Document:

EX-4.1

DOUBLE EAGLE PETROLEUM CO.

the “Company”

and

COMPUTERSHARE TRUST COMPANY, N.A.

the “Rights Agent”

RIGHTS AGREEMENT

Dated as of August 24, 2007

1

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Section 1.
	 	Certain Definitions	 	 	1	 
	Section 2.
	 	Appointment of Rights Agent	 	 	3	 
	Section 3.
	 	Issue of Right Certificates	 	 	3	 
	Section 4.
	 	Form of Right Certificates	 	 	5	 
	Section 5.
	 	Countersignature and Registration	 	 	5	 
	Section 6.
	 	Transfer, Split Up, Combination and Exchange of Right Certificates;	 	 	 	 
	 
	 	Mutilated, Destroyed, Lost or Stolen Right Certificates	 	 	5	 
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	6	 
	Section 8.
	 	Cancellation and Destruction of Right Certificates	 	 	7	 
	Section 9.
	 	Availability of Preferred Shares	 	 	7	 
	Section 10.
	 	Preferred Shares Record Date	 	 	7	 
	Section 11
	 	Adjustment of Purchase Price, Number of Shares or Number of Rights	 	 	8	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	 	12	 
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	 	12	 
	Section 14.
	 	Fractional Rights and Fractional Shares	 	 	13	 
	Section 15.
	 	Rights of Action	 	 	14	 
	Section 16.
	 	Agreement of Right Holders	 	 	14	 
	Section 17.
	 	Right Certificate Holder Not Deemed a Stockholder	 	 	14	 
	Section 18.
	 	Concerning the Rights Agent	 	 	14	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	15	 
	Section 20.
	 	Duties of Rights Agent	 	 	15	 
	Section 21.
	 	Change of Rights Agent	 	 	17	 
	Section 22.
	 	Issuance of New Right Certificates	 	 	17	 
	Section 23.
	 	Redemption	 	 	17	 
	Section 24.
	 	Exchange	 	 	18	 
	Section 25.
	 	Notice of Certain Events	 	 	19	 
	Section 26.
	 	Notices	 	 	19	 
	Section 27.
	 	Supplements and Amendments	 	 	20	 
	Section 28.
	 	Successors	 	 	20	 
	Section 29.
	 	Periodic Review	 	 	20	 
	Section 30.
	 	Benefits of this Agreement	 	 	21	 
	Section 31.
	 	Severability	 	 	21	 
	Section 32.
	 	Governing Law	 	 	21	 
	Section 33.
	 	Counterparts	 	 	21	 
	Section 34.
	 	Descriptive Headings	 	 	21	 
	Section 35
	 	Determinations and Actions by the Board of Directors	 	 	21	 
	Signatures
	 	 	 	 	 	 	21	 

Exhibit A – Articles Supplementary of Preferred Shares

Exhibit B — Form of Right Certificate

Exhibit C — Summary of Rights to Purchase Preferred Shares

2

RIGHTS AGREEMENT

RIGHTS AGREEMENT, dated as of August 24, 2007 between Double Eagle Petroleum Co., a Maryland
corporation (the “Company”) and Computershare Trust Company, N.A., a federally chartered trust
company (the “Rights Agent”).

The Board of Directors of the Company has authorized and declared a dividend of one preferred
share purchase right (a “Right”) for each Common Share (as hereinafter defined) of the Company
outstanding on September 4, 2007 (the “Record Date”), each Right representing the right to purchase
one one-thousandth of a Preferred Share (as hereinafter defined) upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).

IN CONSIDERATION of the premises and the mutual agreements herein set forth, the parties
hereby agree as follows:

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

(a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the
Common Shares of the Company then outstanding, but shall not include the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any employee benefit plan of the Company or
any Subsidiary of the Company, or any Person holding Common Shares for or pursuant to the terms of
any such plan in a fiduciary capacity. Notwithstanding the foregoing, no Person shall become an
“Acquiring Person” as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person, together with all Affiliates and Associates of such Person to
20% or more of the Common Shares of the Company then outstanding; provided, however, that if a
Person, together with all Affiliates and Associates of such Person, shall become the Beneficial
Owner of 20% or of the Common Shares of the Company then outstanding by reason of an acquisition of
Common Shares by the Company and shall, after such share acquisition by the Company, become the
Beneficial Owner of any additional Common Shares of the Company (other than Common Shares issued by
the Company as a dividend or distribution made pro rata to all holders of Common Shares), then
(subject to the next sentence of this Section 1(a)) such Person shall be deemed to be an “Acquiring
Person”. Notwithstanding the foregoing, if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an “Acquiring Person”, as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and such Person, if
required by the Board of Directors in its sole discretion, divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an “Acquiring Person” for any purposes of this Agreement.

(b) “Affiliate” and “Associate” shall have the 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.

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

(i) which such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly;

(ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right to
acquire (whether such right is 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 (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates
until such tendered securities are accepted for purchase or exchange or (2) securities which a
Person or any of such Person’s Affiliates or Associates may be deemed to have the right to acquire
pursuant to any merger or other acquisition agreement between the Company and such Person (or one
or more of his or her Affiliates or Associates) if such agreement has been approved by the Board of
Directors of the Company prior to there being an Acquiring Person; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) 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, the applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

(iii) which are beneficially owned, directly or indirectly, by any other Person with which
such Person or any such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company.

Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding” when used with reference to a Person’s Beneficial Ownership of securities of the
Company shall mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.

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

(e) “Close of business” on any given date shall mean 5:00 P.M., Eastern Standard Time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Eastern
Standard Time, on the next succeeding Business Day.

(f) “Common Shares” when used with reference to the Company shall mean the shares of common
stock, $0.10 par value per share, of the Company. “Common Shares” when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest) with the greatest
voting power (in relation to any other classes or series of capital stock (or equity interest)) of
such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.

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

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

(i) “Person” shall mean any individual, firm, corporation, partnership (general or limited),
limited liability company, trust, unincorporated association, or other entity, and shall include
any successor (by merger or otherwise) of such entity.

