Document:

EX-4.2

 

Exhibit 4.2

GOLF GALAXY, INC.

2004 STOCK INCENTIVE PLAN*

     The purpose of the Golf Galaxy, Inc. 2004 Stock Incentive Plan (the “Plan”) is to promote the
growth and profitability of Golf Galaxy, Inc. (the “Company”) and its Affiliates (as defined below)
by providing its directors, officers, employees, consultants and other service providers (“Eligible
Persons”) with an incentive to achieve long-term corporate objectives, to attract and retain
persons of outstanding competence, and to provide such persons with an equity interest in the
Company.

     1. Shares Subject to Plan. Subject to adjustment as provided in Sections 8 and 9 of the Plan,
an aggregate of One Million (1,000,000) shares (the “Shares”) of the common stock, par value $0.01
per share, of the Company (“Common Stock”) may be subject to awards granted under the Plan. Of
such aggregate Plan limit, the maximum number of shares of Common Stock that may be issued as
Incentive Stock Options under the Plan shall be limited to One Million (1,000,000) shares. Shares
that are subject to an award which expires or is terminated unexercised, or which are reacquired by
the Company upon the forfeiture of restricted Shares, shall again be available for issuance under
the Plan. Shares that are withheld in full or partial payment to the Company of the purchase or
exercise price relating to an award under the Plan or in connection with the satisfaction of tax
obligations relating to an award (other than an Incentive Stock Option) shall again be available
for granting awards under the Plan. Any previously issued shares of Common Stock that are used by
an award recipient as full or partial payment to the Company of the purchase or exercise price
relating to an award or in connection with the satisfaction of tax obligations relating to an award
shall again be available for granting Awards under the Plan.

     2. Administration.

     a. Compensation Committee. The Plan shall be administered by the Compensation
Committee of the Board of Directors (the “Board”), or such other committee of the Board as
the Board may from time to time designate (the “Committee”). The Committee shall be
comprised of not less than such number of directors as shall be required to permit awards
granted under the Plan to qualify under Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor
rule or regulation, and no member of the Committee shall be an employee of the Company or an
Affiliate within the meaning of Rule 16b-3.

     b. Powers and Duties. The Committee shall have the authority to make rules and
regulations governing the administration of the Plan; to select the Eligible Persons to whom
awards shall be granted; to determine the type, amount, size and terms of awards; to
determine the time when awards shall be granted; to determine whether any restrictions shall
be placed on Shares purchased pursuant to any option or issued pursuant to any award; and to
make all other determinations necessary or advisable for the administration of the Plan .
The Committee’s determinations need not be uniform, and may be made by it selectively among
Eligible Persons, whether or not such persons are

____________

*  All share amounts as represented by common stock of
Dick’s Sporting Goods, Inc. have been adjusted in accordance
with the Agreement and Plan of Merger dated November 13, 2006. This Plan
will be administered by the Board of Directors of Dick’s
Sporting Goods, Inc. or its compensation committee and the daily
administration of the Plan will be conducted in accordance with
Dick’s Sporting Goods normal practices related to routine
administration.

 

 

similarly situated . All interpretations, decisions or determinations made by the
Committee with respect to the Plan shall be final and conclusive.

     3. Eligibility; Participants.

     a. Any Eligible Persons who provide services to the Company or any of its Affiliates
shall be eligible to receive awards under the Plan . Eligible Persons may be selected to
receive awards individually or by group or category (for example, by pay grade) as the
Committee may determine. The selection of officers of the Company to receive awards under
the Plan and the terms of any award granted to such officers shall be approved by the
Committee. The Committee, in its sole discretion, may delegate to one or more officers of
the Company the authority to select persons who are not officers of the Company to receive
awards under the Plan and to establish the terms of awards granted to such persons.

