Document:

exv4w4

 

Exhibit 4.4

 

 

RIGHTS AGREEMENT

between

EMERGENT BIOSOLUTIONS INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY,

as Rights Agent

Dated                     , 2006

 

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	Section 1.

	 	Certain Definitions
	 	 	2	 
	 
	 	 	 	 	 	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 3.

	 	Issuance of Rights
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.

	 	Form of Rights Certificates
	 	 	9	 
	 
	 	 	 	 	 	 
	Section 5.

	 	Countersignature and Registration
	 	 	10	 
	 
	 	 	 	 	 	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates
	 	 	11	 
	 
	 	 	 	 	 	 
	Section 7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	12	 
	 
	 	 	 	 	 	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	14	 
	 
	 	 	 	 	 	 
	Section 9.

	 	Reservation and Availability of Capital Stock
	 	 	14	 
	 
	 	 	 	 	 	 
	Section 10.

	 	Preferred Stock Record Date
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 11.

	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	 	16	 
	 
	 	 	 	 	 	 
	Section 12.

	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 14.

	 	Fractional Rights and Fractional Shares
	 	 	26	 
	 
	 	 	 	 	 	 
	Section 15.

	 	Rights of Action
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	28	 
	 
	 	 	 	 	 	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	28	 
	 
	 	 	 	 	 	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	29	 
	 
	 	 	 	 	 	 
	Section 20.

	 	Duties of Rights Agent
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 21.

	 	Change of Rights Agent
	 	 	32	 
	 
	 	 	 	 	 	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	32	 

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	Section 23.

	 	Redemption
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 24.

	 	Exchange
	 	 	34	 
	 
	 	 	 	 	 	 
	Section 25.

	 	Notice of Certain Events
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 26.

	 	Notices
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 27.

	 	Supplements and Amendments
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 28.

	 	Successors
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 29.

	 	Actions by the Board, etc.
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 30.

	 	Benefits of this Agreement
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 31.

	 	Severability
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 32.

	 	Governing Law
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 33.

	 	Counterparts
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 34.

	 	Descriptive Headings
	 	 	38	 

 

 

RIGHTS AGREEMENT

RIGHTS AGREEMENT, dated                , 2006 (this “Agreement”), between
Emergent BioSolutions Inc., a Delaware corporation (the “Company”), and American Stock Transfer &
Trust Company, as Rights Agent (the “Rights Agent”).

WITNESSETH

WHEREAS, on September 20, 2006, the Board of Directors of the Company (the “Board”) (1) approved
the adoption by the Company of a stockholder rights plan to become effective prior to the closing
of the Company’s initial public offering (the “IPO”), including certain terms and conditions of
this Agreement and of rights each initially representing the right to purchase one one-thousandth
of a share of Series A Junior Preferred Stock (as defined below) upon the terms and subject to the
conditions of this Agreement (the “Rights”); (2) authorized the filing of a Certificate of
Designations setting forth the rights, powers and preferences of the Series A Junior Participating
Preferred Stock, $0.001 par value per share, as set forth as Exhibit A to this Agreement
(the “Series A Junior Preferred Stock”); (3) delegated to the Pricing Committee of the Board the
authority to (a) determine the remaining terms of this Agreement, including the initial exercise
price of the Rights, (b) declare a dividend distribution of one Right for each share of Common
Stock (as hereinafter defined) of the Company outstanding, (c) fix the record date for such
dividend and (d) take such other actions as the Pricing Committee deems necessary or appropriate to
adopt and implement the shareholder rights plan and (4) recommended to stockholders that they
approve the adoption by the Company of the stockholder rights plan;

WHEREAS, effective                , 2006, the stockholders of the Company approved the adoption by the Board
of a stockholder rights plan, substantially in the form of this Agreement;

WHEREAS, on                , 2006, pursuant to the authority previously delegated to it by the
Board, the Pricing Committee (1) approved the terms and conditions of this Agreement, including the
initial exercise price of the Rights, (2) authorized and declared a dividend distribution of one
Right for each share of Common Stock of the Company outstanding at the close of business on
               , 2006 (the “Record Date”), and (3) authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the provisions of Section

 

 

11(i) or Section 11(p) hereof) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company’s treasury) and the earlier of
the Distribution Date or the Expiration Date;

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

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

     (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person
organized, appointed or established by the Company for or pursuant to the terms of any such plan or
(v) an Exempted Person. Notwithstanding the foregoing, (x) no Person shall become an “Acquiring
Person” as the result of an acquisition of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the shares of Common Stock of the Company then outstanding; provided,
however that if a Person shall become the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding as the result of an acquisition of Common Stock by the
Company and shall, following written notice from, or public disclosure by the Company of such share
purchases by the Company become the Beneficial Owner of any additional Common Stock of the Company
and shall then beneficially own 15% or more of the shares of Common Stock then outstanding, then
such Person shall be deemed to be an “Acquiring Person” and (y) if the Board determines in good
faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and such Person divests
as promptly as practicable (as determined in good faith by the Board of Directors), but in any
event within 15 Business Days, following receipt of written notice from the Company of such event,
of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person would
no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an “Acquiring Person” for any purposes of
this Agreement unless and until such Person shall again become an “Acquiring Person.”

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

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

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

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

          (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities or agreements with or between Persons and the Company with
respect to any other bona fide issuance of securities by the Company to such Persons for resale
within 40 days, including without limitation pursuant to Section 4(2) of the Act or Rule 144A or
Regulation S promulgated under the Act), whether or not in writing, or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” (A) securities tendered pursuant to a tender or exchange offer made pursuant
to, and in accordance with, the applicable provisions of the General Rules and Regulations under
the Exchange Act 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, (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person’s Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or
pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original
Rights;

          (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or any
comparable or successor rule), including pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities or agreements with or between Persons and the
Company with respect to any other bona fide issuance of securities by the Company to such Persons
for resale within 40 days, including without limitation pursuant to Section 4(2) of the Act or Rule
144A or Regulation S promulgated under the Act), whether or not in writing; provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own,” any security under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

          (iii) which are beneficially owned, directly or indirectly, by any other Person with which
such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters

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and selling group members with respect to a bona fide public offering of securities or
agreements with or between Persons and the Company with respect to any other bona fide issuance of
securities by the Company to such Persons for resale within 40 days, including without limitation
pursuant to Section 4(2) of the Act or Rule 144A or Regulation S promulgated under the Act) whether
or not in writing, for the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in the proviso to subparagraph (ii) of this paragraph (e)) or
disposing of any voting securities of the Company.

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

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

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

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

     (i) “Common Stock” shall mean the common stock, $.001 par value, of the Company, except that
“Common Stock” when used with reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person. Prior to the closing of
the Company’s IPO, references to Common Stock shall include both the Company’s common stock, par
value $.001 per share, and the Company’s class B non-voting common stock, par value $.01 per share.
For avoidance of doubt, notwithstanding any other provision of this Agreement, immediately prior
to the closing of the Company’s IPO (at which point, pursuant to the Company’s Certificate of
Incorporation, each outstanding share of class B non-voting common stock shall automatically
convert into one share of the Company’s common stock), the Right theretofore attached to each share
of class B non-voting common stock shall be cancelled and each share of common stock issued upon
conversion of the class B non-voting common stock shall have attached to it one Right.

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

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

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

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

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

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

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

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

     (r) “Exempted Person” shall mean (i) Fuad El-Hibri, Nancy El-Hibri and any Person controlled
by Fuad El-Hibri or Nancy El-Hibri, (ii) Microscience Investments Limited (“Microscience”), unless
and until such time as Microscience, together with its Affiliates and Associates, directly or
indirectly, becomes the Beneficial Owner of any additional shares of Common Stock (other than under
circumstances described in the second sentence of Section 1(a) hereof and disregarding any shares
Microscience is or becomes the Beneficial Owner of solely as a result of the fact that it is a
party to any of the pre-IPO stockholder arrangements described in the Company’s Registration
Statement on Form S-1 relating to its IPO), and (iii) each other holder of the Company’s Common
Stock immediately prior to the IPO to the extent such person’s Beneficial Ownership exceeds 15%
solely as a result of the fact that such person is a party to any of the pre-IPO stockholder
arrangements described in the Company’s Registration Statement on Form S-1 relating to its IPO.

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

     (t) “Final Expiration Date” shall mean the close of business on                     ,
2016.

     (u) “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms determined, prior to the consummation of such tender
offer or exchange offer, by directors constituting at least 75% of all of the members of the Board,
after receiving advice from a nationally recognized investment banking firm selected by the Board,
to be (a) at a price that is fair to stockholders (taking into account all factors which such
members of the Board deem relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its stockholders.