(j) “Preferred Shares” shall mean shares of Junior Participating Preferred Stock, Series B,
Par Value $0.10 per share, having the rights and preferences set forth in the Articles
Supplementary attached as Exhibit A to this Agreement.

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

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

(m) “Stockholder Rights Plan Committee” shall mean a committee of the Board of Directors of
the Company comprised of at least three (3) Directors who are “independent directors” within the
meaning of Rule 4200(a)(15) of the Nasdaq Marketplace Rules.

(n) “Subsidiary” of any Person shall mean any corporation, partnership (general or limited),
limited liability company, trust, unincorporated association, or other entity of which a majority
of the voting power of the voting equity securities or equity interest is beneficially owned,
directly or indirectly, by such Person or is otherwise controlled by such Person.

Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or desirable and, upon
acceptance of such appointment by a co-Rights Agent, the provisions of this Agreement applicable to
the Rights Agent shall be deemed also to apply to such co-Rights Agent.

Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the close of business on
the tenth Business Day after the Shares Acquisition Date and (ii) the later of (A) the close of
business on 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 becomes an Acquiring Person) after the date that a
tender or exchange offer or intention to commence a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person holding Common Shares for or pursuant to the terms of any
such plan in a fiduciary capacity) is first published, announced, sent, or given within the meaning
of Rule 14d-4(A) of the General Rules and Regulations under the Exchange Act, the consummation of
which tender or exchange offer would result in any Person becoming the Beneficial Owner of Common
Shares aggregating 20% or more of the then outstanding Common Shares, or (B) if such a tender or
exchange offer has been published, announced, sent, or given before the date this Rights Agreement
was entered into, then the close of business on the tenth Business Day after the date this Rights
Agreement was entered into (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person; the earlier of such dates
referred to in (i) and (ii) of this subsection (a), which date may include any such date which is
after the date of this Agreement but prior to the issuance of the Rights, being herein referred to
as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection with the transfer of
Common Shares (including a transfer to the Company). As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the Company, one or more
Right Certificates, in substantially the form of Exhibit B hereto (a “Right Certificate”),
evidencing one Right for each Common Share so held, subject to adjustment as provided herein. As of
and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates.

(b) As soon as practicable after the Record Date, the Company will send a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the form of Exhibit C hereto (the “Summary of
Rights”), by first-class, postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Record Date at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates registered in the names of
the holders thereof together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.

(c) Rights shall, without any further action, be issued in respect of all Common Shares of the
Company that become outstanding (whether originally issued or delivered from treasury) after the
Record Date but prior to the earlier of the Distribution Date, the Redemption Date, or the Final
Expiration Date. Certificates for Common Shares of the Company which become outstanding (whether
originally issued or delivered from treasury) after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:

This certificate also evidences and entitles the holder hereof to certain rights
as set forth in a Rights Agreement between DOUBLE EAGLE PETROLEUM CO., and
COMPUTERSHARE TRUST COMPANY, N.A. dated as of August 24, 2007 (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of DOUBLE EAGLE
PETROLEUM CO. Under certain circumstances, as set forth in the Rights Agreement,
such rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. DOUBLE EAGLE PETROLEUM CO., will mail to the
holder of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefore. Under certain circumstances, as set forth
in the Rights Agreement, Rights issued to any Person who is, was, or becomes an
Acquiring Person or any Affiliate or Associate therefore (as such terms are
defined in the Rights Agreement) or specified transferees of such Acquiring
Person (or Affiliate or Associate thereof), may become null and void and no
longer transferable.

After the Record Date but prior to the earlier of the Distribution Date, the Redemption Date,
and the Final Expiration Date, if new certificate(s) representing Common Shares of the Company are
issued in connection with the transfer, split up, combination or exchange of certificate(s)
representing Common Shares of the Company or if new certificate(s) representing Common Shares of
the Company are issued to replace any certificate(s) that have been mutilated, destroyed, lost, or
stolen, then such new certificate(s) shall bear the foregoing legend. With respect to such
certificates containing the foregoing legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificates shall also constitute the transfer
of the Rights associated with the Common Shares represented thereby. In the event that the Company
purchases or acquires any Common Shares after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Shares shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.

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

Section 4. Form of Right Certificates. The Right Certificates (and the forms of election to
purchase and of 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 on which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 22 and 24 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred Share as shall be set
forth therein at the price per one one-thousandth of a Preferred Share set forth therein (the
“Purchase Price”), but the number of such one one-thousandths of a Preferred Share and the amount
and type of any other securities, cash or other assets issuable upon exercise of Rights, 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 its Chairman of the Board, its Vice-Chairman of the Board, its President,
any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature, shall have
affixed thereto the Company’s seal or a facsimile thereof, and shall be attested by the Secretary
or any Assistant Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer 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 Rights 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 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 14 hereof, at
any time after the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a
Preferred Share as the Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. 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 of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.

Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of the 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 of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights
Agent for delivery to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.

Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The registered
holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) 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 on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with payment of the
Purchase Price for each one one-thousandth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on August 24, 2010 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof. (b) The Purchase Price for each one one-thousandth of a Preferred Share
purchaseable upon the exercise of a Right shall initially be $45, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.

(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the Purchase Price for the shares 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 hereof by certified check, 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 Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates, 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 receipt, deliver such cash to or upon the order of
the registered holder of such Right Certificate.

(d) 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 to the registered holder of such Right
Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14
hereof.

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 Rights 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 Rights 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. Availability of Preferred Shares. The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with Section 7. The Company
covenants and agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.

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 Shares 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 or depositary receipts for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates or depositary receipts for Preferred Shares upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax is due.

Section 10. Preferred Shares Record Date. Each person in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares 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 and payment is a date upon which the
Preferred Shares transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares 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 Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings
of the Company, except as provided herein.

Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase
Price, the number of Preferred Shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.

(a)(i) In the event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares, (b) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise provided in this Section
11(a), 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 Shares transfer books of the Company were open, he or she would
have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right.