     b. A person who has been granted an award under this Plan, or under any predecessor
plan, may be granted additional awards if the Committee shall so determine . Except to the
extent otherwise provided in the instrument evidencing an award, the granting of an award
under this Plan shall not affect any outstanding award previously granted under this Plan or
under any other plan of the Company or any Affiliate.

     c. For purposes of this Plan, the term “Affiliate” shall mean any “parent corporation”
or “subsidiary corporation” of the Company, as those terms are defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

     4. Awards. The Committee may make awards to Eligible Persons in the form of (i) stock options
which are intended to qualify as “Incentive Stock Options” within the meaning of Section 422 of the
Code, or any successor provision, (ii) stock options which are not intended to so qualify
(“Non-Qualified Options”), (iii) awards of restricted stock, or (iv) any combination thereof.

     5. Stock Options. A stock option granted pursuant to the Plan shall entitle the optionee,
upon exercise, to purchase Shares at a specified price during a specified period . Options shall
be subject to such terms and conditions as the Committee shall from time to time approve; provided,
that each such option shall be subject to the following requirements:

     a. Type of Option. Each option shall be identified in the instrument pursuant to which
it is granted as an Incentive Stock Option or as a Non-Qualified Option, as the case may be.

     b. Term. No option shall be exercisable more than ten years after the date on which it
is granted.

     c. Payment. The purchase price of Shares subject to an option (“Exercise Price”) shall
be payable in full at the time the option is exercised . Payment may
be made in cash, in shares of Common Stock having an aggregate fair market value on the date of exercise which
is not less than the Exercise Price, or by a combination of cash and such

2

 

shares, as the Committee may determine, and subject to such terms and conditions as the
Committee deems appropriate.

     d. Options Not Transferable. Except to the extent permitted by the instrument
evidencing such option, no option shall be transferable by the optionee other than by will
or by the laws of descent and distribution . If, pursuant to the instrument evidencing any
option, such option remains exercisable after the optionee’s death, it may be exercised, to
the extent permitted by such instrument, by the personal representative of the optionee’s
estate or by any person who acquired the right to exercise such option by bequest,
inheritance or otherwise by reason of the optionee’s death. The Committee, in its
discretion and subject to such additional terms and conditions as it determines, may permit
an optionee to transfer a Non-Qualified Stock Option to any “family member” (as such term is
defined in the General Instructions to Form S-8 (or any successor to such Instructions or
such Form) under the Securities Act of 1933, as amended) at any time that such optionee
holds such option, provided that such transfers may not be for value (i.e., the transferor
may not receive any consideration therefor) and the family member may not make any
subsequent transfers other than by will or by the laws of descent and distribution. No
option granted under the Plan may be pledged, alienated, attached or otherwise encumbered,
and any purported pledge, alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company.

     e. Incentive Stock Options. If an option is an Incentive Stock Option, it shall be
subject to the following additional requirements:

     i. Incentive Stock Options may be granted only to persons who are employees of
the Company or of an Affiliate.

     ii. The Exercise Price of Shares that are subject to an Incentive Stock Option
shall not be less than 100% of the fair market value of such Shares on the date the
option is granted, as determined in good faith by the Committee.

     iii. The aggregate fair market value (determined on the date the option is
granted) of the Shares with respect to which Incentive Stock Options are exercisable
by the optionee for the first time during any calendar year, under this Plan or any
other plan of the Company or any Affiliate, shall not exceed $100,000.

     iv. The Exercise Price of Shares that are subject to an Incentive Stock Option
granted to an employee who, at the time such option is granted, owns 10% or more of
the total combined voting power of all classes of stock of the Company or of an
Affiliate shall not be less than 110% of the fair market value of such Shares on the
date such option is granted, and such option may not be exercisable more than five
years after the date on which it is granted . For the purposes of this
subparagraph, the rules of Section 424(d) of the Code shall apply in determining the
stock ownership of any employee.

3

 

Subject to the foregoing, options may be made exercisable in one or more installments, upon the
happening of certain events, upon the fulfillment of certain conditions, or upon such other terms
and conditions as the Committee shall determine.