     (v) “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, limited liability partnership, trust, syndicate or other entity and includes,

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without limitation, an unincorporated group of persons who, by formal or informal agreement or
arrangement (whether or not in writing), have embarked on a common purpose or act.

     (w) “Preferred Stock” shall mean shares of Series A Junior Preferred Stock (as defined in the
WHEREAS clause at the beginning of this Agreement) and, to the extent that there is not a
sufficient number of shares of Series A Junior Preferred Stock authorized to permit the full
exercise of the Rights, any other series of Preferred Stock, $.001 par value, of the Company
designated for such purpose containing terms substantially similar to the terms of the Series A
Junior Preferred Stock.

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

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

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

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

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

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

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

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

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

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

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

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

     (jj) “Stock Acquisition Date” shall mean the later of (i) the first date of public
announcement (which, for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such or (ii) the first date on which an executive officer of the
Company has actual knowledge that an Acquiring Person has become such; provided,

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however that, if such Person is deemed not to be an Acquiring Person pursuant to
clause (y) of Section 1(a) hereof, no Stock Acquisition Date shall be deemed to have occurred.

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

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

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

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

     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable
upon ten (10) days’ prior written notice to the Rights Agent. The Rights Agent shall have no duty
to supervise, and shall in no event be liable for, the acts or omissions of any such Co-Rights
Agent.

     Section 3. Issuance of Rights.

     (a) Until the earlier of (i) the close of business on the tenth Business Day (or such later
date as may be determined by the Board) after the Stock Acquisition Date (or, if the tenth Business
Day after the Stock Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth Business Day (or such later date as may be
determined by action of the Board) after the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2 of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would become an Acquiring Person, (the
earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights will
be evidenced by the certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common Stock 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

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more rights certificates, in substantially the form of Exhibit B hereto (the “Rights
Certificates”), evidencing one Right for each share of Common Stock so held, subject to adjustment
as provided herein. With respect to certificates for the Common Stock outstanding as of the close
of business on the Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. In addition, in connection with the issuance or sale
of shares of Common Stock following the Distribution Date and prior to the redemption or expiration
of the Rights, the Company (i) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee benefit plan or arrangement, or
upon the exercise, conversion or exchange of securities granted or issued by the Company prior to
the Distribution Date, and (ii) may, in any other case, if deemed necessary or appropriate by the
Board, issue Rights Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (x) no such Rights Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (y) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof. In the event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Sections 11(i) or 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights Certificates.

     (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Stock, in substantially the form attached hereto as
Exhibit C, by first-class, postage prepaid mail, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder shown on the records
of the Company. The failure to send a copy of the Summary of Rights shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder of the Rights.
Notwithstanding the foregoing, the Company shall not be required to send a copy of such summary to
any purchaser of Common Stock in the IPO if a substantially similar summary is included in the
final prospectus relating to the IPO.

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

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exchange of Common Stock) shall also be deemed to be certificates for Rights, and shall bear
the following legend:

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Emergent
BioSolutions Inc. (the “Company”) and American Stock Transfer &
Trust Company (the “Rights Agent”) dated                     , 2006,
as the same may be amended, restated or renewed from time to time
(the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may
become null and void.

With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date and (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated Rights.
Notwithstanding this Section 3(c), the omission of a legend shall not affect the enforceability of
any part of this Rights Agreement or the rights of any holder of the Rights.

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

     Section 4. Form of Rights Certificates.

     (a) The Rights Certificates (and the forms of election to purchase, certification and
assignment to be printed on the reverse thereof) shall each be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are

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not inconsistent with the provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or over-the-counter market on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 7, 11 and 22 hereof,
the Rights Certificates, whenever distributed, shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as shall be set forth therein at the
price set forth therein (such exercise price per one one-thousandth of a share, the “Purchase
Price”), but the amount and type of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.

     (b) Any Rights Certificate issued pursuant to Section 3, Section 11(i) or Section 22 hereof
that represents Rights beneficially owned by persons known to be: (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding (whether or not in writing) that has as a primary purpose
or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible) the following
legend:

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

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

     Section 5. Countersignature and Registration.

     (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, President or any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company’s seal or a facsimile thereof, which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so

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countersigned. In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

     (b) Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
office designated as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates, the Rights Certificate
number and the date of each of the Rights Certificates.

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

     (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that have become void pursuant to Section 7(e) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder to purchase a like
number of one one-thousandths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate appropriately executed, at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.

-11-

 

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

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

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

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

     (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandth of a share of Preferred Stock
(or other shares, securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates
for the total number of one one-thousandths of a share of Preferred Stock to be purchased and the
Company hereby authorizes its transfer agent to comply with such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock

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issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such requests, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made in cash or by certified bank check or money order payable to
the order of the Company. In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company shall make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the Rights Agent, if and
when appropriate.

     (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.

     (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding (whether or not in writing) that has as a primary purpose
or effect avoidance of this Section 7(e), shall become null and void without any further action and
no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. No Rights Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Rights Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void pursuant to the preceding sentence shall
be cancelled. The Company shall use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights

-13-

 

Certificates or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder.

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

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

     Section 9. Reservation and Availability of Capital Stock.

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

     (b) So long as the shares of Preferred Stock (and, following the occurrence of a Section
11(a)(ii) Event, Common Stock and/or other securities) issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange or automated quotation system, the
Company shall use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be so listed upon official notice of issuance
upon such exercise.

     (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as

-14-

 

the case may be, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the Expiration Date, and (iv) obtain such other regulatory approvals as
may be necessary for it to issue securities purchasable upon the exercise of the Rights. The
Company will also take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration statement and permit it
to become effective or to obtain any other required regulatory approval in connection with the
exercisability of the Rights. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite registration or qualification in such jurisdiction shall have
been effected or obtained.

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

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

     Section 10. Preferred Stock Record Date. Each Person in whose name any certificate
for a number of one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for all purposes

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

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

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

          (ii) Subject to Section 24 of this Agreement, in the event that any Person, alone or together
with its Affiliates or Associates, becomes an Acquiring Person (other than pursuant to a Permitted
Offer), then, promptly following the first occurrence of such event,

-16-

 

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

          (iii) In the event that the number of shares of Common Stock that are authorized by the
Company’s Certificate of Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”) over (2) the Purchase Price (such excess, the “Spread”), and (B) with
respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board has deemed to have the same value as shares of
Common Stock (such shares of preferred stock, “common stock equivalents”)), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the Board;
provided, however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the
“Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. If the Board shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the authorization of such additional
shares (such period, as it may be extended in accordance with this sentence until up to ninety (90)
days after the Section 11(a)(ii) Trigger Date, the “Substitution Period”). To the extent that the
Company determines that some action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration

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of the Substitution Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any “common stock equivalent” shall be deemed to have the same value
as the Common Stock on such date.

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

     (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall

-18-

 

be determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes) of the portion of
the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Preferred Stock and the denominator of which shall be such
current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date. Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted
to be the Purchase Price which would have been in effect if such record date had not been fixed.

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

-19-

 

Stock are listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or traded, “current market
price” per share shall mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.

          (ii) For the purpose of any computation hereunder, the “current market price” per share of
Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in
clause (i) of this Section 11(d) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “current market price” per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1000 (as such number may be appropriately adjusted for such events
as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, “current market price” per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the “current market price” of one one-thousandth of a share of Preferred Stock shall be
equal to the “current market price” of one share of Preferred Stock divided by 1000.

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

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

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

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

     (h) Unless the Company shall have exercised its election as provided in Section 11(i), 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 share of Preferred Stock (calculated to the nearest ten-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

     (i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one-hundred- thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10) days later than the date of
the public announcement. If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public announcement.

-21-

 

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

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

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

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

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

-22-

 

other instruments or securities outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the stockholders of
the Person who constitutes, or would constitute, the “Principal Party” for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates. The Company shall not consummate any consolidation, merger, sale or
transfer described in clause (i), (ii) or (iii) of the prior sentence unless prior thereto the
Company and such other Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this Section 11(n).

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

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

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

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

     (a) In the event that, at any time after a Person has become an Acquiring Person, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(o) hereof), and the

-23-

 

Company shall not be the continuing or surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in a transaction that complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section 11(o) hereof), then,
and in each such case and except as contemplated by Section 13(d) hereof, proper provision shall be
made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), which shall not be subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of one one-thousandths of a share of Preferred Stock
for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and (2) dividing that product (which, following
the first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each
Right and for all purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that, subject to clause (v) below, the
provisions of Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13
Event.

