If as a result of an adjustment made
pursuant to Section 11.1, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in Sections 11.1,
11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any such
other shares.

          11.7. Rights Issued Prior to Adjustment. 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-hundredths of a share of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

          11.8. Effect of Adjustments. Unless the Company shall have exercised its election as
provided in Section 11.9, upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11.2 and 11.3, 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-hundredths of a share of Preferred Stock (calculated to

18

 

the
nearest one-hundred thousandth of a share of Preferred Stock) obtained by (i) multiplying (x) the
number of one one-hundredths of a share of Preferred Stock covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

          11.9. Adjustment in Number of Rights. The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement 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 Right Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this Section 11.9,
the Company may, as promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right 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 Right Certificates on the record date specified in the public
announcement.

          11.10. Right Certificates Unchanged. Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of one one-hundredths of a share of Preferred
Stock which were expressed in the initial Right Certificates issued hereunder.

          11.11. Par Value Limitations. Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if any, of the Preferred
Stock or other shares of capital stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Preferred Stock or other such
shares at such adjusted Purchase Price.

19

 

          11.12. Deferred Issuance. 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 of that number of shares of Preferred Stock and
shares of other capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Stock and shares of other capital stock or other securities, assets or
cash 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 upon the occurrence of the event requiring such adjustment.

          11.13. Reduction in Purchase Price. 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 it in its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any of the
Preferred Stock at less than the current market price, issuance wholly for cash of Preferred Stock
or securities which by their terms are convertible into or exchangeable for Preferred Stock,
dividends on Preferred Stock payable in Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such shareholders.

          11.14. Company Not to Diminish Benefits of Rights. The Company covenants and agrees
that after the earlier of the Stock Acquisition Date or Distribution Date it will not, except as
permitted by Section 23, Section 26 or Section 27, 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 substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.

          11.15. Adjustment of Rights Associated with Common Stock. Notwithstanding anything
contained in this Agreement to the contrary, in the event that the Company shall at any time after
the date hereof and prior to the Distribution Date (i) declare or pay any dividend on the
outstanding Common Stock payable in shares of Common Stock, (ii) effect a subdivision or
consolidation of the outstanding Common Stock (by reclassification or otherwise than by the payment
of dividends payable in shares of Common Stock), or (iii) combine the outstanding Common Stock into
a greater or lesser number of shares of Common Stock, then in any such case, the number of Rights
associated with each share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date or in accordance with Section 22 shall be proportionately
adjusted so that the number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a fraction, the
numerator of which shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11.15 shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation is effected.

20

 

          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 or 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock or the Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25. 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 such adjustment unless and until it shall have
received such certificate.

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

          13.1. Certain Transactions. In the event that, from and after the first occurrence of
a Trigger Event, directly or indirectly, (A) the Company shall consolidate with, or merge with and
into, any other Person and the Company shall not be the continuing or surviving corporation, (B)
any Person shall consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed into or exchanged for stock or other
securities of the Company or any other Person or cash or any other property, or (C) the Company
shall sell, exchange, mortgage or otherwise transfer (or one or more of its Subsidiaries shall
sell, exchange, mortgage or otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more 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 or one or more
wholly-owned Subsidiaries of the Company in one or more transactions each of which complies with
Section 11.14), then, and in each such case, proper provision shall be made so that (i)
each holder of a Right (other than Rights which have become void pursuant to Section
11.1.2) shall thereafter have the right to receive, upon the exercise thereof at a price per
Right equal to the then current Purchase Price multiplied by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Trigger Event (as subsequently adjusted pursuant to Sections 11.1.1, 11.2,
11.3, 11.8, 11.9 and 11.12), in accordance with the terms of this Agreement and in lieu
of Preferred Stock or Common Stock, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Stock of the Principal Party (as such term is hereinafter
defined) not subject to any liens, encumbrances, rights of first refusal or other adverse claims,
as shall be equal to the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently adjusted pursuant to
Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y) dividing that product by
50% of the then current per share market price of the Common Stock of such Principal Party
(determined pursuant to Section 11.4) on the date of consummation of such consolidation,
merger, sale or transfer; provided that the price per Right so payable and the number of shares of
Common Stock of such Principal Party so receivable upon exercise of a Right shall thereafter be
subject to further adjustment as appropriate in accordance with Section 11.6 to reflect any
events covered thereby occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all of the obligations and

21

 

duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be
deemed to refer to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with Section 9) in connection with such consummation 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 Stock thereafter deliverable upon the exercise of the
Rights; provided that, upon the subsequent occurrence of any consolidation, merger, sale or
transfer of assets or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of
the Purchase Price as provided in this Section 13.1, such cash, shares, rights, warrants
and other property which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Stock of the Principal Party receivable upon the
exercise of a Right pursuant to this Section 13.1, and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock) as may be necessary to permit
the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares,
rights, warrants and other property. The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement confirming that the
requirements of this Section 13.1 and Section 13.2 shall promptly be performed in
accordance with their terms and that such consolidation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to this Section 13.1 and Section 13.2 and
providing that, as soon as practicable after executing such agreement pursuant to this Section
13, the Principal Party, at its own expense, shall:

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

          (2) use its best efforts, if the Common Stock of the Principal Party shall be listed or
admitted to trading on a national securities exchange, to list or admit to trading (or continue the
listing of) the Rights and the securities purchasable upon exercise of the Rights on such
securities exchange;

          (3) deliver to holders of the Rights historical financial statements for the Principal Party
which comply in all respects with the requirements for registration on Form 10 (or any successor
form) under the Exchange Act; and

          (4) obtain waivers of any rights of first refusal or preemptive rights in respect of the
Common Stock of the Principal Party subject to purchase upon exercise of outstanding Rights.