     6. Restricted Stock. Restricted stock awards granted pursuant to the Plan shall entitle the
holder to receive Shares, subject to forfeiture if specified conditions are not satisfied at the
end of a specified period, and shall be subject to such additional terms and conditions as the
Committee shall from time to time approve; provided, that each such award shall be subject
to the following requirements:

     a. Restricted Period. The Committee shall establish a period (the “Restricted Period”)
at the time an award is granted during which the holder will not be permitted to sell,
transfer, assign, pledge or otherwise encumber the Shares subject to the award . The
Committee may provide for the lapse of restrictions in installments, or upon the occurrence
of certain events, where deemed appropriate . Any attempt by a holder to dispose of
restricted Shares in a manner contrary to the applicable restrictions shall be void and of
no force and effect. Notwithstanding the foregoing, the Committee may, but is not obligated
to, permit acceleration of vesting of such awards in the event of the recipient’s death,
disability or retirement.

     b. Rights During Restricted Period. Except to the extent otherwise provided in this
Section 6 or under the terms of any instrument, during the Restricted Period the holder of
restricted Shares shall have all of the rights of a shareholder in the Company with respect
to such Shares, including the right to vote the Shares and to receive dividends and other
distributions with respect to the Shares; provided, that all stock dividends, stock rights
and stock issued upon split-ups or reclassifications of Shares shall be subject to the same
restrictions as the Shares with respect to which such stock dividends, rights, or additional
stock are issued, and may be held in custody as provided below in this Section 6 until the
restrictions thereon shall have lapsed.

     c. Forfeitures. Except to the extent otherwise provided in any restricted stock
instrument, all Shares then subject to any restriction shall be forfeited to the Company
without further obligation of the Company to the holder thereof, and all right of the holder
with respect to such Shares shall terminate, if the holder shall cease to provide services
to the Company or its Affiliates, or if any condition established by the Committee for the
release of any restriction shall not have occurred, prior to the expiration of the
Restricted Period.

     d. Issuance and Delivery of Shares. A restricted stock award under the Plan may be
evidenced in such manner as the Committee may deem appropriate, including book-entry
registration or issuance of a stock certificate or certificates, which certificate or
certificates shall be held by the Company. The Committee may require that the recipient of
any restricted stock award deliver to the Company one or more stock powers, endorsed in
blank, relating to the restricted Shares as a condition of receiving the award. Such
certificate or certificates, if any, shall be registered in the name of the recipient and
shall bear an appropriate legend referring to the restrictions applicable to such restricted
stock. Shares representing restricted stock that is no longer subject to

4

 

restrictions shall be delivered to the recipient promptly after the applicable
restrictions lapse or are waived.

     e. Gifts, Etc. Notwithstanding any other provision of this Section 6, the Committee
may permit a gift of restricted stock to the holder’s spouse, child, stepchild, grandchild,
or legal dependent, or to a trust whose sole beneficiary or beneficiaries shall be the
holder and/or any one or more of such persons; provided, that the donee shall have entered
into an agreement with the Company pursuant to which it agrees that the restricted stock
shall be subject to the same restrictions in the hands of such donee as it was in the hands
of the donor.

     7. Instruments. Each award granted pursuant to the Plan shall be evidenced by a written
instrument or other document evidencing the award, setting forth the terms and conditions upon
which it is granted, and duly executed on behalf of the Company and, if requested by the Company,
signed by the recipient. Multiple awards may be evidenced by a single instrument . Subject to the
limitations set forth in the Plan, the Committee may waive any conditions of or rights of the
Company under any outstanding award, prospectively or retroactively. Except as otherwise provided
herein or in an instrument evidencing an award, the Committee may not amend, alter, suspend,
discontinue or terminate any outstanding award, prospectively or retroactively, if such action
would adversely affect the rights of the holder of such award, without the consent of the holder or
beneficiary thereof.