(ii) Subject to Section 24 of this Agreement, in the event any Person becomes an Acquiring
Person, each holder of a Right (other than Rights that have become void pursuant to this Section
11(a)(ii)) shall thereafter have a right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu
of Preferred Shares, such number of Common Shares of the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company’s Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event. In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the Company shall not take any
action which would eliminate or diminish the benefits intended to be afforded by the Rights.

Notwithstanding anything in this Agreement to the contrary, from and after the time that any
Person becomes an Acquiring Person, any Rights that are or were acquired or beneficially owned by
(i) any Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (ii) a
transferee of an Acquiring Person (or any Affiliate or Associate of such Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Affiliate or Associate of such Acquiring Person) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and who receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such
Affiliate or Associate) to any Person with whom the Acquiring Person (or such Affiliate or
Associate) has any continuing written or oral agreement, arrangement, or understanding regarding
the Company, the transferred Rights, or Common Shares of the Company, or (B) a transfer that the
Board of Directors has determined in good faith to be part of a plan, agreement, arrangement, or
understanding that has a primary purpose or effect of the avoidance of this provision, shall be
null and void without any further action, and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement. No Right Certificate shall be
issued pursuant to Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominees of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence shall be canceled.

(iii) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit the exercise in full of the Rights in accordance with the
foregoing paragraph (ii), the Company may substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof.

(b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Shares or securities
convertible into Preferred Shares at a price per Preferred Share (or having a conversion price per
share, if a security convertible into Preferred Shares) less than the then current per share market
price of the Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase Price
to be in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be number
of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock 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 of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent. Preferred Shares owned
by or held for the account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed.

(c) In case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (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 or assets (other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market price of the Preferred
Shares on such record date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred Shares; 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.

(d) 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(d)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the 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 a period
following the announcement by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such shares or (B) any
subdivision, combination or reclassification of such Security and prior to the expiration of 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 or admitted to trading on the Nasdaq Stock Market or, if
the Security is not listed or admitted to trading on the Nasdaq Stock Market, 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 by the Nasdaq or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the Security selected
by the Board of Directors of the company. 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 Preferred Shares are not publicly held or
so listed or traded, “current per share market price” shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant to the foregoing
provisions of this Section 11(d) (appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof), multiplied by one thousand. If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or traded, “current per share
market price” shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent.

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

(f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, 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 Shares contained
in Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10 and 13 with
respect to the Preferred Shares shall apply on like terms to any such other shares.

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

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

(i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of one
one-thousandths of a Preferred Share purchasable 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-thousandths of a Preferred Share for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one 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 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(i), the Company shall, 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 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the 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 holder 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 shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the public announcement.

(j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price and the
number of one one-thousandths of a Preferred Share which was expressed in the initial Right
Certificates issued hereunder.

(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
one one-thousandths of the then par value, if any, of the Preferred Shares 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 Shares at such adjusted Purchase Price.

(l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such stockholders.

(n) In the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one one-thousandths of a
Preferred Share purchasable after such event upon proper exercise of each Right shall be determined
by multiplying the number of one one-thousandths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The adjustments provided
for in this Section 11(n) shall be made successively whenever such a dividend is declared or paid
or such a subdivision, combination or consolidation is effected.

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

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In the
event, directly or indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person, (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 Shares shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other property, or (c) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell 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 other than the Company or one or more of its wholly owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (w) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such other Person (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer;
(x) the issuer of such Common Shares shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (y) the term “the Company” shall thereafter be deemed to refer to such
issuer; and (z) such issuer shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Shares in accordance with Section 9 hereof) 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 the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall have executed and delivered
to the Rights Agent a supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements or arrangements
which, as a result of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or other transfers.

Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. 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(a), the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the Nasdaq Stock Market or, if the
Rights are not listed or admitted to trading on the Nasdaq Stock Market, 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 Nasdaq or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.

(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandths of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred Share 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 Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the purpose of this
Section 14(b), the current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.

(c) The holder of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided
above).

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 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the Common Shares), may, in
his or her own behalf and for his or her own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his or
her right to exercise the Rights evidenced by such Right Certificate in the manner 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 will be entitled to specific
performance of the obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.

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 Right will be transferable only in connection with the
transfer of the Common Shares;

(b) after the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; 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 Shares 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 Shares
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 Stockholder. 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 Shares 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 stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), 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 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
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.

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 Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the
proper person or persons, or otherwise upon the advice of counsel as set forth in Section 20
hereof.

Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into
which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the 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 the 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:

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

(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter 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 anyone of the Chairman of the Board, any Vice-Chairman of the Board, the
President, any Vice President, the Secretary or the Treasurer of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such
certificate.

(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct.

(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except 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.

(e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any 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(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and non assessable.

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

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, any Vice-
Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for those instructions.

(h) The Rights Agent and any stockholder, 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 any other legal entity.

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

(j) The provisions of Section 18 and this Section 20 shall survive termination of this
Agreement, the exercise or expiration of the Rights and the resignation, replacement, or removal of
the Rights Agent.

Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30 days notice in writing mailed to the
Company and to each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares 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 Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice,
submit his or her 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. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of
any such appointment the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Preferred Shares, and 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 Rights Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

Section 23. Redemption. (a) The Rights may be redeemed by action of the Board of Directors
pursuant to paragraph (b) of this Section 23 and shall not be redeemed in any other manner.

(b) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) such time as any Person becomes an Acquiring Person and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter referred to as the
“Redemption Price”). The redemption of the Rights by the Board of Directors 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.

(c) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (b) of this Section 23 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. The Company shall
promptly give public notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption of the Rights pursuant to
paragraph (b), the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. 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 24 hereof, and other
than in connection with the purchase of Common Shares prior to the Distribution Date.

Section 24. Exchange. (a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any Person holding Common Shares
for or pursuant to the terms of any such plan in a fiduciary capacity), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares of the Company then outstanding.

(b) Immediately upon the effective date of the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent on the effective date of
said action of the Board of Directors ordering the exchange of Rights. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of Rights which will
be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.