          In case the Principal Party has provision in any of its authorized securities or in its
articles or certificate of incorporation or by-laws or other instrument governing its affairs,
which

22

 

provision would have the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, Common Stock or common
stock equivalents of such Principal Party at less than the then current market price per share
thereof (determined pursuant to Section 11.4) or securities exercisable for, or convertible
into, Common Stock or common stock equivalents of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this Section 13), or (ii)
providing for any special payment, taxes or similar provision in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provision of Section 13, then, in
such event, the Company hereby agrees with each holder of Rights that it shall not consummate any
such transaction unless prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the provision in question of
such Principal Party shall have been canceled, waived or amended, or that the authorized securities
shall be redeemed, so that the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

          The Company covenants and agrees that it shall not, at any time after the Trigger Event, enter
into any transaction of the type described in clauses (A) through (C) of this Section 13.1
if (i) at the time of or immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the shareholders of the Person who
constitute, or would constitute, the Principal Party for purposes of Section 13.2 shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates or
Associates or (iii) the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights. The provisions of this Section 13 shall similarly
apply to successive transactions of the type described in clauses (A) through (C) of this
Section 13.1.

          13.2. Principal Party. “Principal Party” shall mean:

               (i) in the case of any transaction described in clauses (A) or (B) of the first sentence of
Section 13.1: (i) the Person that is the issuer of the securities into which the Common
Stock is converted in such merger or consolidation, or, if there is more than one such issuer, the
issuer the Common Stock of which has the greatest aggregate market value of shares outstanding, or
(ii) if no securities are so issued, (x) the Person that is the other party to the merger, if such
Person survives said merger, or, if there is more than one such Person, the Person the Common Stock
of which has the greatest aggregate market value of shares outstanding or (y) if the Person that is
the other party to the merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting from the consolidation; and

               (ii) in the case of any transaction described in clause (C) of the first sentence in
Section 13.1, the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if each Person that is
a party to such transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the assets or earning power

23

 

cannot be determined, whichever of such Persons is the issuer of Common Stock having the
greatest aggregate market value of shares outstanding; provided, however, that in any such case
described in the foregoing clause (i) or (ii) of this Section 13.2, if the shares of Common
Stock of such Person are not at such time or have not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, then (1) if such Person is a direct or
indirect Subsidiary of another Person the shares of Common Stock of which are and have been so
registered, the term “Principal Party” shall refer to such other Person, or (2) if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the shares of Common Stock of all of
which are and have been so registered, the term “Principal Party” shall refer to whichever of such
Persons is the issuer of Common Stock having the greatest aggregate market value of shares
outstanding, or (3) if 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 clauses (1) and (2) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total of such
interests.

          13.3. Approved Acquisitions. Notwithstanding anything contained herein to the
contrary, upon the consummation of any merger or other acquisition transaction of the type
described in clause (A), (B) or (C) of Section 13.1 involving the Company pursuant to a
merger or other acquisition agreement between the Company and any Person (or one or more of such
Person’s Affiliates or Associates) which agreement has been approved by the Board prior to any
Person becoming an Acquiring Person, this Agreement and the rights of holders of Rights hereunder
shall be terminated in accordance with Section 7.1.

          Section 14. Fractional Rights and Fractional Shares.

          14.1. Cash in Lieu of Fractional Rights. The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence fractional Rights (except
prior to the Distribution Date in accordance with Section 11.15). In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right 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 the purposes of this Section
14.1, 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 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 on the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by such 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. If on any such date no such market maker is making a market in the Rights,
the current market value of the Rights on such date shall be the fair value of the Rights as
determined in good faith by the Board, or, if at the time of such determination there is an

24

 

Acquiring Person, by a nationally recognized investment banking firm selected by the Board,
which shall have the duty to make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.

          14.2. Cash in Lieu of Fractional Shares of Preferred Stock. The Company shall not be
required to issue fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon exercise or exchange of the
Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other
than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock).
Interests in fractions of shares of Preferred Stock in integral multiples of one one-hundredth of a
share of Preferred Stock may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such Rights are exercised or
exchanged as herein provided an amount in cash equal to the same fraction of the current per share
market price of one share of Preferred Stock (as determined in accordance with Section
14.1) for the Trading Day immediately prior to the date of such exercise or exchange.

          14.3. Cash in Lieu of Fractional Shares of Common Stock. The Company shall not be
required to issue fractions of shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock upon the exercise or exchange of Rights. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock (as determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.

          14.4. Waiver of Right to Receive Fractional Rights or Shares. The holder of a Right
by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise or exchange 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 given to the Rights Agent under Section 18, are vested in the
respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of
the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce this Agreement, and may institute
and maintain any suit, action or proceeding against the Company to enforce this Agreement, or
otherwise enforce or act in respect of his right to exercise the Rights evidenced by such Right
Certificate (or, prior to the Distribution Date, such Common Stock) in the manner

25

 

provided in such Right 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 under, and injunctive relief against actual or
threatened violations of, the obligations of any Person (including, without limitation, the
Company) subject to this Agreement.