     (b) “Principal Party” shall mean

          (i) in the case of any transaction described in clause (x) or (y) of the first sentence of
Section 13(a), the Person that is the issuer of any securities into which shares of

-24-

 

Common Stock of the Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such merger or consolidation; and

          (ii) in the case of any transaction described in clause (z) of the first sentence of Section
13(a), the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;

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

     (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will

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

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

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

-25-

 

The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Section 13 Event shall occur at the same time as, or
at any time after, the occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner described in Section
13(a).

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

     Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(i) or (p) hereof, or to distribute Rights Certificates
that evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the principal national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and the low asked
prices in the over-the-counter market, or if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board. All references in this Section to
closing prices, last quoted prices or other stock prices means prices during regular trading hours,
without giving effect to any after-hours or extended hours trading. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board shall be used, which determination shall be described in a
statement filed with Rights Agent and shall be conclusive for all purposes.

     (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates that evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a

-26-

 

share of Preferred Stock). Fractional shares of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts; provided, however, that holders of such depositary receipts shall have all of
the designations and the powers, preferences and rights, and the qualifications, limitations and
restrictions to which they are entitled as beneficial owners of the shares of Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock),
the Company shall pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock. For purposes of this Section 14(b), the
current market value of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise.

     (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
price of one (1) share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.

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

     Section 15. Rights of Action. All rights of action in respect of this Agreement,
except the rights of action expressly given to the Rights Agent in Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Stock); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

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

-27-

 

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

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

     (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates
or the associated Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the
penultimate sentence of Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and

     (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the
Company must use its best efforts to prevent the issuance of any such order, decree or ruling and
to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.

     Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of one one-thousandths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, 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 Rights Certificate shall have been exercised in accordance with the provisions
hereof.

     Section 18. Concerning the Rights Agent.

     (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its

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reasonable expenses and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.

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

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

     (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust, stock transfer or other shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the part of any of the
parties hereto; provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.

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

-29-

 

     Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

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

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “current market price”) be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

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

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

     (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11, Section 13 or Section
24 hereof or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after receipt of a certificate
describing any such adjustment, delivered pursuant to Section 12); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable.

     (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts,

-30-

 

instruments and assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

     (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its duties or
obligations under this Rights Agreement and the date on and/or after which such action shall be
taken or omitted and the Rights Agent shall not be liable for any action taken or omitted in
accordance with a proposal included in any such application on or after the date specified therein
(which date shall not be less than five Business Days after the date any such officer actually
receives such application, unless any such officer shall have consented in writing to an earlier
date) unless, prior to taking or omitting any such action, the Rights Agent has received written
instructions in response to such application specifying the action to be taken or omitted.

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

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

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

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

-31-

 

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and, if such resignation occurs after the Distribution Date to the
registered holders of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and, if such removal occurs
after the Distribution Date, to the registered holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a legal business entity organized and doing business under the laws of the United
States (or of any state of the United States) in good standing, which is authorized under such laws
to exercise corporate trust, stock transfer or shareholder services powers and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or
(b) an affiliate of a legal business entity described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock and the Preferred Stock, and, if such appointment occurs
after the Distribution Date, mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.

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

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     Section 23. Redemption.

     (a) The Board may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth Business Day (or such later date as may be determined by the Board pursuant
to clause (i) of the first sentence of Section 3(a) with respect to the Distribution Date)
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth Business Day following the Record Date) and
(ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the “Redemption Price”). The redemption of the Rights by
the Board may be made effective at such time, on such basis and with such conditions as the Board
in its sole discretion may establish. The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock (based on the “current market price,” as defined in Section 11(d)(i)
hereof, of the Common Stock at the time of redemption) or any other form of consideration, or any
combination of any of the foregoing, deemed appropriate by the Board. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company’s right of redemption
hereunder has expired.

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

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

-33-

 

     Section 24. Exchange.

     (a) The Board may, at its option, at any time after a Section 11(a)(ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which (i) shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof, and (ii) shall include,
without limitation, any Rights issued after the Distribution Date) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board
shall not be empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.

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

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

     (d) In the event that there shall not be sufficient shares of Common Stock or Preferred Stock
issued but not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such action as may

-34-

 

be necessary to authorize additional shares of Common Stock or Preferred Stock for issuance upon
exchange of the Rights.

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

     Section 25. Notice of Certain Events.

     (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date
for determining holders of the shares of Preferred Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the shares of Preferred
Stock, whichever shall be the earlier.

     (b) In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of the occurrence of such

-35-

 

event, which shall specify the event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer also to Common Stock and/or, if appropriate, other securities; provided
that the failure to give such notice shall not affect the validity of such consent.

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

Emergent BioSolutions Inc.

300 Professional Drive

Gaithersburg, MD 20879

Attention: Chief Executive Officer

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:

American Stock Transfer Trust Company

59 Maiden Lane

New York, NY 10038

Attention:                                         

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

     Section 27. Supplements and Amendments. Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable, the Company may, in its
sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of any holders of the
Rights. At any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of any holders of
Rights in order (i) to cure any ambiguity or (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein, provided that no
such supplement or amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the

-36-

 

terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Any supplement or amendment that the Rights Agent is
required to sign pursuant to this Section 27 shall be effective upon execution by the Company
(whether or not then executed by the Rights Agent or the certificate referred to in the immediately
preceding sentence has been delivered). Notwithstanding anything contained in this Agreement to
the contrary, no supplement or amendment shall be made which changes the Redemption Price. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.

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

     Section 29. Actions by the Board, etc. The Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board or to the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not redeem the Rights or
to amend this Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the
Board or any director serving on the Board to any liability to the holders of the Rights.

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

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

-37-

 

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

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

     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.

-38-

 

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

	 	 	 	 	 	 	 
	Attest:	 	 	 	EMERGENT BIOSOLUTIONS INC.
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Attest:	 	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, AS RIGHTS AGENT
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 

-39-

 

FORM OF

CERTIFICATE OF DESIGNATIONS

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

EMERGENT BIOSOLUTIONS INC.

 

Emergent BioSolutions Inc., a corporation organized and existing under the laws of the State of
Delaware (hereinafter called the “Corporation”), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation at a meeting duly called and held on September
20, 2006:

RESOLVED: That pursuant to the authority granted to and vested in the Board of Directors of the
Corporation (hereinafter called the “Board”) in accordance with the provisions of the Certificate
of Incorporation, as amended, the Board hereby creates a series of Preferred Stock, $0.001 par value
per share (the “Preferred Stock”), of the Corporation and hereby states the designation and number
of shares, and fixes the relative rights, preferences and limitations thereof as follows:

     Series A Junior Participating Preferred Stock:

     Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of
shares constituting the Series A Preferred Stock shall be One Hundred Thousand (100,000). Such
number of shares may be increased or decreased by resolution of the Board prior to issuance;
provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A Preferred Stock.

     Section 2. Dividends and Distributions.

     (A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of
Common Stock, par value $.001 per share (the “Common Stock”), of the Corporation, and of any

A-1

 

other junior stock, shall be entitled to receive, when, as and if declared by the Board out of funds
of the Corporation legally available for the payment of dividends, quarterly dividends payable
in cash on the last day of each fiscal quarter of the Corporation in each year (each such date
being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$10 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate
per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event. In the event the Corporation shall at any time declare or pay any
dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock)
into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the first sentence of this Section 2(A) shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of shares of Series A
Preferred Stock that were outstanding immediately prior to such event and the denominator of which
is the number of shares of Series A Preferred Stock outstanding immediately after such event.

     (B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock
as provided in paragraph (A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and the
Corporation shall pay such dividend or distribution on the Series A Preferred Stock before the
dividend or distribution declared on the Common Stock is paid or set apart; 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 $10 per share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.

A-2

 

     (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
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 A
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board may fix a record
date for the determination of holders of shares of Series A 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 shares of Series A Preferred Stock shall
have the following voting rights:

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

     (B) Except as otherwise provided herein, in the Certificate of Incorporation or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.

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     (C) (i) If at any time dividends on any Series A Preferred Stock shall be in arrears in an
amount equal to six quarterly dividends thereon, the holders of the Series A Preferred Stock,
voting as a separate series from all other series of Preferred Stock and classes of capital
stock, shall be entitled to elect two members of the Board in addition to any Directors
elected by any other series, class or classes of securities and the authorized number of Directors
will automatically be increased by two. Promptly thereafter, the Board of the Corporation shall,
as soon as may be practicable, call a special meeting of holders of Series A Preferred Stock for
the purpose of electing such members of the Board. Such special meeting shall in any event be held
within 45 days of the occurrence of such arrearage.