(c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with
subsection (a) of this Section 24, the Company may substitute, for each Common Share that would
otherwise be issuable upon exchange of a Right, a number of Preferred Shares or fraction thereof
such that the current per share market price of one Preferred Share multiplied by such number or
fraction is equal to the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.

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

Section 25. Notice of Certain Events. (a) In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred Shares), (iv) 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 it Subsidiaries (taken as a whole)
to, any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or
(vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination, or consolidation of the Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares) then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purpose of such stock dividend, or 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 Shares or Common Shares, as the case may be, if any such
date is to be fixed, and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 10 days prior to the record date for determining holders of the
Preferred Shares or Common Shares, as the case may be, for purposes of such action, and in the case
of any such other action, at least 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 Shares or Common Shares, as
the case may be.

(b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such events which notice shall
describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.

Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any 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:

Double Eagle Petroleum Co. 777 Overland Trail

P.O. Box 766

Casper, Wyoming 82602

Attention: Chief Executive Officer

Subject to the provisions of Section 21 hereof, 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:

Computershare Trust Company, N.A.

350 Indiana Street, Suite 800

Golden, Colorado 80401

Attention: Corporate Services Department

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 shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

Section 27. Supplements and Amendments. The Company, by action of its Board of Directors, may
from time to time supplement or amend this Agreement without the approval of any holders of Rights
to make any provision with respect to the Rights which the Company may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights
Agent whether or not it would adversely affect the holders of Rights; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement shall not be amended
in any manner which would adversely affect the interests of the holders of Rights (other than
Rights that have become void pursuant to Section 11(a)(ii) hereof). Without limiting the
foregoing, the Company, by action of its Board of Directors, may at any time prior to such time as
any Person becomes an Acquiring Person amend this Agreement (A) to make the provisions of this
Agreement inapplicable to a particular transaction by or with a Person that would or may otherwise
become an Acquiring Person or to otherwise alter the terms and conditions of this Agreement as they
may apply with respect to any such transaction, and (B) to lower the thresholds set forth in
Sections 1(a) and 3(a). Upon delivery of a certificate from an appropriate officer of the Company
and, if requested by the Rights Agent, an opinion of counsel that states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Notwithstanding anything contained herein to the contrary,
the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that
affects the Rights Agent’s own rights, duties, obligations, or immunities under this Agreement.
Prior to the Distribution Date, the interests of holders of Rights shall be deemed coincident with
the interests of the holders of Common Shares.

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

Section 29. Periodic Review. The Stockholder Rights Plan Committee shall review and evaluate
this Agreement in order to consider whether the maintenance of this Agreement continues to be in
the interests of the Company and its stockholders. Such committee shall conduct such review
periodically when, as and in such manner as the committee deems appropriate, after giving due
regard to all relevant circumstances; provided, however, that the committee shall take such action
at least annually. Following each such review, the Stockholder Rights Plan Committee will report
its conclusions to the full Board of Directors of the Company, including any recommendation in
light thereof as to whether this Agreement should be modified or the Rights should be redeemed.
The Stockholder Rights Plan Committee shall have the power to set its own agenda and to retain, at
the expense of the Company, legal counsel, investment bankers or other advisors, in each case as
chosen by the committee. The Stockholder Rights Plan Committee shall have the authority to review
all information of the Company and to consider any and all factors it deems relevant to an
evaluation of whether to maintain or modify this Agreement.

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

Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated.

Section 32. Governing Law. This Agreement and each Right and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Maryland 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 33. Counterparts. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.

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

Section 35. Determinations and Actions by the Board of Directors. For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of outstanding Common Shares of
which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the
date hereof. Except as otherwise specifically provided herein, the Board of Directors shall have
the exclusive power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors or to the Company hereunder, or as may be
necessary or advisable in the administration of this Agreement, including, without limitation, the
right and power (i) to interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations, and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by the Board of
Directors in good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the Board of Directors
or any member thereof to any liability to the holders of the Rights.

3

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

DOUBLE EAGLE PETROLEUM CO.

Attest:

	 	 	 	 	 	 	 
	By:

	 	/s/ Carol A. Osborne
	 	By:
	 	/s/ Stephen H. Hollis
	
 
	 	 	 	 	 	 
	
 
	 	Carol A. Osborne

Secretary
	 	 	 	Stephen H. Hollis

Chief Executive Officer

COMPUTERSHARE TRUST COMPANY, N.A.
	Attest:
	 	 	 	 
	By:

	 	/s/ Ian Yewer
	 	By:
	 	/s/ Kellie Gwinn
	
 
	 	 
	 	 	 	 
	
 
	 	Secretary
	 	 	 	Authorized Officer

4

Exhibit A—

ARTICLES SUPPLEMENTARY

of

JUNIOR PARTICIPATING PREFERRED STOCK, SERIES B

of

DOUBLE EAGLE PETROLEUM CO.,

(Pursuant to Section 2-208 of the Maryland General Corporation Law)

DOUBLE EAGLE PETROLEUM CO., a corporation organized and existing under the laws of the State
of Maryland (herein referred to as the “Company”), in accordance with the provisions of Section
2-208 of the Maryland General Corporation Law and ARTICLE FOURTH of the Company’s Articles of
Incorporation, as amended, does hereby CERTIFY:

I. The Articles of Incorporation of the Company fixes the total number of shares of all
classes of capital stock that the Company shall have the authority to issue as Sixty Million
(60,000,000) shares, of which Ten Million (10,000,000) shares shall be shares of preferred stock of
the par value of $0.10 per share (“Preferred Stock”), and Fifty Million (50,000,000) shares shall
be shares of common stock of the par value of $0.10 per share (“Common Stock”).

II. The Articles of Incorporation of the Company expressly grants to the Board of Directors of
the Company authority to cause such shares of preferred stock to be issued from time to time, by
resolution adopted prior to such issue, providing the voting powers, designations, preferences,
rights and qualifications, limitations or restrictions applicable to such shares.