          Section 16. Agreement of Right 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 the Common Stock;

          (b) as of and after the Distribution Date, the Right Certificates are transferable only
on the registry books of the Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer
with all required certifications completed; and

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

          Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of
any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right 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 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.

          Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent 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

26

 

connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly or indirectly.

          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 Right Certificate or certificate for the Preferred Stock or the Common Stock or
for other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, 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.

          Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation, limited liability company or other entity into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any corporation, limited
liability company or other entity resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation or limited liability
company succeeding to the corporate trust or stock transfer 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 that such corporation, limited liability company or other entity would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates
so countersigned; and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

          In case at any time the name of the Rights Agent shall be changed and at such time any of the
Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in the Right 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 Right Certificates, by their acceptance thereof, shall be bound:

          20.1. Legal Counsel. The Rights Agent may consult with legal counsel selected by it
(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.

27

 

          20.2. Certificates as to Facts or Matters. Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any one of the
President and Chief Executive Officer, the Chief Financial Officer and Senior Vice President,
Finance, the Secretary or the Senior Vice President and General Counsel 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.

          20.3. Standard of Care. The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.

          20.4. Reliance on Agreement and Right Certificates. 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 Right Certificates (except as to its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been made by the Company
only.

          20.5. No Responsibility as to Certain Matters. 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 Right 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 Right Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11.1.2) or any
adjustment required under the provisions of Sections 3, 11, 13, 23 or 27 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 Right Certificates after actual notice of any such change or adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Stock or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Stock will, when so issued,
be validly authorized and issued, fully paid and nonassessable.

          20.6. Further Assurance by Company. 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.

          20.7. Authorized Company Officers. The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder from any one of the
President and Chief Executive Officer, the Chief Financial Officer and Senior Vice President,
Finance, the Secretary and the Senior Vice President and General Counsel of the Company, and to
apply to such officers for advice or instructions in connection with its duties

28

 

under this Agreement, 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 or for any delay in acting
while waiting for these instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable to the Company for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such application on or
after the date specified therein (which date shall not be less than three (3) 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 of any such action (or the
effective date in the case of omission), the Rights Agent shall have received written instructions
in response to such application specifying the action to be taken or omitted.

          20.8. Freedom to Trade in Company Securities. 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.

          20.9. Reliance on Attorneys and Agents. 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, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or misconduct, provided that
reasonable care was exercised in the selection and continued employment thereof.

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

          20.11. Rights Holders List. At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall promptly deliver to the Company a
list, as of the most recent practicable date (or as of such earlier date as may be specified by the
Company), of the holders of record of Rights.

          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 Stock and/or Preferred
Stock, as applicable, by registered or certified mail. Following the Distribution Date, the
Company shall promptly notify the holders of the Right Certificates by first-class mail

29

 

of any such resignation. 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 Stock and/or Preferred Stock,
as applicable, by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the resigning, removed, or incapacitated Rights Agent shall remit to the
Company, or to any successor Rights Agent designated by the Company, all books, records, funds,
certificates or other documents or instruments of any kind then in its possession which were
acquired by such resigning, removed or incapacitated Rights Agent in connection with its services
as Rights Agent hereunder, and shall thereafter be discharged from all duties and obligations
hereunder. Following notice of such removal, resignation or incapacity, the Company shall appoint
a successor to such Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right 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 corporation organized and
doing business under the laws of the State of New York or the State of Delaware (or any other state
of the United States so long as such corporation is authorized to do business as a banking
institution in the State of New York or the State of Delaware) in good standing, having an office
in the State of New York or the State of Delaware, which is authorized under such laws to exercise
stock transfer or corporate trust 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 $100 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock and/or Preferred
Stock, as applicable, and, following the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right 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 Right Certificates. Notwithstanding any of the provisions
of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its 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 Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the Expiration Date, the Company shall, with respect
to Common Stock so issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded, or upon exercise, conversion or exchange of securities
hereinafter issued by the Company, in each case existing prior to the

30

 

Distribution Date, issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such Right 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 Right Certificate would be issued and (ii) no such Right Certificate shall be issued
if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.

          Section 23. Redemption.

          23.1. Right to Redeem. The Board may, at its option, at any time prior to a Trigger
Event, redeem all but not less than all of the then outstanding Rights at a redemption price of
$0.01 per Right, appropriately adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the “Redemption Price”), and the Company may, at its option, pay
the Redemption Price in Common Stock (based on the “current per share market price,” determined
pursuant to Section 11.4, of the Common Stock at the time of redemption), cash or any other
form of consideration deemed appropriate by the Board. The redemption of the Rights by the Board
may be made effective at such time, on such basis and subject to such conditions as the Board in
its sole discretion may establish.

          23.2. Redemption Procedures. Immediately upon the action of the Board ordering the
redemption of the Rights (or at such later time as the Board may establish for the effectiveness of
such redemption), and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. The Company shall promptly give public notice of such
redemption; provided, however, that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. The Company shall promptly give, or cause the Rights
Agent to give, notice of such redemption to the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in Section
27, and other than in connection with the purchase, acquisition or redemption of Common Stock
prior to the Distribution Date.