     8. Adjustments. In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, reclassification, combination, or exchange
of shares or other similar corporate change, then if the Committee shall determine, in its sole
discretion, that such change necessarily or equitably requires an adjustment in the maximum number
of Shares subject to this Plan, or in the number of Shares subject to an award, the Exercise Price
or value of an outstanding award, such adjustments shall be made by the Committee and shall be
conclusive and binding for all purposes of this Plan . No adjustment shall be made in connection
with the issuance by the Company of any shares of Common Stock, any warrants, rights or options to
acquire shares of Common Stock, or any securities convertible into Common Stock.

     9. Merger, Consolidation, Reorganization, Liquidation, etc. Subject to the provisions of the
instrument evidencing any award, if the Company shall become a party to any corporate merger,
consolidation, major acquisition of property for stock, reorganization or liquidation, the Board
shall have the power to make any arrangement it deems advisable with respect to outstanding awards
and in the number of Shares subject to this Plan, which shall be binding for all purposes of this
Plan, including, but not limited to, the substitution of new awards for any awards then
outstanding, the assumption of any such awards, and the termination of such awards.

     10. Expenses of Plan. The expenses of administering this Plan shall be borne by the Company
and its Affiliates.

     11. Reliance on Reports. Each member of the Committee and each member of the Board shall be
fully justified in relying or acting in good faith upon any report made by the

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independent public accountants of the Company and its Affiliates and upon any other
information furnished in connection with this Plan by any person or persons other than himself .
In no event shall any person who is or shall have been a member of the Board or the Committee be
liable for any determination made or other action taken or omitted in reliance upon any such report
or information, or for any action taken or omitted, including the furnishing of information, in
good faith.

     12. Rights as Shareholder. Except to the extent otherwise specifically provided hereon, no
recipient of any award shall have any rights as a shareholder with respect to Shares sold or issued
pursuant to the Plan until such shares have been issued to such person.

     13. General Restrictions. Each award granted pursuant to the Plan shall be subject to the
requirement that if, in the opinion of the Board or the Committee, the listing, registration or
qualification of any Shares related thereto upon any securities exchange or under any state or
federal law, the consent or approval of any regulatory body, or an agreement by the recipient with
respect to the disposition of any such Shares, is necessary or desirable as a condition of the
issuance or sale of such Shares, such award shall not be consummated unless and until such listing,
registration, qualification, consent, approval or agreement is effected or obtained in form
satisfactory to the Board or the Committee.

     14. Employment Rights. Nothing in this Plan, or in any instrument issued hereunder, shall
confer upon any person the right to continue to provide services to the Company or an Affiliate as
a director, officer, employee, consultant or other service provider, or affect the right of the
Company or Affiliate to terminate such person’s service at any time, with or without cause.

     15. Withholding. If the Company proposes or is required to issue Shares pursuant to the Plan,
it may require the recipient to remit, or it may withhold from such award or from the recipient’s
other compensation, an amount, in the form of cash or Shares, sufficient to satisfy any applicable
federal, state or local tax withholding requirements prior to the delivery of any Shares.

     16. Amendments. The Board may at any time, and from time to time, amend the Plan in any
respect, except that no amendment:

     a. materially increasing the benefits accruing to participants under the Plan;

     b. increasing the number of Shares available for issuance or sale pursuant to the Plan
(other than as permitted by Sections 8 and 9);

     c. materially modifying the requirements as to eligibility for participation in the
Plan;

     d. shall be made without the affirmative vote of the holders of at least a majority of
the voting stock of the Company.

     17. Shareholder Approval. The Plan is subject to approval by the holders of at least a
majority of the voting stock of the Company, and any award granted under the Plan prior to the date
of such approval shall be contingent upon such approval.