III. Pursuant to authority conferred upon the Board of Directors by the Articles of
Incorporation of the Company, the Board of Directors, by actions duly taken on August 21, 2007,
authorized and adopted the following resolution providing for an issue of a series of its preferred
stock to be designated “Junior Participating Preferred Stock, Series B”:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
the Company in accordance with the provisions of its Articles of Incorporation, the Board of
Directors hereby creates a series of Preferred Stock, par value $0.10 per share, of the Company and
hereby states the designation and number of shares, and fixes the relative rights, preferences and
limitations thereof as follows:

Section 1. Designation and Amount. The shares of such series shall be designated as “Junior
Participating Preferred Stock, Series B” (the “Series B Preferred Stock”), and the number of shares
constituting the Series B Preferred Stock shall be Seventy-Five Thousand (75,000). 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 B 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 Company convertible into Series B Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series B Preferred Stock with respect to
dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of
Common Stock of the Company, and of any other junior 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 B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 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 B Preferred Stock. In the
event the Company shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series B 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 Company shall declare a dividend or distribution on the Series B Preferred Stock as
provided in paragraph (A) of this Section 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 per share on the Series B 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 B
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series B 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 B Preferred Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more than 60 days prior
to the date fixed for the payment thereof.

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

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series B
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote
of the stockholders of the Company. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share to which holders of
shares of Series B 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 Articles Supplementary creating a series
of Preferred Stock or any similar stock, or by law, the holders of shares of Series B Preferred
Stock and the holders of shares of Common Stock and any other capital stock of the Company having
general voting rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.

(C) Except as set forth herein, or as otherwise provided by law, holders of Series B 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.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series B
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 B Preferred Stock
outstanding shall have been paid in full, the Company 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 B
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
B Preferred Stock, except dividends paid ratably on the Series B 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 B
Preferred Stock provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred;
or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series B
Preferred Stock, or any shares of stock ranking on a parity with the Series B 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 Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such
manner.

Section 5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwise
acquired by the Company 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 the Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the Company’s Articles
of Incorporation, or in any other Articles Supplementary creating a series of Preferred Stock or
any similar stock or as otherwise required by law.

Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made (A) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock
shall have received $1,000 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 B Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Common Stock, or (B) 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 B Preferred Stock, except distributions made ratable on
the Series B 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 Company shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event under the proviso in clause (A) 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.

Section 7. Consolidation, Merger, etc. In case the Company 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 B 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 1,000
times the aggregate amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is changed or exchanged. In
the event the Company shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or change of shares of
Series B 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 shares of Series B Preferred Stock shall not be redeemable.

Section 9. Rank. The Series B Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other class of the Company’s
Preferred Stock.

Section 10. Amendment. The Articles of Incorporation of the Company shall not be amended in
any manner that would materially alter or change the powers, preferences or special rights of the
Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders
of at least two-thirds of the outstanding shares of Series B Preferred Stock, voting together as a
single class.

IN WITNESS WHEREOF, this Articles Supplementary is executed on behalf of the Company by its
President and Chief Executive Officer and attested by its Secretary this [     ] day of August,
2007.

/s/ Stephen H. Hollis

Stephen H. Hollis

President and Chief Executive Officer

Attest:

	 	 	 
	By:

	 	/s/ Carol A. Osborne

Carol A. Osborne

Secretary

5

Exhibit B—

Form of Right Certificate

Certificate No. R-      Rights

NOT EXERCISABLE AFTER AUGUST 24, 2010 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AND EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.

Right Certificate

DOUBLE EAGLE PETROLEUM CO.

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 August 24, 2007 (the “Rights
Agreement”), between DOUBLE EAGLE PETROLEUM CO., a Maryland corporation (the “Company”), and
COMPUTERSHARE TRUST COMPANY, N.A., a federally chartered trust company (the “Rights Agent”), to
purchase from the Company at any time after Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., Eastern Standard Time, on August 24, 2010, at the
principal office of the Rights Agent, or at the office of its successor as Rights Agent, one
one-thousandth share of the Company’s Junior Participating Preferred Stock Series B, par value
$0.10 per share (“Preferred Shares”), of the Company, at an initial purchase price of $45 per one
one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. As provided in the Rights
Agreement, the Purchase Price, the number of Rights and the number of one one-thousandths of a
Preferred Share 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.

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-mentioned offices of the
Rights Agent.

This Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, 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 Preferred Shares 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 Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.01 per Right or (ii) may be exchanged
in whole or in part for Preferred Shares or Common Shares.

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

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

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

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of      [200_].

	 	 	 
	ATTEST:

	 	DOUBLE EAGLE PETROLEUM CO.
	
 
	 	By
	 

	 	 
	Countersigned:

	 	

	COMPUTERSHARE TRUST COMPANY, N.A.

	 	

	By

	 	

	 

	 	

	Authorized Signature

	 	

6

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)

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 DOUBLE EAGLE PETROLEUM CO., with full power of substitution.

Dated:      , [200_]

     

Signature

Signature Guaranteed:

The signature must be medallion guaranteed by a financial institution (commercial bank,
stockbroker, savings and loan, credit union or trust company) that is a participant in the
Securities Transfer Agents Medallion Program, pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended. A notary public is not sufficient.

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

Signature

By

Authorized Signature

7

Form of Reverse Side of Certificate — continued

FORM OF ELECTION TO PURCHASE—

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

To: DOUBLE EAGLE PETROLEUM CO.

The undersigned hereby irrevocably elects to exercise

Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights and requests that certificates for such Preferred Shares be issued in the
name of:

Please insert social security or other identifying number

(Please print name and address)

If such number of Rights shall not be all the Rights evidenced by this 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:      , [200_]

Signature

Signature Guaranteed:

The signature must be medallion guaranteed by a financial institution (commercial bank,
stockbroker, savings and loan, credit union or trust company) that is a participant in the
Securities Transfer Agents Medallion Program, pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended.

8

Form of Reverse Side of Right Certificate – continued

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

Signature

NOTICE—

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

In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, DOUBLE EAGLE PETROLEUM CO., and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be
an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and
such Assignment or Election to Purchase will not be honored.