          Section 24. Notice of Certain Events. In case the Company shall propose at any time
after the earlier of the Stock Acquisition Date and the Distribution Date (a) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last regular periodic cash dividend theretofore paid or, in case
regular periodic cash dividends have not theretofore been paid, at a rate not in excess of 50% of
the average net income per share of the Company for the four quarters ended immediately prior to
the payment of such dividends, or a stock dividend on, or a subdivision,

31

 

combination or reclassification of the Common Stock), or (b) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any additional Preferred Stock
or shares of stock of any class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), or (d) to effect any consolidation or merger into or
with, 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 or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person (other
than pursuant to a merger or other acquisition agreement of the type excluded from the definition
of “Beneficial Ownership” in Section 1.3), or (e) to effect the liquidation, dissolution or
winding up of the Company, or (f) to declare or pay any dividend on the Common Stock payable in
Common Stock or to effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock), then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 25, 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 Preferred Stock and/or Common Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (a) or (b) above at least ten (10) days prior
to the record date for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least ten (10) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the Preferred Stock
and/or Common Stock, whichever shall be the earlier.

     In case any event set forth in Section 11.1.2 or Section 13 shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter give to the Rights Agent
and to each holder of a Right Certificate, in accordance with Section 25, a notice of the
occurrence of such event, which notice shall describe the event and the consequences of the event
to holders of Rights under Section 11.1.2 and Section 13, and (ii) all references
in this Section 24 to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.

     Section 25. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right 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:

Opnext, Inc.

4629 Landing Parkway

Fremont, CA 94538

Attention: Secretary

Subject to the provisions of Section 21 and Section 24, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder of any Right
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:

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American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention: Barry S. Rosenthal

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate (or, prior to the Distribution Date, to the holder of
any certificate representing Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company; provided that prior to the Distribution Date a filing by the
Company with the Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of this Agreement and no
other notice need be given.

          Section 26. Supplements and Amendments. 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 Rights or Common Stock. From and after the time that the Rights are no
longer redeemable, the Company may, and the Rights Agent shall, if the Company so directs, from
time to time supplement or amend this Agreement without the approval of any holders of Rights (i)
to cure any ambiguity or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein or (ii) to make any other changes or
provisions in regard to matters or questions arising hereunder which the Company may deem necessary
or desirable, including but not limited to extending the Final Expiration Date; provided, however,
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), and
no such supplement or amendment may cause the Rights again to become redeemable or cause this
Agreement again to become amendable as to an Acquiring Person or an Affiliate or Associate of an
Acquiring Person other than in accordance with this sentence; provided further, that the right of
the Board to extend the Distribution Date shall not require any amendment or supplement hereunder.
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 26,
the Rights Agent shall execute such supplement or amendment.

          Section 27. Exchange.

          27.1. Exchange of Common Stock for Rights. The Board may, at its option, at any time
after the occurrence of a Trigger Event, exchange Common Stock for all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have become void pursuant
to the provisions of Section 11.1.2) by exchanging at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such amount per Right being hereinafter
referred to as the “Exchange Consideration”). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Acquiring Person shall have become the
Beneficial Owner of 50% or more of the Common Stock then outstanding. From

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and after the occurrence of an event specified in Section 13.1, any Rights that
theretofore have not been exchanged pursuant to this Section 27.1 shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged pursuant to this
Section 27.1. The exchange of the Rights by the Board may be made effective at such time,
on such basis and with such conditions as the Board in its sole discretion may establish. Without
limiting the foregoing, prior to effecting an exchange pursuant to this Section 27, the
Board may direct the Company to enter into a Trust Agreement in such form and with such terms as
the Board shall then approve (the “Trust Agreement”). If the Board so directs, the Company shall
enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”)
all of the shares of Common Stock issuable pursuant to the exchange (or any portion thereof that
have not theretofore been issued in connection with the exchange). From and after the time at
which such shares are issued to the Trust, all stockholders then entitled to receive shares
pursuant to the exchange shall be entitled to receive such shares (and any dividends or
distributions made thereon after the date on which such shares are deposited in the Trust) only
from the Trust and solely upon compliance with the relevant terms and provisions of the Trust
Agreement. Any shares of Common Stock issued at the direction of the Board in connection herewith
shall be validly issued, fully paid and nonassessable shares of Common Stock or Preferred Stock (as
the case may be), and the Company shall be deemed to have received as consideration for such
issuance a benefit having a value that is at least equal to the aggregate par value of the shares
so issued.

          27.2. Exchange Procedures. Immediately upon the action of the Board ordering the
exchange for any Rights pursuant to Section 27.1 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 the Exchange Consideration. 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 the Common Stock 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 the Rights that have become void pursuant to the provisions of Section 11.1.2) held by
each holder of Rights.

          27.3. Insufficient Shares. The Company may at its option substitute, and, in the
event that there shall not be sufficient Common Stock issued but not outstanding or authorized but
unissued to permit an exchange of Rights for Common Stock as contemplated in accordance with this
Section 27, the Company shall substitute to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares
of Preferred Stock or fraction thereof (or equivalent preferred stock, as such term is defined in
Section 11.2) such that the current per share market price (determined pursuant to
Section 11.4) of one share of Preferred Stock (or equivalent preferred stock) multiplied by
such number or fraction is equal to the current per share market price of one share of Common Stock
(determined pursuant to Section 11.4) as of the date of such exchange.