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

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

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

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

     (D) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be required (except

A-4

 

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

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

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

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

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

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

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

A-5

 

Certificate of Incorporation, or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

     Section 6. Liquidation, Dissolution or Winding Up.

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

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

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

A-6

 

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

     Section 8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.

     Section 9. Rank. The Series A 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
Preferred Stock issued either before or after the issuance of the Series A Preferred Stock, unless
the terms of any such series shall provide otherwise.

     Section 10. Amendment. At such time as any shares of Series A Preferred Stock are
outstanding, the Certificate of Incorporation, as amended, of the Corporation shall not be amended
in any manner which would materially alter or change the powers, preferences or special rights of
the Series A 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 A Preferred Stock, voting
together as a single class.

     Section 11. Fractional Shares. Series A Preferred Stock may be issued in fractions of
a share which shall entitle the holder, in proportion to such holder’s fractional shares, to
exercise

A-7

 

voting rights, receive dividends, participate in distributions and have the benefit of all
other rights of holders of Series A Preferred Stock.

     IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation
by its Chief Executive Officer this                      day of                     , 2006.

	 	 	 	 	 
	 	EMERGENT BIOSOLUTIONS, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 	 	 	 
	 	 	 	 
	 

A-8

 

[Form of Rights Certificate]

	 	 	 	 	 
	Certificate No. R-
	 	                     Rights

NOT EXERCISABLE AFTER ____, 2016 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]1

EMERGENT BIOSOLUTIONS INC.

Rights Certificate

This certifies that                     , or registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated                     , 2006 (the “Rights Agreement”), between
Emergent BioSolutions Inc., a Delaware corporation (the “Company”), and American Stock Transfer &
Trust Company, as rights agent (the “Rights Agent”), to purchase from the Company after the
Distribution Date (as such term is defined in the Rights Agreement) and at any time prior to 5:00
p.m. (New York time) on                     , 2016 at the office of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-thousandth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company,
$.001 par value per share, at a purchase price of $___ in cash per one one-thousandth of a share
(the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one one-thousandth of a share of Preferred Stock which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of the close of business on                     , 2006, based on the
Preferred Stock as constituted at such date. Capitalized

 

			
	1	 	The portion of the legend in brackets shall be
inserted only if applicable and shall replace the preceding sentence.

B-1

 

terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Rights Agreement.

Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes an Acquiring Person, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become
null and void and no holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.

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

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

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

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption price of $0.001 per Right at any time prior
to the earlier of (i) the close of business on the tenth Business Day (or such later date as may be
determined by the Board pursuant to clause (i) of the first sentence of Section 3(a) with respect
to the Distribution Date) following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close of business on the tenth Business Day
following the Record Date) and (ii) the Final Expiration Date.

B-2

 

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

No fractional shares of Preferred Stock 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
share of Preferred Stock, 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 Rights Certificate, as such, shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the
Company 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 or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.

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

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

Dated as of                     

	 	 	 	 	 
	ATTEST:

	 	EMERGENT BIOSOLUTIONS INC.
	 
	 

	 	By:
	 
	 
	Secretary 

	 	Title: 
	 
	 	 

	 	 	 	 	 
	COUNTERSIGNED:

AMERICAN STOCK TRANSFER & TRUST COMPANY, AS
RIGHTS AGENT

 	 	 
	By:  	 	 	 
	Authorized Signature 	 
	 	 	 	 

B-3

 

	 	 	 	 	 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED                                                                                                                                        
                                hereby sells,
assigns and transfers unto                                                                                                                                                                       
                                                                                                                                                                                                                                              

(Please print name and address of transferee)

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

Dated:                     

	 	 	 	 	 
	 	 

Signature
 	 

Signature Guaranteed:

Certificate

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

Dated:                     

	 	 	 	 	 
	 	 

Signature
 	 

Signature Guaranteed:

NOTICE

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

B-4

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)

To: American Stock Transfer & Trust Company, as rights agent

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

Please insert social security

or other identifying number                                                                                                                                                                            

 

(Please print name and address)

 

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

Please insert social security

or other identifying number                                                                                                                                                                            

 

(Please print name and address)

 

Dated:                     

	 	 	 	 	 
	 	  

Signature
 	 

Signature Guaranteed:

B-5

 

Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                     

	 	 	 	 	 
	 	  

Signature
 	 

Signature Guaranteed:

NOTICE

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

B-6

 

SUMMARY OF RIGHTS TO

PURCHASE PREFERRED STOCK

On                     , 2006, a committee of the Board of Directors of Emergent BioSolutions Inc. (the
“Company” “we” or “us”), acting under authority previously delegated to the committee, declared a
dividend of one right for each outstanding share of common stock to stockholders of record at the
close of business on                     , 2006. Each right, when exercisable, entitles the registered holder
to purchase from us one one-thousandth of a share of Series A Junior Participating Preferred Stock,
$.001 par value per share, at a purchase price of $                     in cash, subject to adjustment. The
description and terms of the rights are set forth in a Rights Agreement dated                     , 2006
between the Company and American Stock Transfer & Trust Company, as Rights Agent.

The following description is a summary of the material terms of the rights agreement. It does not
restate these terms in their entirety. We urge you to read the rights agreement because it, and
not this description, defines its terms and provisions. We have filed a copy of the rights
agreement as an exhibit to our Registration Statement on Form S-1 filed in connection with our
initial public offering.

Rights. Each share of common stock will have attached to it one right. Initially, the rights are
not exercisable and are attached to all certificates representing outstanding shares of our common
stock, and we will not distribute separate rights certificates. The rights will only be
exercisable under limited circumstances specified in the rights agreement when there has been a
distribution of the rights and the rights are no longer redeemable by us.

The rights will expire at the close of business on                     , 2006 [the tenth anniversary of
the date the rights agreement was adopted], unless we redeem or exchange the rights earlier as
described below.

Prior to the rights distribution date. Prior to the rights distribution date:

	•	 	the rights are evidenced by our common stock certificates and will be transferred with
and only with such common stock certificates; and
	 
	•	 	the surrender for transfer of any certificates of our common stock will also constitute
the transfer of the rights associated with our common stock represented by such
certificate.

Rights distribution date. The rights will separate from our common stock, and a rights
distribution date will occur, upon the earlier of the following events:

	•	 	10 business days following the later of (1) a public announcement that a person or group,
other than an exempted person, has acquired, or obtained the right to acquire beneficial

C-1

 

	 	 	ownership of 15% or more of the outstanding shares of our common stock or (2) the first date
on which one of our executive officers has actual knowledge of such an event; and

	•	 	10 business days following the start of a tender offer or exchange offer that would result
in a person or group, other than an exempted person, beneficially owning 15% or more of the
outstanding shares of our common stock.

The distribution date may be deferred by our board of directors and some inadvertent actions will
not trigger the occurrence of the rights distribution date. In addition, a rights distribution
date will not occur as a result of the ownership of our stock by the following exempted persons:

	•	 	Fuad El-Hibri, Nancy El-Hibri and any person controlled by
Fuad El-Hibri or Nancy El-Hibri;
	 
	•	 	Microscience Investments Limited, unless and until such time as
Microscience, together with its affiliates and associates,
directly or indirectly, becomes the beneficial owner of any
additional shares of common stock, except under certain specified
circumstances, and disregarding any shares Microscience is or
becomes the beneficial owner of solely as a result of the fact
that it is a party to any of the stockholder agreements described
in the Registration Statement on Form S-1 filed in connection with
our initial public offering; and
	 
	•	 	each other holder of our common stock immediately prior to this
offering to the extent such person’s beneficial ownership exceeds
15% solely as a result of the fact that the person is a party to
any of the stockholder agreements described in the Registration
Statement on Form S-1 filed in connection with our initial public
offering.

As soon as practicable after the rights distribution date, separate rights certificates will be
mailed to the holders of record of our common stock as of the close of business on the rights
distribution date. From and after the rights distribution date, the separate rights certificates
alone will represent the rights. All shares of our common stock issued prior to the rights
distribution date will be issued with rights. Shares of our common stock issued after the rights
distribution date in connection with specified employee benefit plans or upon conversion of
specified securities will be issued with rights. Except as otherwise determined by our board of
directors, no other shares of our common stock issued after the rights distribution date will be
issued with rights.