9

Exhibit C—

SUMMARY OF RIGHTS TO PURCHASEPREFERRED SHARES

On August 21, 2007, the Board of Directors of DOUBLE EAGLE PETROLEUM CO. (the “Company”)
declared a dividend of one Preferred Share Purchase Right (a “Right”) for each outstanding share of
common stock, par value $0.10 per share (the “Common Shares”), of the Company. The dividend is
payable on September 4, 2007 (the “Record Date”) to the stockholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one one-thousandth of a share of
the Company’s Junior Participating Preferred Stock, Series B, par value $0.10 per share (“Preferred
Shares”) at a price of $45 per one one-thousandth of a Preferred Share (the “Purchase Price”),
subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement
(the “Rights Agreement”) between the Company and Computershare Trust Company, N.A., as Rights Agent
(the “Rights Agent”).

Until the earlier to occur of (i) the close of business on the 10th business day following a
public announcement that a person or group of affiliated or associated persons (an “Acquiring
Person”) have acquired beneficial ownership of 20% or more of the outstanding Common Shares or (ii)
the close of business on the 10th business day (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person becomes an Acquiring Person) after the
date that a tender or exchange offer or intention to commence a tender offer or exchange offer by
any person or group is first published, announced, sent, or given, the consummation of which would
result in the beneficial ownership by such person or group of 20% or more of such outstanding
Common Shares (the earlier of such dates being called the “Distribution Date”), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as of the Record Date,
by such Common Share certificate with a copy of this Summary of Rights attached thereto.

The Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued after the Record
Date, upon transfer or new issuance of Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares, outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. 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 Shares 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 August
24, 2010 (the “Final Expiration Date”), unless the Final Expiration Date is extended or changed or
unless the Rights are earlier redeemed by the Company, in each case, as described below.

The Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification
of, the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the then current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of earnings or retained
earnings or dividends payable in Common Shares) or of subscription rights or warrants (other than
those referred to above).

The number of outstanding Rights and the number of one one-thousandths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event of a stock split
of the Common Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each holder
of a Preferred Share will be entitled to a minimum preferential quarterly dividend payment equal to
the greater of $1 per share or 1,000 times the dividend declared per Common Share. In the event of
liquidation, each holder of a Preferred Share will be entitled to a payment of $1,000 per share
provided that such holders shall be entitled to an aggregate payment of 1,000 times the payment
made per Common Share. Each Preferred Share will have 1,000 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. These rights are protected by customary anti-dilution provisions.

Because of the nature of the Preferred Shares’ dividend and liquidation rights, the value of
the one one-thousandth interest in a Preferred Share purchasable upon exercise of each Right should
approximate the long term value of one Common Share.

In the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will have a market value of
two times the exercise price of the Right. In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person or an affiliate or
associate or certain transferees of an Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares having a market
value of two times the exercise price of the Right.

At any time after the acquisition by a person or group of affiliated or associated persons of
beneficial ownership of 20% or more of the outstanding Common Shares and prior to the acquisition
by such person or group of 50% or more of the outstanding Common Shares, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one Common Share or one one-thousandth
of a Preferred Share per Right (subject to adjustment).

With certain exceptions, 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
Shares will be issued (other than fractions which are integral multiples of one one-thousandth of a
Preferred Share and which may, at the election of the Company, be evidenced by depositary receipts)
and in lieu thereof, an adjustment in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise.

At any time prior to the acquisition by a person or group of affiliated or associated persons
of beneficial ownership of 20% or more of the outstanding Common Shares, the Board of Directors of
the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
“Redemption Price”). The redemption of the Rights may be made effective at such time on such basis
and with such conditions as the Board of Directors 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.

The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights, including an amendment to lower certain thresholds described
above, except that from and after such time as any person becomes an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights.

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

At least once annually during the term of the Rights Agreement, a committee comprised of
independent directors of the Company (the “Stockholder Rights Plan Committee”) will review the
Rights Agreement to determine whether the Rights Agreement remains in the interests of the Company
and its stockholders. Following each such review, the Stockholder Rights Plan Committee will
report its conclusions to the full Board of Directors of the Company, including any recommendation
in light thereof as to whether the Rights Agreement should be modified or the Rights should be
redeemed.

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A dated August 24, 2007. A copy of the Rights
Agreement is available to shareholders of the Company free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by reference.

10August 23, 2007

 

 

Stanford R. Ovshinsky

1050 E. Square Lake Road

Bloomfield Township, MI 48304-1957

 

Dear Stan:

 

This letter is intended to confirm our mutual understanding and agreement regarding your desire to retire from your board and management positions at Energy Conversion Devices, Inc. (“ECD”), Ovonic Battery Company, Inc. (“OBC”) and their affiliates effective August 31, 2007.  As used in this letter, we may sometimes refer to you as “SRO.”  Other capitalized terms used and not otherwise defined in this letter will have the meanings set forth in the Executive Employment Agreement dated September 2, 1993, between SRO and ECD, as amended June 27, 2005 (the "ECD Employment Agreement") and the Executive Employment Agreement dated September 2, 1993, by
and among SRO, ECD and OBC, as amended March 31, 1996 and June 27, 2005 (the “OBC Employment Agreement”; the ECD Employment Agreement and OBC Employment Agreement are, collectively, the “Employment Agreements”).  

 

	
             
 	
            By execution of this letter, the undersigned acknowledge and agree, as follows:
 

 

1.            SRO will, effective August 31, 2007, retire from all board and management positions at ECD, OBC and their affiliates, and commence his Retirement Period.  Nothing in this paragraph 1, however, precludes SRO from serving in the future as a director, officer and/or in a management position with any entity if he is hereafter duly elected or appointed to such position.