34

 

          Section 28. Process to Seek Exemption. Any Person who desires to effect any
acquisition of Common Stock that would, if consummated, result in such Person (together with its
Affiliates and Associates) beneficially owning 4.99% or more of the then outstanding Common Stock
(or, in the case of an Existing Holder, shares of Common Stock in excess of the Exempt Ownership
Percentage) (a “Requesting Person”) may, prior to the Stock Acquisition Date and in accordance with
this Section 28, request that the Board grant an exemption with respect to such acquisition
under this Agreement so that such Person would be deemed to be an “Exempt Person” under subsection
(ii) of Section 1.7 hereof for purposes of this Agreement (an “Exemption Request”). An
Exemption Request shall be in proper form and shall be delivered by registered mail, return receipt
requested, to the Secretary of the Company at the principal executive office of the Company. The
Exemption Request shall be deemed made upon receipt by the Secretary of the Company. To be in
proper form, an Exemption Request shall set forth (i) the name and address of the Requesting
Person, (ii) the number and percentage of shares of Common Stock then Beneficially Owned by the
Requesting Person, together with all Affiliates and Associates of the Requesting Person, and (iii)
a reasonably detailed description of the transaction or transactions by which the Requesting Person
would propose to acquire Beneficial Ownership of Common Stock aggregating 4.99% or more of the then
outstanding Common Stock (or, in the case of an Existing Holder, shares of Common Stock in excess
of the Exempt Ownership Percentage) and the maximum number and percentage of shares of Common Stock
that the Requesting Person proposes to acquire. The Board shall make a determination whether to
grant an exemption in response to an Exemption Request as promptly as practicable (and, in any
event, within ten (10) Business Days) after receipt thereof; provided, that the failure of the
Board to make a determination within such period shall be deemed to constitute the denial by the
Board of the Exemption Request. The Board shall only grant an exemption in response to an
Exemption Request if the Board determines, in its sole discretion, that the acquisition of
Beneficial Ownership of Common Stock by the Requesting Person will not limit or impair the
availability to the Company of the NOLs. Any exemption granted hereunder may be granted in whole
or in part, and may be subject to limitations or conditions (including a requirement that the
Requesting Person agree that it will not acquire Beneficial Ownership of shares of Common Stock in
excess of the maximum number and percentage of shares approved by the Board), in each case as and
to the extent the Board shall determine necessary or desirable to provide for the protection of the
Company’s NOLs. Any Exemption Request may be submitted on a confidential basis and, except to the
extent required by applicable law, the Company shall maintain the confidentiality of such Exemption
Request and the Board’s determination with respect thereto, unless the information contained in the
Exemption Request or the Board’s determination with respect thereto otherwise becomes publicly
available.

          Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person or corporation other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).

35

 

          Section 31. Determination and Actions by the Board. The Board shall have the
exclusive power and authority to administer this Agreement and to exercise the 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, without limitation, a determination
to redeem or not redeem the Rights or amend this Agreement). All such actions, calculations,
interpretations and determinations that are done or made by the Board in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the Rights, as such, and
all other parties.

          Section 32. 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.

          Section 33. Governing Law. This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the internal laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.

          Section 34. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.

          Section 35. 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.

[Signature Page Follows]

36

 

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

	 	 	 	 	 
	 	OPNEXT, INC.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

EXHIBIT A

FORM OF

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

OPNEXT, INC.

(Pursuant to Section 151 of the

Delaware General Corporation Law)

 

          Opnext, Inc., a corporation organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the “Corporation”), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation as required by Section 151 of
the General Corporation Law at a meeting duly called and held on June 11, 2009.

          RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with
the provisions of the Amended and Restated Certificate of Incorporation of this Corporation the
Board of Directors hereby creates a series of Preferred Stock, par value $0.01 per share (the
“Preferred Stock”), of the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, powers and preferences, and qualifications, limitations and restrictions
thereof as follows:

          Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of
shares constituting the Series A Preferred Stock shall be 1,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock 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 Preferred Stock.

          Section 2. Dividends and Distributions.

     (A) Subject to the prior and superior rights of the holders of any shares of any class
or series of stock of this Corporation ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $0.01 per share (the

A-1

 

“Common Stock”), of the Corporation, and of any other stock ranking junior to the Series A
Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of March, June, September and December in each year (each such date
being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock 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 shares of
Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.

     (B) The Corporation shall declare a dividend or distribution on the Series A Preferred
Stock as provided in paragraph (A) of this Section 2 immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on
the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

     (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date immediately 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 shares of Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be

A-2

 

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

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

     (A) Subject to the provision for adjustment hereinafter set forth, each share of Series
A Preferred Stock shall entitle the holder thereof to 100 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 Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

     (B) Except as otherwise provided herein, in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock 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) Except as set forth herein, or as otherwise provided by law, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.