Flip-in event. If a person or group, other than an exempted person, becomes the beneficial owner
of 15% or more of the outstanding shares of our common stock, except as described below, each
holder of a right will thereafter have the right to receive, upon exercise, a number of shares of
our common stock, or, in some circumstances, cash, property or other securities of ours, which
equals the exercise price of the right divided by one-half of the current market price of our
common stock on the date the acquisition occurs. However, following the acquisition:

	•	 	rights will not be exercisable until the rights are no longer
redeemable by us as set forth below; and

C-2

 

	•	 	all rights that are, or were, under the circumstances specified in
the rights agreement, beneficially owned by any acquiring person
will be null and void.

The event set forth in this paragraph is referred to as a flip-in event. A flip-in event would not
occur if there is an offer for all of our outstanding shares of common stock that at least 75% of
our board of directors determines is fair to our stockholders and in their best interests.

Flip-over event. If at any time after a person or group, other than an exempted person, has become
the beneficial owner of 15% or more of the outstanding shares of our common stock:

	•	 	we are acquired in a merger or other business combination transaction in which we are not the surviving corporation;
	 
	•	 	we are the surviving entity in a merger of other business combination transaction but our common stock is changed or
exchanged for stock or securities of any other person or for cash or any other property; or
	 
	•	 	more than 50% of our assets or earning power is sold or transferred,

then each holder of a right, except rights which previously have been voided as set forth above,
shall thereafter have the right to receive, upon exercise, that number of shares of common stock of
the acquiring company which equals the exercise price of the right divided by one-half of the
current market price of that company’s common stock at the date of the occurrence of the event.

The event set forth in this paragraph is referred to as a flip-over event. A flip-over event does
not arise if the merger or other transaction follows an offer for all of our outstanding shares of
common stock that at least 75% of our board of directors determines is fair to our stockholders and
in their best interests.

Exchange of rights. At any time after a flip-in event, when no person owns a majority of our
common stock, our board of directors may exchange the rights, other than rights owned by the
acquiring person that have become void, in whole or in part, at an exchange ratio of one share of
our common stock, or one one-thousandth of a share of Series A preferred stock, or of a share of a
class or series of preferred stock having equivalent rights, preferences and privileges, per right.

Adjustments. The purchase price of the rights, and the number of securities purchasable, are
subject to adjustment from time to time to prevent dilution. The number of rights associated with
each share of common stock is also subject to adjustment in the event of a stock splits,
subdivisions, consolidations or combinations of our common stock that occur prior to the rights
distribution date.

Series A junior participating preferred stock. Series A preferred stock purchasable upon exercise
of the rights will not be redeemable. Each share of series A preferred stock will be entitled to
receive when, as and if declared by our board of directors, a minimum preferential quarterly
dividend payment of $10 per share or, if greater, an aggregate dividend of 1,000 times the dividend
declared per share of our common stock. In the event of liquidation, the holders of

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the series A preferred stock will be entitled to a minimum preferential liquidation payment of $1,000 per share,
plus accrued and unpaid dividends, and will be entitled to an aggregate payment of 1,000 times the
payment made per share of our common stock. Each share of series A preferred stock will have 1,000 votes,
voting together with our common stock. In the event of any merger, consolidation or other transaction in which our
common stock is changed or exchanged,
each share of series A preferred stock will be entitled to receive 1,000 times the amount received
per share of our common stock. These rights are protected by customary antidilution provisions.

Because of the nature of the series A preferred stock’s dividend, liquidation and voting rights,
the value of one one thousandth of a share of series A preferred stock purchasable upon exercise of
each right should approximate the value of one share of common stock.

Redemption of rights. At any time until ten business days following the date of a public
announcement that a person or group, other than an exempted person, has acquired or obtained the
right to acquire beneficial ownership of 15% or more of the outstanding shares of our common stock,
or such later date upon which one of our executive officers first has actual knowledge of such
event or such later date as our board of directors may determine, we may redeem the rights in
whole, but not in part, at a price of $.001 per right, payable in cash or stock. Immediately upon
the redemption of the rights or such earlier time as established by our board of directors, the
rights will terminate and the only right of the holders of rights will be to receive the redemption
price.

Status of rights holder and tax affects. Until a right is exercised, the holder of the right, as
such, will have no rights as a stockholder of ours, including no right to vote or to receive
dividends. Although the distribution of the rights should not be taxable to stockholders or to us,
stockholders may, depending upon the circumstances, recognize taxable income in the event that the
rights become exercisable for our common stock, or other consideration, or for common stock of the
acquiring company as described above.

Board’s authority to amend. Our board of directors may amend any provision of the rights
agreement, other than the redemption price, prior to the date on which the rights are no longer
redeemable. Once the rights are no longer redeemable, our board’s authority to amend the rights
agreement is limited to correcting ambiguities or defective or inconsistent provisions in a manner
that does not adversely affect the interest of holders of rights.

Effects of the rights. The rights are intended to protect our stockholders in the event of an
unfair or coercive offer to acquire our company and to provide our board of directors with adequate
time to evaluate unsolicited offers. The rights may have anti-takeover effects. The rights will
cause substantial dilution to a person or group that attempts to acquire us without conditioning
the offer on a substantial number of rights being acquired. The rights, however, should not affect
any prospective offeror willing to make an offer at a fair price and otherwise in the best
interests of us and our stockholders, as determined by our board of directors. The rights should
not interfere with any merger or other business combination approved by our board of directors.

C-4exv10w3

 

Exhibit 10.3

EMERGENT BIOSOLUTIONS INC.

2006 STOCK INCENTIVE PLAN

1. Purpose

     The purpose of this 2006 Stock Incentive Plan (the “Plan”) of Emergent BioSolutions Inc., a
Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who are expected to make
important contributions to the Company and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended to align their interests with
those of the Company’s stockholders. Except where the context otherwise requires, the term
“Company” shall include any of the Company’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the “Code”) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company has a controlling
interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

     All of the Company’s employees, officers, directors, consultants and advisors are eligible to
receive options, stock appreciation rights, restricted stock, restricted stock units and other
stock-unit awards (each, an “Award”) under the Plan. Each person who receives an Award under the
Plan is deemed a “Participant”.

3. Administration and Delegation

     (a) Administration by Board of Directors. The Plan will be administered by the Board.
The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may
construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.
The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and
it shall be the sole and final judge of such expediency. All decisions by the Board shall be made
in the Board’s sole discretion and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating to or under the
Plan made in good faith.

     (b) Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s
powers or authority under the Plan have been delegated to such Committee or officers.

 

 

     (c) Delegation to Officers. To the extent permitted by applicable law, the Board may
delegate to one or more officers of the Company the power to grant Awards to employees or officers
of the Company or any of its present or future subsidiary corporations and to exercise such other
powers under the Plan as the Board may determine, provided that the Board shall fix the terms of
the Awards to be granted by such officers (including the exercise price of such Awards, which may
include a formula by which the exercise price will be determined) and the maximum number of shares
subject to Awards that the officers may grant; provided further, however, that no officer shall be
authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the
Company (as defined by Rule 16a-1 under the Exchange Act).

4. Stock Available for Awards

     (a) Number of Shares. Subject to adjustment under Section 10, Awards may be made
under the Plan for up to the number of shares of common stock, $0.001 par value per share, of the
Company (the “Common Stock”) that is equal to the sum of:

          (1) 503,500 shares of Common Stock; plus

          (2) such additional number of shares of Common Stock as is equal to the sum of (x) the number
of shares of class B common stock, $0.01 par value per share, of the Company (the “Class B Common
Stock”) reserved for issuance under the Company’s Employee Stock Option Plan as amended and
restated effective January 26, 2005 (the “Existing Plan”) that remain available for grant under the
Existing Plan immediately prior to the closing of the Company’s initial public offering and (y) the
number of shares of Class B Common Stock subject to awards granted under the Existing Plan which
awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the
Company at their original issuance price pursuant to a contractual repurchase right (subject,
however, in the case of Incentive Stock Options (as hereinafter defined) to any limitations of the
Code); plus

          (3) an increase to be added on the first day of the first quarter of the Company’s fiscal year
2007 equal to the lesser of (i) 428,700 shares of Common Stock, (ii) 1.5 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board; plus

          (4) an increase to be added on the first day of the third quarter of the Company’s fiscal year
2007 equal to the lesser of (i) 463,200 shares of Common Stock, (ii) 1.5 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board; plus

          (5) an increase to be added on the first day of the first quarter of the Company’s fiscal year
2008 equal to the lesser of (i) 926,400 shares of Common Stock, (ii) 3.0 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board; plus

          (6) an increase to be added on the first day of the third quarter of the Company’s fiscal year
2008 equal to the lesser of (i) 466,100 shares of Common Stock, (ii) 1.5 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board; plus

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          (7) an increase to be added on the first day of the first quarter of the Company’s fiscal year
2009 equal to the lesser of (i) 937,900 shares of Common Stock, (ii) 3.0 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board; plus

          (8) an increase to be added on the first day of the third quarter of the Company’s fiscal year
2009 equal to the lesser of (i) 471,800 shares of Common Stock, (ii) 1.5 % of the aggregate number
of shares of Common Stock outstanding on such date or (iii) an amount determined by the Board.