 

2.            The parties confirm certain terms under the Employment Agreements, as they apply in connection with your retirement, as follows:

 

(a)          SRO will be paid his full current monthly salaries for the month of August 2007.  If application of the provisions of Sections 4.2 of the ECD Employment Agreement or the OBC Employment Agreement with respect to the fiscal year ending June 30, 2007 or the fiscal year ending June 30, 2008 results in, or would have (if the applicable Employment Periods under the Employment Agreements continued in effect) resulted in, a bonus or bonuses being due SRO, then:  (a) SRO shall be paid his full bonus amounts for the fiscal year ending June 30, 2007, and (b) shall be paid a prorated portion through August 31, 2007 (that is, one-sixth) of the bonus or bonuses that would have been payable for the fiscal year ending June 30, 2008.  If applicable, these bonus amounts will be
paid to SRO at the times designated in, and in accordance with the terms set forth in, the Employment Agreements.

 

(b)          For the remainder of SRO’s life, ECD and OBC will, at their expense, provide retirement benefits to SRO as specified in the Employment Agreements, including: (a) 50% of SRO’s present aggregate salaries from ECD and OBC under the Employment Agreements (payable in the same manner as salary under Sections 4.1 of each of the Employment Agreements) and (b) medical (including dental) insurance, disability insurance and, to the extent currently in effect, life insurance, coverage for SRO and his spouse, if any, continuing at least at current levels for the remainder of the lives of SRO and his spouse or until the date 

 

 

Stanford R. Ovshinsky

August 23, 2007

Page 2

 

 

SRO or his spouse secures comparable coverage provided by another employer.  SRO's current annual aggregate salaries from ECD and OBC total $368,000.00; so that 50% of his present aggregate salaries under the Employment Agreements will be $184,000.00.

 

(c)          SRO will continue to be bound by the covenants contained in Sections 6.2 - 6.7 of each of the Employment Agreements from and after August 31, 2007, provided that, for the avoidance of doubt, the three-year period set forth in Sections 6.4 and 6.5 of each of the Employment Agreements will begin on August 31, 2007 and the covenants contained in Sections 6.4 and 6.5 will cease to be of any further force or effect after August 31, 2010.

 

3.            The parties hereby amend and restate clause (b) appearing in Section 6.5 of each of the Executive Employment Agreements to read as follows: “(b) solicit or hire any person then employed by ECD or OBC or any  person who, after having been solicited by SRO during employment (excluding solicitation solely by means of publication in any newspaper, trade journal, website or similar means), terminated his or her employment with ECD or OBC at any time during the preceding 12-month period.” 

 

4.            The parties confirm that all outstanding stock options to acquire shares of ECD securities under the Stock Option Agreement dated November 18, 1993 between SRO and ECD (the "ECD Stock Option Agreement"), presently covering 321,294 shares of stock, all of which are vested, will continue in effect and will be exercisable during the period continuing through and including August 31, 2008, as provided in, and pursuant to the provisions of, the ECD Stock Option Agreement. Exhibit 1, attached hereto and incorporated herein by reference, sets forth a list of all of such outstanding stock options including the number of outstanding unexercised shares, and the exercise
price, as to each such option.

 

5.            The parties hereby amend the outstanding stock options granted to SRO to acquire shares of ECD securities under the Energy Conversion Devices, Inc. 2000 Stock Option Plan (the “2000 Plan”), presently covering 114,000 shares of stock at various exercise prices, 40,000 shares of which are presently unvested, as follows: (a) all such stock options will fully vest as of August 31, 2007, and (b) all such stock options will be exercisable for the period ending ten years after the date of the respective option grants except that, in the event of SRO's death without having fully exercised such options, such options shall be exercisable until the earlier of 12 months following the date of SRO's death or ten years after the
date of option grant. Exhibit 2, attached hereto and incorporated herein by reference, sets forth a list of all such outstanding stock options including the number of outstanding unexercised shares, the exercise price, and the expiration date of the ten year term, of each such option.

 

6.            The parties agree to the following additional terms and acknowledge and agree to the following in connection with SRO’s retirement:

 

(a)          For the remainder of SRO’s life (or, if earlier, until the date SRO commences to receive comparable services provided, without expense to SRO, by an employer of SRO [other than an employer that is controlled by SRO or in which SRO owns more than 50% of the outstanding equity]), ECD will, at its expense, continue to provide full time secretarial assistance to SRO at his office in the greater Detroit metropolitan area, by a person employed 

 

 

Stanford R. Ovshinsky

August 23, 2007

Page 3

 

 

by ECD but of SRO's choosing and subject to his supervision, who will be provided benefits at least equal to those provided to other top level executive secretaries of ECD or OBC.  ECD and OBC shall at all times take commercially reasonable steps to assure that all communications directed to or intended for SRO, including, without limitation, mail, memoranda and emails, are promptly delivered to SRO at his office or at his email address (as furnished by SRO to ECD from time to time) with copy to his secretary (unless otherwise directed by SRO in writing).

 

(b)          Effective August 31, 2007, the two Prius automobiles in SRO’s possession will be transferred to him, free of encumbrance and with sales tax and transfer fees paid.

 

(c)          Effective August 31, 2007, (1) SRO will surrender for termination the outstanding option to acquire shares of OBC stock (the “OBC Option”) under the Stock Option Agreement dated November 18, 1993 between SRO and OBC (the “OBC Stock Option Agreement”) and (2) the OBC Option and the OBC Stock Option Agreement will terminate.

 

(d)          Effective August 31, 2007, ECD will (1) convey the property located at 1050 East Square Lake Road, Bloomfield Township, Michigan (the “Institute Property”), including the improvements thereon, to SRO by Warranty Deed (subject to previously existing easements and restrictions of record, and with the July 2007 tax bill and all operating costs through August 31, 2007 fully paid or payable by ECD prior to delinquency), at fair market value, and (2) pay SRO $500,000.00 to help SRO pay post-August 31, 2007 costs of maintenance, insurance and taxes of the Institute Property but without commitment or restriction as to application by SRO of such funds.

 

Reference is made to that certain appraisal of the Institute Property obtained by ECD, which indicates a current fair market value of the Institute Property in the range of $1,750,000.00 to $2,000,000.00 (the “ECD Appraisal”).  The parties agree that the current fair market value of the Institute Property shall, for all purposes, be deemed to be the average of the high and low values reflected in the ECD Appraisal and that the current fair market value of the Institute Property shall, for all purposes, be deemed to be $1,875,000.00.