     (D) If, at the time of any annual meeting of stockholders for the election of
directors, the equivalent of six quarterly dividends (whether or not consecutive) payable on
any share or shares of Series A Preferred Stock are in default, the number of directors
constituting the Board of Directors of the Corporation shall be increased by two. In
addition to voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A Preferred Stock, voting
separately as a class to the exclusion of the holders of Common Stock, shall be entitled at
such meeting of stockholders (and at each subsequent annual meeting of stockholders), unless
all dividends in arrears on the Series A Preferred Stock have been paid or declared and set
apart for payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to cast a number of
votes per share of Series A Preferred Stock as is specified in paragraph (A) of this

A-3

 

Section 3. Each such additional director shall serve until the next annual
meeting of stockholders 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(D). Until the default in payments of all dividends
which permitted the election of said directors shall cease to exist, any director who shall
have been so elected pursuant to the provisions of this Section 3(D) may be removed
at any time, without cause, only by the affirmative vote of the holders of the shares of
Series A Preferred Stock at the time entitled to cast a majority of the votes entitled to be
cast for the election of any such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by the vote of such holders. If
and when such default shall cease to exist, the holders of the Series A Preferred Stock
shall be divested of the foregoing special voting rights, subject to revesting in the event
of each and every subsequent like default in payments of dividends. Upon the termination of
the foregoing special voting rights, the terms of office of all persons who may have been
elected directors pursuant to said special voting rights shall forthwith terminate, and the
number of directors constituting the Board of Directors shall be reduced by two. The voting
rights granted by this Section 3(D) shall be in addition to any other voting rights
granted to the holders of the Series A Preferred Stock in this Section 3.

          Section 4. Certain Restrictions.

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

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

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

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

A-4

 

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

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

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

          Section 6. Liquidation, Dissolution or Winding Up.

          (A) Upon any liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise, no distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of Series A Preferred Stock shall have received an amount
per share (the “Series A Liquidation Preference”) equal to $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common
Stock, or (ii) to the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which holders of Series A
Preferred Stock were entitled immediately prior to such event under the proviso in clause (i) of
the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock

A-5

 

outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that are outstanding immediately prior to such event.

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

     (C) Neither the merger or consolidation of the Corporation into or with another
corporation nor the merger or consolidation of any other corporation into or with the
Corporation shall be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6.

          Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock 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 100 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

          Section 8. No Redemption. The Series A Preferred Stock shall not be redeemable by the
Corporation.

          Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment
of dividends and the distribution of assets upon liquidation, dissolution or winding up, junior to
all series of any other class of the Corporation’s Preferred Stock, except to the extent that any
such other series specifically provides that it shall rank on a parity with or junior to the Series
A Preferred Stock.

          Section 10. Amendment. At any time any shares of Series A Preferred Stock are
outstanding, the Amended and Restated Certificate of Incorporation of the Corporation shall not be
further amended in any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely

A-6

 

without the affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting separately as a single class.

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

***

A-7

 

          IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation
by the undersigned authorized officer this [___] day of [___], 2009.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Secretary 	 
	 	 	 

A-8

 

	 	 	 	 	 

EXHIBIT B

Form of Right Certificate

			
	Certificate No. R-
	 	______ Rights

NOT EXERCISABLE AFTER [ _________, 20___] OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS
GIVEN, IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE
DESCRIBED IN SECTION 13.3 OF THE AGREEMENT, OR IF THE BOARD OF DIRECTORS DETERMINES
THAT THE NOLs (AS DEFINED IN THE AGREEMENT) ARE FULLY UTILIZED OR ARE NO LONGER
AVAILABLE. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO
AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

OPNEXT, INC.

          This certifies that _________, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of June 18, 2009, as the same may be
amended from time to time (the “Agreement”), between Opnext, Inc., a Delaware corporation (the
“Company”), and American Stock Transfer & Trust Company, a New York limited liability trust
company, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date and prior to 5:00 P.M. (New York time) on [___, 20___], at the offices of the Rights
Agent, or its successors as Rights Agent, designated for such purpose, one one-hundredth of a fully
paid, nonassessable share of Junior Participating Preferred Stock, par value $0.01 per share (the
“Preferred Stock”), of the Company, at a purchase price of $17.00 per one one-hundredth of a share
of Preferred Stock, subject to adjustment (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase and certification duly executed.
The number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a
share of Preferred Stock which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of ______, 20___ based on the
Preferred Stock as constituted at such date. Capitalized terms used in this Right Certificate
without definition shall have the meanings ascribed to them in the Agreement. As provided in the
Agreement, the Purchase Price and the number of shares of Preferred Stock which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.

B-1

 

          This Right Certificate is subject to all of the terms, provisions and conditions of the
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which 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 Right Certificates. Copies of the Agreement are on file at the
principal offices of the Company and the Rights Agent.

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

          Subject to the provisions of the Agreement, the Board may, at its option, (i) redeem the
Rights evidenced by this Right Certificate at a redemption price of $0.01 per Right or (ii)
exchange Common Stock for the Rights evidenced by this Certificate, in whole or in part.

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

          No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Stock 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 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 Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in
the Agreement.

          If any term, provision, covenant or restriction of the 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 the Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

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

B-2

 

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

Dated as of ______, 20___.

	 	 	 	 	 	 	 	 	 
	Attest:	 	OPNEXT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	By
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	Title:	 	 

Countersigned:

	 	 	 	 	 
	AMERICAN STOCK TRANSFER &

TRUST COMPANY, LLC as Rights Agent

 	 
	By 	 	 
	 	 	
Authorized Signature

 	 

B-3

 

	 	 	 	 	 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder

desires to transfer the Right Certificate.)