     If any Award expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part (including as the result of shares of Common Stock
subject to such Award being repurchased by the Company at the original issuance price pursuant to a
contractual repurchase right), is settled in cash or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the grant of Awards
under the Plan. However, in the case of Incentive Stock Options (as hereinafter defined), the
foregoing provisions shall be subject to any limitations under the Code. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

     (b) Section 162(m) Per-Participant Limit. The maximum number of shares of Common
Stock with respect to which Awards may be granted to any Participant under the Plan shall be
287,700 per fiscal year. For purposes of the foregoing limit, the combination of an Option in
tandem with a SAR (as each is hereafter defined) shall be treated as a single Award. The
per-Participant limit described in this Section 4(b) shall be construed and applied consistently
with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder
(“Section 162(m)”).

     (c) Substitute Awards. In connection with a merger or consolidation of an entity with
the Company or the acquisition by the Company of property or stock of an entity, the Board may
grant Awards in substitution for any options or other stock or stock unit awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except
as may be required by reason of Section 422 and related provisions of the Code.

5. Stock Options

     (a) General. The Board may grant options to purchase Common Stock (each, an “Option”)
and determine the number of shares of Common Stock to be covered by each Option, the exercise price
of each Option and the conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as
hereinafter defined) shall be designated a “Nonstatutory Stock Option”.

     (b) Incentive Stock Options. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be
granted to employees of Emergent BioSolutions Inc., any of Emergent BioSolutions Inc.’s present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any
other entities the employees of which are eligible to receive

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Incentive Stock Options under the Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The Company shall have no liability
to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an
Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board,
including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock
Option.

     (c) Exercise Price. The Board shall establish the exercise price of each Option and
specify such exercise price in the applicable option agreement; provided, however, that the
exercise price shall not be less than 100% of the Fair Market Value (as defined below) on the date
the Option is granted.

     (d) Duration of Options. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Board may specify in the applicable option agreement; provided,
however, that no Option will be granted for a term in excess of 10 years.

     (e) Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved by the Board together with payment in full as specified in Section 5(f)
for the number of shares for which the Option is exercised. Subject to Section 11(e), shares of
Common Stock subject to the Option will be delivered by the Company following exercise either as
soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis
(with the Company’s obligation to be evidenced by an instrument providing for future delivery of
the deferred shares at the time or times specified by the Board).

     (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as otherwise provided in the applicable option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax withholding or (ii)
delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions
to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;

          (3) to the extent provided for in the applicable option agreement or approved by the Board, in
its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common
Stock owned by the Participant valued at their fair market value as determined by (or in a manner
approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted
under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by
the Participant for such minimum period of time, if any, as may be established by the Board in its
discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements;

          (4) to the extent permitted by applicable law and provided for in the applicable option
agreement or approved by the Board, in its sole discretion, by (i) delivery

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of a promissory note of the Participant to the Company on terms determined by the Board, or
(ii) payment of such other lawful consideration as the Board may determine; or

          (5) by any combination of the above permitted forms of payment.

     (g) Limitation on Repricing. Unless such action is approved by the Company’s
stockholders: (i) outstanding Options granted under the Plan may not be amended to provide an
exercise price per share that is lower than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to Section 10) and (ii) the Board may also not
cancel any outstanding option (whether or not granted under the Plan) and grant in substitution
therefor new Awards under the Plan covering the same or a different number of shares of Common
Stock and having an exercise price per share lower than the then-current exercise price per share
of the cancelled option.

6. Director Options.

     (a) Initial Grant. Upon the commencement of service on the Board by any individual
who is not then an employee of the Company or any subsidiary of the Company, the Company shall
grant to such person a Nonstatutory Stock Option to purchase 21,600 shares of Common Stock (subject
to adjustment under Section 10).

     (b) Annual Grant. On the date of each annual meeting of stockholders of the Company,
the Company shall grant to each member of the Board who is both serving as a director of the
Company immediately prior to and immediately following such annual meeting and who is not then an
employee of the Company or any of its subsidiaries, a Nonstatutory Stock Option to purchase 14,400
shares of Common Stock (subject to adjustment under Section 10); provided, however, that a director
shall not be eligible to receive an option grant under this Section 6(b) until such director has
served on the Board for at least six months. If the non-employee director shall be serving as the
Chair of a Committee, such annual grant provided above shall be increased by 7,200 shares of Common
Stock for a total annual grant of 21,600 shares; provided, however, that such director shall be
entitled to only one such increase per year even if serving as Chair for more than one Committee.

     (c) Terms of Director Options. Options granted under this Section 6 shall (i) have an
exercise price equal to the closing sale price (for the primary trading session) of the Common
Stock on the New York Stock Exchange, the Nasdaq Stock Market or such
other national securities exchange on which the Common Stock is
then traded on the trading date immediately prior to the date of grant (and if the Common Stock is
not then traded on the New York Stock Exchange, the Nasdaq Stock Market or a national securities exchange, the fair market value
of the Common Stock on such date as determined by the Board), (ii) vest one-third per year over
three years on the anniversary of the date of grant provided that the individual is serving on the
Board on such date (or in the case of an option granted under Section 6(b), if earlier, on the date
which is one business day prior to date of the Company’s next annual meeting), provided that no
additional vesting shall take place after the Participant ceases to serve as a director and further
provided that the Board may provide for accelerated vesting in the case of death, disability,
attainment of mandatory retirement age or retirement following at least 10 years of service, (iii)
expire on the earlier of 10 years from the date of grant or three months following cessation of
service on the Board and (iv) contain such other terms and conditions as the Board shall determine.

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     (d) Board Discretion. The Board retains the specific authority to from time to time
increase or decrease the number of shares subject to options granted under this Section 6, subject
to the provisions of Section 4(b)(3).

7. Stock Appreciation Rights.

     (a) General. A Stock Appreciation Right, or SAR, is an Award entitling the holder,
upon exercise, to receive an amount of Common Stock determined by reference to appreciation, from
and after the date of grant, in the fair market value of a share of Common Stock. The date as of
which such appreciation or other measure is determined shall be the exercise date.

     (b) Grants. Stock Appreciation Rights may be granted in tandem with, or independently
of, Options granted under the Plan.

          (1) Tandem Awards. When Stock Appreciation Rights are expressly granted in tandem
with Options, (i) the Stock Appreciation Right will be exercisable only at such time or times, and
to the extent, that the related Option is exercisable (except to the extent designated by the Board
in connection with a Reorganization Event or a Change in Control Event) and will be exercisable in
accordance with the procedure required for exercise of the related Option; (ii) the Stock
Appreciation Right will terminate and no longer be exercisable upon the termination or exercise of
the related Option, except to the extent designated by the Board in connection with a
Reorganization Event or a Change in Control Event and except that a Stock Appreciation Right
granted with respect to less than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the Stock Appreciation Right; (iii) the
Option will terminate and no longer be exercisable upon the exercise of the related Stock
Appreciation Right; and (iv) the Stock Appreciation Right will be transferable only with the
related Option.

          (2) Independent SARs. A Stock Appreciation Right not expressly granted in tandem with
an Option will become exercisable at such time or times, and on such conditions, as the Board may
specify in the SAR Award.

     (c) Exercise. Stock Appreciation Rights may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Board, together with any other documents required by
the Board.

8. Restricted Stock; Restricted Stock Units.

     (a) General. The Board may grant Awards entitling recipients to acquire shares of
Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price from the recipient in the event
that conditions specified by the Board in the applicable Award are not satisfied prior to the end
of the applicable restriction period or periods established by the Board for such Award. Instead
of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to
receive shares of Common Stock to be delivered at

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the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock and
Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

     (b) Terms and Conditions for all Restricted Stock Awards. The Board shall determine
the terms and conditions of a Restricted Stock Award, including the conditions for vesting and
repurchase (or forfeiture) and the issue price.

     (c) Additional Provisions Relating to Restricted Stock.