 

(e)          ECD shall fully cooperate with SRO, in his individual capacity and in his capacity as executor of the estate of his deceased wife, Iris M. Ovshinsky, in SRO’s establishment and implementation of so-called Section 10b5-1 plans to permit a prompt sale of the stock of ECD owned by SRO and by the estate of Iris M. Ovshinsky, including stock acquired upon the future exercise of outstanding stock options of SRO and said estate; provided that SRO and his representatives shall have the primary responsibility for preparing and implementing any such plans.  This undertaking by ECD shall continue until February 28, 2009.

 

(f)           ECD and OBC shall, to the full extent permitted under law and the respective company’s governance documents, indemnify, defend and hold harmless SRO with respect to all acts and omissions of SRO that occur on or before August 31, 2007 in his capacity as an officer, director or employee of ECD or OBC, to the full extent that would apply if SRO continued as an officer, director or employee of ECD or OBC, as applicable.

 

 

Stanford R. Ovshinsky

August 23, 2007

Page 4

 

 

(g)          With reasonable prior notice and pursuant to reasonable scheduling practices of ECD and OBC, SRO shall be permitted to continue to bring groups of visitors or individuals to tour ECD and OBC facilities to view the technology in use, subject to ECD’s and OBC’s uniform security, safety and confidentiality practices and requirements; but ECD and OBC will not unreasonably refuse admission for, or unreasonably restrict, any such tour requested by SRO.

 

(h)          Within thirty days following the execution of this letter agreement, SRO will (a) sign and deliver to ECD any applicable assignment documents presented by ECD that are needed to transfer to ECD the one share of stock that he currently owns in each of United Solar Systems de Mexico S.A. de C.V and United Solar Ovonic Europe GmbH, and (b) deliver to ECD any original stock certificates that he has in his possession relating to each of the foregoing entities.

 

(i)           The amounts payable by ECD or OBC under this letter agreement will be subject to all taxes and other amounts required to be withheld according to applicable federal and state laws.  ECD has indicated that it is required, and intends, to make withholding payments to IRS, on or before September 4, 2007, for the account of SRO, resulting from taxable income of SRO based upon and resulting from transfer of the two Prius automobiles to SRO as provided in Section 6(b), transfer of the Institute Property to SRO as provided in Section 6(d), and payment of $500,000.00 to SRO as provided in Section 6(d) (collectively, the “Taxable Transfers”), in an aggregate amount equal to $878,488.00 (the
“Withholding Obligation”).  SRO acknowledges and agrees that (1) the Withholding Obligation exceeds the amount of the $500,000.00 payment to SRO (which will be withheld and paid to the IRS as a portion of the aforementioned withholding payment) by $378,488.00 (such excess being herein called the “Excess Withholding Payment”), and (2) he will pay an amount equal to the Excess Withholding Payment to ECD on or before September 4, 2007.

 

The parties acknowledge and agree that (a) this letter agreement and the documents implementing the transactions described herein (including a certain Transfer Agreement dated effective August 31, 2007 and the documents described therein) constitute the complete and entire agreement between the parties relating to SRO’s retirement and the subject matter described herein and supersedes any prior or contemporaneous agreements between the parties with respect to SRO’s retirement and the subject matter herein, (b) all existing agreements by between the parties (specifically including the Employment Agreements and the covenants set forth in Sections 6.2 – 6.7 of each of the Employment Agreements) will continue in accordance with their respective terms, except as amended herein, until terminated in accordance with their terms, and (c) to the extent that that there is any conflict
between the terms set forth in this letter agreement and the terms set forth in any existing agreement between the parties, the terms set forth in this letter agreement will control.

 

The parties further acknowledge and agree that:

 

 (a)         If any provision of this letter agreement or the Employment Agreements contravenes any regulations or U.S. Department of Treasury guidance promulgated under Section 409A of the Code, or could cause any amounts or benefits hereunder to be subject to taxes, interest or penalties under Section 409A of the Code, the parties shall attempt to modify 

 

 

Stanford R. Ovshinsky

August 23, 2007

Page 5

 

 

this letter agreement or the Employment Agreements, as the case may be, without causing any additional payment obligations or otherwise causing any additional economic burden to ECD or OBC, to: (i) comply with, or avoid being subject to, Section 409A of the Code and avoid the imposition of taxes, interest, and penalties under Code Section 409A of the Code, provided, however, that no such modification will be made that would require ECD or OBC to change the economic terms (in a manner adverse to ECD or OBC) of or to accelerate any payments that would otherwise be due and owing to SRO under the Employment Agreements or this letter agreement, and (ii) maintain, to the maximum extent practicable, the original intent of the applicable provisions appearing in the Employment Agreements or this letter agreement without contravening the provisions of Section 409A of the Code.

 

 (b)         Notwithstanding anything to the contrary in the foregoing paragraph (a), the parties acknowledge and agree that in the event that it is finally determined that any amounts or benefits paid hereunder are subject to any taxes, interest and/or penalties pursuant to Section 409A of the Code, (a) all such taxes, interest and/or penalties shall be borne solely by SRO and ECD and OBC shall have no obligation for the payment of any such taxes, interest and/or penalties and (b) SRO will indemnify and hold ECD and OBC harmless from any and all such taxes, interest and/or penalties that may arise from any such determination.

 

Please sign and return a copy of this letter agreement to confirm that this letter agreement conforms to your understanding of our agreements in connection with your retirement.

 

ENERGY CONVERSION DEVICES, INC.

 

 

By:  /S/ Jay B. Knoll                         

Jay B. Knoll

Its:  Vice President and General Counsel

 

 

OVONIC BATTERY COMPANY, INC.

 

 

By:  /S/ Jay B. Knoll                         

Jay B. Knoll

Its:  Attorney-in-Fact

 

Agreed and accepted as of the date written above:

 

/S/ STANFORD R. OVSHSINKY             

STANFORD R. OVSHINSKY

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