FOR VALUE RECEIVED 

hereby sells, assigns and transfers unto 

 

 

(Please print name and address

of transferee)

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

Dated:                     

	 	 	 	 	 
	 	
 	 
	 	Signature 	 
	 	 	 

	 	 	 	 	 
	Signature Guaranteed:

 	 
	
 	 

          Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

B-4

 

The undersigned hereby certifies that:

          (1) the Rights evidenced by this Right Certificate are not Beneficially Owned by and are not
being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

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

Dated:                     

	 	 	 	 	 
	 	
 	 
	 	Signature 	 
	 	 	 

B-5

 

	 	 	 	 	 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise the Right Certificate.)

To: Opnext, Inc.

          The undersigned hereby irrevocably elects to exercise ____________ Rights represented by
this Right Certificate to purchase the Preferred Stock issuable upon the exercise of such Rights
(or such other securities or property of the Company or of any other Person which may be issuable
upon the exercise of the Rights) and requests that certificates for such stock be issued in the
name of:

 
(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining 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:

 	 
	
 	 

          Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

B-6

 

The undersigned hereby certifies that:

          (1) the Rights evidenced by this Right Certificate are not Beneficially Owned by and are not
being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

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

Dated:                     

	 	 	 	 	 
	 	
 	 
	 	Signature 	 

NOTICE

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

          In the event the certification set forth above in the Form of Assignment or Form of Election
to Purchase is not completed, the Company will deem the Beneficial Owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate hereof and such
Assignment or Election to Purchase will not be honored.

B-7

 

EXHIBIT C

As described in the Rights Agreement, Rights which are 

held by or have been held by an Acquiring Person or Associates 

or Affiliates thereof (as defined in the Rights Agreement) and certain 

transferees thereof shall become null and void and will no longer be transferable.

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES

          On June 11, 2009 the Board of Directors of Opnext, Inc. (the “Company”) declared a dividend of
one preferred stock purchase right (a “Right”) for each share of common stock, $0.01 par value (the
“Common Stock”), of the Company outstanding at the close of business on June 22, 2009 (the “Record
Date”). As long as the Rights are attached to the Common Stock, the Company will issue one Right
(subject to adjustment) with each new share of Common Stock so that all such shares will have
attached Rights. When exercisable, each Right will entitle the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (the
“Preferred Stock”) at a price of $17.00 per one one-hundredth of a share of Preferred Stock,
subject to adjustment (the “Purchase Price”). The description and terms of the Rights are set
forth in a Rights Agreement, dated as of June 18, 2009, as the same may be amended from time to
time (the “Agreement”), between the Company and American Stock Transfer & Trust Company, as Rights
Agent (the “Rights Agent”).

          By adopting the rights agreement, the Board of Directors is seeking to protect the Company’s
ability to carry forward its net operating losses and certain other tax attributes (collectively,
“NOLs”). The Company has experienced and may continue to experience substantial operating losses,
and for federal and state income tax purposes, the Company may “carry forward” net operating losses
in certain circumstances to offset current and future taxable income, which will reduce federal and
state income tax liability, subject to certain requirements and restrictions. These federal and
state NOLs can be a valuable asset of the Company, which may inure to the benefit of the Company
and its stockholders. However, if the Company experiences an “ownership change,” as defined in
Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), its ability to use the
NOLs could be substantially limited, and the timing of the usage of the NOLs could be substantially
delayed, which could significantly impair the value of the Company’s NOL asset. Generally, an
“ownership change” occurs if the percentage of the Company’s stock owned by one or more “five
percent stockholders” increases by more than fifty percentage points over the lowest percentage of
stock owned by such stockholders at any time during the prior three-year period or, if sooner,
since the last “ownership change” experienced by the Company. An NOL rights agreement with a 4.99%
“trigger” threshold is intended to act as a deterrent to any person acquiring 4.99% or more of the
outstanding shares of Common Stock without the approval of the Board of Directors. This would
protect the Company’s NOL asset because changes in ownership by a person owning less than 4.99% of
the Common Stock are not included in the calculation of “ownership change” for purposes of Section
382 of the Code.

C-1

 

          Until the earlier to occur of (i) the tenth Business Day following a public announcement that
a person or group of affiliated or associated persons has acquired beneficial ownership of 4.99% or
more of the Common Stock (an “Acquiring Person”) or (ii) the tenth Business Day (or such later date
as may be determined by action of the Board of Directors prior to such time as any person or group
of affiliated persons becomes an Acquiring Person) following the commencement or announcement of an
intention to make a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 4.99% or more of the Common Stock (the earlier of (i)
and (ii) being called the “Distribution Date”), the Rights will be evidenced, with respect to any
of the Common Stock certificates outstanding as of the Record Date, by such Common Stock
certificate (or, with respect to any shares of Common Stock held in book entry form, by the
notation in book entry) together with a copy of this Summary of Rights. The Agreement provides
that any person who, immediately prior to the first public announcement of the adoption of the
Agreement, beneficially owned 4.99% or more of the Common Stock then outstanding, together with any
affiliates and associates of that person (each an “Existing Holder”), shall not be deemed to be an
“Acquiring Person” for purposes of the Agreement unless the Existing Holder becomes the beneficial
owner of (x) a percentage of the Common Stock then outstanding that is more than the aggregate
percentage of the outstanding Common Stock that such Existing Holder beneficially owns as of the
date immediately prior to the first public announcement of the adoption of the Agreement or (y)
less than 4.99% of the Common Stock then outstanding (after which, if the Existing Holder becomes
the beneficial owner of 4.99% or more of the Common Stock then outstanding, the Existing Holder
shall be deemed to be an “Acquiring Person”). The Agreement includes a procedure whereby the Board
of Directors will consider requests to exempt certain proposed acquisitions of Common Stock from
the applicable ownership trigger if the Board determines that the requested acquisition will not
limit or impair the availability of the NOLs to the Company.