          (1) Dividends. Participants holding shares of Restricted Stock will be entitled to
all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the
Board. If any such dividends or distributions are paid in shares, or consist of a dividend or
distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or
other property will be subject to the same restrictions on transferability and forfeitability as
the shares of Restricted Stock with respect to which they were paid. Each dividend payment will
be made no later than the end of the calendar year in which the dividends are paid to stockholders
of that class of stock or, if later, the 15th day of the third month following the date the
dividends are paid to stockholders of that class of stock.

          (2) Stock Certificates. The Company may require that any stock certificates issued in
respect of shares of Restricted Stock shall be deposited in escrow by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver the certificates no
longer subject to such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts
due or exercise rights of the Participant in the event of the Participant’s death (the “Designated
Beneficiary”). In the absence of an effective designation by a Participant, “Designated
Beneficiary” shall mean the Participant’s estate.

     (d) Additional Provisions Relating to Restricted Stock Units.

          (1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e.,
settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to
receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market
Value of one share of Common Stock, as provided in the applicable Award agreement. The Board may,
in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a
mandatory basis or at the election of the Participant.

          (2) Voting Rights. A Participant shall have no voting rights with respect to any
Restricted Stock Units.

          (3) Dividend Equivalents. To the extent provided by the Board, in its sole
discretion, a grant of Restricted Stock Units may provide Participants with the right to receive an
amount equal to any dividends or other distributions declared and paid on an equal number of
outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid
currently or credited to an account for the Participants, may be settled in cash and/or shares of
Common Stock and may be subject to the same restrictions on transfer and forfeitability as the
Restricted Stock Units with respect to which paid, as determined by the Board in its sole
discretion, subject in each case to such terms

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and conditions as the Board shall establish, in each case to be set forth in the applicable
Award agreement.

9. Other Stock-Unit Awards

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, shares of Common Stock or other property, may be
granted hereunder to Participants (“Other Stock Unit Awards”), including without limitation Awards
entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other
Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards
granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise
entitled. Other Stock Unit Awards may be paid in shares of Common Stock or cash, as the Board
shall determine. Subject to the provisions of the Plan, the Board shall determine the terms and
conditions of each Other Stock Unit Award, including any purchase price applicable thereto.

     10. Adjustments for Changes in Common Stock and Certain Other Events.

     (a) Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the number and class of securities available
under this Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share of each outstanding Option and each Option
issuable under Section 6, (iv) the share- and per-share provisions and the exercise price of each
SAR, (v) the number of shares subject to and the repurchase price per share subject to each
outstanding Restricted Stock Award, and (vi) the share- and per-share-related provisions and the
purchase price, if any, of each outstanding Other Stock Unit Award, shall be appropriately adjusted
by the Company (or substituted Awards may be made, if applicable) to the extent determined by the
Board. Without limiting the generality of the foregoing, in the event the Company effects a split
of the Common Stock by means of a stock dividend and the exercise price of and the number of shares
subject to any outstanding Options are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then optionees who exercise such Options
between the record date and the distribution date for such stock dividend shall be entitled to
receive, on the distribution date, the stock dividend with respect to the shares of Common Stock
acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding
as of the close of business on the record date for such stock dividend.

     (b) Reorganization and Change in Control Events

          (1) Definitions

	 	(a)	 	A “Reorganization Event” shall mean:

	 	(i)	 	any merger or consolidation of
the Company with or into another entity as a result of which all
of the Common Stock of the Company is converted into or
exchanged for the right to receive cash, securities or other
property or is cancelled;

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	 	(ii)	 	any exchange of all of the Common
Stock of the Company for cash, securities or other property
pursuant to a share exchange transaction; or
	 
	 	(iii)	 	any liquidation or dissolution
of the Company.

	 	(b)	 	A “Change in Control Event” shall mean:

	 	(i)	 	the acquisition by an individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning
of Rule 13d 3 promulgated under the Exchange Act) 50% or more of
either (x) the aggregate number of shares of Common Stock
then-outstanding (the “Outstanding Company Common Stock”) or (y)
the combined voting power of the then-outstanding securities of
the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control
Event: (A) any acquisition directly from the Company (excluding
an acquisition pursuant to the exercise, conversion or exchange
of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging
such security acquired such security directly from the Company
or an underwriter or agent of the Company), (B) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or (C) any acquisition by any corporation pursuant to a
Business Combination (as defined below) which complies with
clauses (x) and (y) of subsection (iii) of this definition; or
	 
	 	(ii)	 	such time as the Continuing
Directors (as defined below) do not constitute a majority of the
Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (x) who was a
member of the Board on the date of the initial adoption of this
Plan by the Board or (y) who was nominated or elected subsequent
to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election
or whose election to the Board was recommended or endorsed by at
least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however,
that

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	 	 	 	there shall be excluded from this clause (y) any individual
whose initial assumption of office occurred as a result of an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on
behalf of a person other than the Board; or

	 	(iii)	 	the consummation of a merger,
consolidation, reorganization, recapitalization or share
exchange involving the Company or a sale or other disposition of
all or substantially all of the assets of the Company (a
“Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is
satisfied: (x) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of
common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of
such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation is
referred to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business
Combination and (y) no Person (excluding any employee benefit
plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 50% or more of the then-outstanding shares of common
stock of the Acquiring Corporation, or of the combined voting
power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except
to the extent that such ownership existed prior to the Business
Combination); or
	 
	 	(iv)	 	the liquidation or dissolution of
the Company.

	 	(c)	 	“Good Reason” shall mean any significant
diminution in the Participant’s title, authority, or responsibilities
from and after such Reorganization Event or Change in Control Event, as
the case may be, or any reduction in the annual cash compensation
payable to the Participant from and after such Reorganization Event or
Change in Control Event, as the case may be, or the

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	 	 	 	relocation of the place of business at which the Participant is
principally located to a location that is greater than 50 miles from
its location immediately prior to such Reorganization Event or Change
in Control Event.

	 	(d)	 	“Cause” shall mean any (i) willful failure by
the Participant, which failure is not cured within 30 days of written
notice to the Participant from the Company, to perform his or her
material responsibilities to the Company, (ii) willful misconduct by
the Participant which affects the business reputation of the Company,
(iii) material breach by the Participant of any employment,
confidentiality, non-competition or non-solicitation agreement with the
Company, (iv) conviction or plea of nolo contendere (no contest) by the
Participant to a felony, or (v) commission by the Participant of any
act involving fraud, theft or dishonesty with respect to the Company’s
business or affairs. The Participant shall be considered to have been
discharged for “Cause” if the Company determines, within 30 days after
the Participant’s resignation, that discharge for Cause was warranted.

          (2) Effect on Options

	 	(a)	 	Reorganization Event. Upon the
occurrence of a Reorganization Event (regardless of whether such event
also constitutes a Change in Control Event), or the execution by the
Company of any agreement with respect to a Reorganization Event
(regardless of whether such event will result in a Change in Control
Event), the Board shall provide that all outstanding Options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof); provided that if
such Reorganization Event also constitutes a Change in Control Event,
except to the extent specifically provided to the contrary in the
instrument evidencing any Option or any other agreement between a
Participant and the Company such assumed or substituted options shall
become immediately exercisable in full if, on or prior to the first
anniversary of the date of the consummation of the Reorganization
Event, the Participant’s employment with the Company or the acquiring
or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the
acquiring or succeeding corporation. For purposes hereof, an Option
shall be considered to be assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase, for
each share of Common Stock subject to the Option immediately prior to
the consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a result of
the Reorganization Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of
consideration, the

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	 	 	 	type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not
solely common stock of the acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with the consent of the
acquiring or succeeding corporation, provide for the consideration to
be received upon the exercise of Options to consist solely of common
stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per
share consideration received by holders of outstanding shares of
Common Stock as a result of the Reorganization Event.

     Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or
substitute for, some or all of such Options, or in the event of a
liquidation or dissolution of the Company, the Board shall, upon
written notice to the Participants, provide with respect to any
Options that are not to be acquired by an acquiring or succeeding
corporation that all then unexercised Options will become exercisable
in full as of a specified time prior to the Reorganization Event and
will terminate immediately prior to the consummation of such
Reorganization Event, except to the extent exercised by the
Participants before the consummation of such Reorganization Event;
provided, however, that in the event of a Reorganization Event under
the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Reorganization Event (the “Acquisition
Price”), then the Board may instead provide that all such outstanding
Options shall terminate upon consummation of such Reorganization
Event and that each Participant shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of Common Stock
subject to such outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate exercise price of such
Options and any applicable tax withholdings.