          The Agreement provides that until the Distribution Date (or earlier redemption, exchange,
termination or expiration of the Rights), the Rights will be transferred with and only with the
Common Stock. Until the Distribution Date (or earlier redemption, exchange, termination or
expiration of the Rights), new Common Stock certificates issued after the close of business on the
Record Date upon transfer or new issuance of the Common Stock will contain a notation incorporating
the Agreement by reference, and the Company will deliver a notice to that effect upon the transfer
or new issuance of book entry shares. Until the Distribution Date (or earlier redemption,
exchange, termination or expiration of the Rights), the surrender for transfer of any certificates
for Common Stock or any book entry shares, with or without such notation, notice or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate or the book entry shares. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be
mailed to holders of record of the Common Stock as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.

          The Rights are not exercisable until the Distribution Date. The Rights will expire on June
22, 2012, subject to the Company’s right to extend such date (the “Final Expiration Date”), or
earlier if redeemed or exchanged by the Company, if the Company is merged or acquired pursuant to a
transaction approved by the Board of Directors prior to the time at which

C-2

 

the a person has become an Acquiring Person, or if the Board of Directors determines that the
NOLs are no longer available.

          Each share of Preferred Stock purchasable upon exercise of the Rights will be entitled, when,
as and if declared, to a minimum preferential quarterly dividend payment of the greater of (a)
$1.00 per share, or (b) an aggregate dividend of 100 times the dividend, if any, declared per share
of Common Stock. In the event of liquidation, dissolution or winding up of the Company, the
holders of the Preferred Stock will be entitled to a minimum preferential liquidation payment of
$100 per share (plus any accrued but unpaid dividends), provided that such holders of the Preferred
Stock will be entitled to an aggregate payment of 100 times the payment made per share of Common
Stock. Each share of Preferred Stock will have 100 votes and will vote together with the Common
Stock. Finally, in the event of any merger, consolidation or other transaction in which Common
Stock are exchanged, each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. Preferred Stock will not be redeemable. These rights are
protected by customary antidilution provisions. Because of the nature of the Preferred Stock’s
dividend, liquidation and voting rights, the value of one one-hundredth of a share of Preferred
Stock purchasable upon exercise of each Right should approximate the value of one share of Common
Stock.

          The Purchase Price payable, and the number of shares of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock or convertible securities
at less than the current market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness, cash, securities or assets (excluding
regular periodic cash dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income per share of the
Company for the four quarters ended immediately prior to the payment of such dividend, or dividends
payable in Preferred Stock (which dividends will be subject to the adjustment described in clause
(i) above)) or of subscription rights or warrants (other than those referred to above).

          In the event that a Person becomes an Acquiring Person or if the Company were the surviving
corporation in a merger with an Acquiring Person or any affiliate or associate of an Acquiring
Person and the Common Stock were not changed or exchanged, each holder of a Right, other than
Rights that are or were acquired or beneficially owned by the Acquiring Person or an Affiliate or
an Associate of the Acquiring Person (which Rights will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Common Stock having a market value of
two times the then current Purchase Price of the Right. In the event that, after a person has
become an Acquiring Person, the Company were acquired in a merger or other business combination
transaction or more than 50% of its assets or earning power were sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market value of two times
the then current Purchase Price of the Right.

C-3

 

          At any time after a Person becomes an Acquiring Person and prior to the earlier of one of the
events described in the last sentence of the previous paragraph or the acquisition by such
Acquiring Person of 50% or more of the outstanding Common Stock, the Board of Directors may cause
the Company to exchange the Rights (other than Rights owned by an Acquiring Person which will have
become void), in whole or in part, for Common Stock at an exchange rate per Right of the number of
shares of Common Stock having an aggregate value equal to the difference between the value of the
Common Stock issuable upon the exercise of a Right and the Purchase Price of a Right (subject to
adjustment).

          No adjustment in the Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional Preferred Stock or Common Stock
will be issued (other than fractions of Preferred Stock which are integral multiples of one
one-hundredth of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depository receipts), and in lieu thereof, a payment in cash will be made based on the
market price of the Preferred Stock or Common Stock on the last trading date prior to the date of
exercise.

          The Rights may be redeemed in whole, but not in part, at a price of $0.01 per Right (the
“Redemption Price”) by the Board of Directors at any time prior to the time that an Acquiring
Person has become such. The redemption of the Rights may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.

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

          Any of the provisions of the Agreement may be amended by the Board of Directors for so long as
the Rights are then redeemable, and after the Rights are no longer redeemable, the Company may
amend or supplement the Agreement in any manner that does not adversely affect the interests of the
holders of the Rights (other than an Acquiring Person or an affiliate or associate of an Acquiring
Person).

          A copy of the Agreement has been filed with the Securities and Exchange Commission as an
Exhibit to a Current Report on Form 8-K. A copy of the 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 Agreement, which is incorporated herein by reference.

C-4

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