	 	(b)	 	Change in Control Event that is not a
Reorganization Event. Upon the occurrence of a Change in Control
Event that does not also constitute a Reorganization Event, except to
the extent specifically provided to the contrary in the instrument
evidencing any Option or any other agreement between a Participant and
the Company, then outstanding Option shall continue to become vested in
accordance with the original vesting schedule set forth in such Option,
provided, however, that each such Option shall be immediately
exercisable in full if, on or prior to the first anniversary of the
date of the consummation of the Change in Control Event, the
Participant’s employment with the Company or the acquiring or
succeeding corporation is terminated for Good Reason by the Participant
or

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	 	 	 	is terminated without Cause by the Company or the acquiring or succeeding corporation.

          (3) Effect on Restricted Stock Awards

	 	(a)	 	Reorganization Event that is not a Change
in Control Event. Upon the occurrence of a Reorganization Event
that is not a Change in Control Event, the repurchase and other rights
of the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Company’s successor and shall apply to the
cash, securities or other property which the Common Stock was converted
into or exchanged for pursuant to such Reorganization Event in the same
manner and to the same extent as they applied to the Common Stock
subject to such Restricted Stock Award.
	 
	 	(b)	 	Change in Control Event. Upon the
occurrence of a Change in Control Event (regardless of whether such
event also constitutes a Reorganization Event), except to the extent
specifically provided to the contrary in the instrument evidencing any
Restricted Stock Award or any other agreement between a Participant and
the Company, each then-outstanding Restricted Stock Award shall
continue to become free from conditions or restrictions in accordance
with the original schedule set forth in such Restricted Stock Award,
provided, however, that each such Restricted Stock Award shall
immediately become free from all conditions or restrictions if, on or
prior to the first anniversary of the date of the consummation of the
Change in Control Event, the Participant’s employment with the Company
or the acquiring or succeeding corporation is terminated for Good
Reason by the Participant or is terminated without Cause by the Company
or the acquiring or succeeding corporation.

          (4) Effect on Stock Appreciation Rights and Other Stock Unit Awards

               The Board may specify in an Award at the time of the grant the effect of a Reorganization
Event and Change in Control Event on any SAR and Other Stock Unit Award.

11. General Provisions Applicable to Awards

     (a) Transferability of Awards. Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution or, other than in the case
of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the
life of the Participant, shall be exercisable only by the Participant; provided, however, that the
gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family
member, domestic partner, family trust or other entity established for the benefit of the
Participant and/or an immediate family member thereof if, with respect to such proposed transferee,
the Company would be eligible to use a Registration Statement on Form S-8 for the registration of
the sale of the Common

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Stock subject to such Award under the Securities Act of 1933, as amended; provided, further,
that the Company shall not be required to recognize any such transfer until such time as the
Participant and such authorized transferee shall, as a condition to such transfer, deliver to the
Company a written instrument in form and substance satisfactory to the Company confirming that such
transferee shall be bound by all of the terms and conditions of the Award; and, provided, further,
that no option intended to be an incentive stock option shall be transferable unless the Board
shall otherwise permit. References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees.

     (b) Documentation. Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition
to those set forth in the Plan.

     (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.

     (d) Termination of Status. The Board shall determine the effect on an Award of the
disability, death, termination of employment, authorized leave of absence or other change in the
employment or other status of a Participant and the extent to which, and the period during which,
the Participant, or the Participant’s legal representative, conservator, guardian or Designated
Beneficiary, may exercise rights under the Award.

     (e) Withholding. The Participant must satisfy all applicable federal, state, and
local or other income and employment tax withholding obligations before the Company will deliver
stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company
may decide to satisfy the withholding obligations through additional withholding on salary or
wages. If the Company elects not to or cannot withhold from other compensation, the Participant
must pay the Company the full amount, if any, required for withholding or have a broker tender to
the Company cash equal to the withholding obligations. Payment of withholding obligations is due
before the Company will issue any shares on exercise or release from forfeiture of an Award or, if
the Company so requires, at the same time as is payment of the exercise price unless the Company
determines otherwise. If provided for in an Award or approved by the Board in its sole discretion,
a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common
Stock, including shares retained from the Award creating the tax obligation, valued at their Fair
Market Value; provided, however, except as otherwise provided by the Board, that the total tax
withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s
minimum statutory withholding obligations (based on minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

     (f) Amendment of Award. The Board may amend, modify or terminate any outstanding
Award, including but not limited to, substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided either (i) that the Participant’s consent to such action shall
be required unless the Board determines that the action, taking into account any related action,
would not materially and adversely affect the Participant or (ii) that the change is permitted
under Section 10 hereof.

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     (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously
delivered under the Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.

     (h) Acceleration. The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or conditions, or
otherwise realizable in full or in part, as the case may be.

     (i) Performance Awards.

          (1) Grants. Restricted Stock Awards and Other Stock Unit Awards under the Plan may be
made subject to the achievement of performance goals pursuant to this Section 11(i) (“Performance
Awards”), subject to the limit in Section 4(b) on shares covered by such grants. Performance
Awards can also provide for cash payments of up to $750,000 per calendar year per individual.

          (2) Committee. Grants of Performance Awards to any Covered Employee intended to
qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”)
shall be made only by a Committee (or subcommittee of a Committee) comprised solely of two or more
directors eligible to serve on a committee making Awards qualifying as “performance-based
compensation” under Section 162(m). In the case of such Awards granted to Covered Employees,
references to the Board or to a Committee shall be deemed to be references to such Committee or
subcommittee. “Covered Employee” shall mean any person who is a “covered employee” under Section
162(m)(3) of the Code.

          (3) Performance Measures. For any Award that is intended to qualify as
Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting
and/or payout shall be subject to the achievement of one or more objective performance measures
established by the Committee, which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following: (a) net income, (b) earnings before
or after discontinued operations, interest, taxes, depreciation and/or amortization, (c) operating
profit before or after discontinued operations and/or taxes, (d) sales, (e) sales growth, (f)
earnings growth, (g) cash flow or cash position, (h) gross margins, (i) stock price, (j) market
share, (k) return on sales, assets, equity or investment, (l) improvement of financial ratings, (m)
achievement of balance sheet or income statement objectives or (n) total stockholder return, and
may be absolute in their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. Such performance measures may be adjusted to exclude
any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of
discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the
writedown of any asset, and (v) charges for restructuring and rationalization programs. Such
performance measures: (i) may vary by Participant and may be different for different Awards; (ii)
may be particular to a Participant or the department, branch, line of business, subsidiary or other
unit in which the Participant works and may cover such period as may be specified by the Committee;
and (iii) shall be set by the Committee within

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the time period prescribed by, and shall otherwise comply with the requirements of, Section
162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on
these or such other performance measures as the Board may determine.

          (4) Adjustments. Notwithstanding any provision of the Plan, with respect to any
Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may
adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and
the Committee may not waive the achievement of the applicable performance measures except in the
case of the death or disability of the Participant.

          (5) Other. The Committee shall have the power to impose such other restrictions on
Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all
requirements for Performance-Based Compensation.

12. Miscellaneous

     (a) No Right To Employment or Other Status. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be construed as giving a Participant
the right to continued employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
of such shares.

     (c) Effective Date and Term of Plan. The Plan shall become effective immediately
prior to the closing of the Company’s initial public offering. No Awards shall be granted prior to
(i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by
the Company’s stockholders. The Plan shall expire on December 31, 2009.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time; provided, however, that, to the extent determined by the Board, no
amendment requiring stockholder approval under any applicable legal, regulatory or listing
requirement shall become effective until such stockholder approval is obtained.

     (e) Authorization of Sub-Plans. The Board may from time to time establish one or more
sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of
various jurisdictions. The Board shall establish such sub-plans by adopting supplements to this
Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with
the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board
shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within
the affected jurisdiction and the Company shall not be required to provide copies of any supplement
to Participants in any jurisdiction which is not the subject of such supplement.

-16-

 

     (f) Provisions for Foreign Participants. The Board may modify Awards or Options
granted to Participants who are foreign nationals or employed outside the United States or
establish subplans or procedures under the Plan to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.

     (g) Compliance with Code Section 409A. No Award shall provide for deferral of
compensation that does not comply with Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to comply with Section 409A of the
Code. The Company shall have no liability to a Participant, or any other party, if an Award that
is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for
any action taken by the Board.

     (h) Governing Law. The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware, excluding
choice-of-law principles of the law of such state that would require the application of the laws of
a jurisdiction other than such state.

-17-

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