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     18. Effective Date; Duration. This Plan shall be effective as of July 15, 2004, subject to
shareholder approval of the Plan as described above on or before August 31, 2004, 2004 . No awards
shall be granted under the Plan after the earlier of (a) the date on which the Plan is terminated
by the Board; or (b) July 14, 2014 . Awards outstanding at the termination of the Plan may
continue to be exercised in accordance with their terms after such termination.

7exv4w1

 

Exhibit 4.1

Execution Version

      

RIGHTS AGREEMENT

MEADOW VALLEY CORPORATION

and

CORPORATE STOCK TRANSFER, INC.

Rights Agent

Dated as
of February 13, 2007

      

 

 

TABLE
OF CONTENTS

	 	 	 	 	 
	 	 	page	 
	Section 1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	9	 
	 
	 	 	 	 
	Section 3. Issue of Rights Certificates
	 	 	9	 
	 
	 	 	 	 
	Section 4. Form of Rights Certificates
	 	 	11	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	12	 
	 
	 	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	13	 
	 
	 	 	 	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	14	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	16	 
	 
	 	 	 	 
	Section 9. Reservation and Availability of Capital Stock
	 	 	16	 
	 
	 	 	 	 
	Section 10. Securities Record Date
	 	 	18	 
	 
	 	 	 	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	18	 
	 
	 	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	26	 
	 
	 	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	26	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	30	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	31	 
	 
	 	 	 	 
	Section 16. Agreement of Rights Holders
	 	 	32	 
	 
	 	 	 	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	32	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	33	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	33	 
	 
	 	 	 	 
	Section 20. Rights and Duties of Rights Agent
	 	 	34	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	36	 
	 
	 	 	 	 
	Section 22. Issuance of New Rights Certificates
	 	 	37	 
	 
	 	 	 	 
	Section 23. Redemption and Termination
	 	 	38	 
	 
	 	 	 	 
	Section 24. Exchange
	 	 	38	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	40	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	40	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	41	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	42	 
	 
	 	 	 	 
	Section 29. Determinations and Actions by the Board of Directors, Etc
	 	 	42	 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	page	 
	Section 30. Benefits of this Agreement
	 	 	43	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	43	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	43	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	43	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	43	 
	 
	 	 	 	 
	EXHIBIT A CERTIFICATE OF DESIGNATION OF SERIES A PARTICIPATING PREFERRED STOCK OF MEADOW   VALLEY
CORPORATION
	 	 	A-1	 
	 
	 	 	 	 
	EXHIBIT B FORM OF RIGHTS CERTIFICATE
	 	 	B-1	 
	 
	 	 	 	 
	EXHIBIT C SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
	 	 	C-1	 

ii

 

RIGHTS AGREEMENT

     RIGHTS AGREEMENT, dated as of February 13, 2007 (the “Agreement”), between Meadow
Valley Corporation, a Nevada corporation (the “Company”), and Corporate Stock Transfer,
Inc. a Colorado corporation, as Rights Agent (the “Rights Agent”).

     WHEREAS, on February 5, 2007 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized the issuance of, and declared a dividend payable in, one right
for each share of Common Stock of the Company outstanding at the close of business on February 15,
2007 (the “Record Date”), each such right initially representing the right to purchase one
one-thousandth of a share of Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and Rights attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth
(individually, a “Right” and collectively, the “Rights”);

     WHEREAS, the Board of Directors of the Company further authorized the issuance of one (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(q) hereof) Right for
each share of Common Stock issued between the Record Date (whether originally issued or delivered
from the Company’s treasury) and the Distribution Date, and, in certain circumstances provided in
Section 22 of this Agreement, after the Distribution Date; and

     WHEREAS, on February 5, 2007, the Board of Directors adopted and approved a Rights Agreement,
dated as of February 13, 2007 (the “Rights Agreement”), in the form hereof;

     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 collectively 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 (other than as a result of a Permitted Offer) or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person together with all
Affiliates or Associates of such Person continues to be the Beneficial Owner of 15% or more of the
then outstanding Common Stock. Notwithstanding the foregoing, (A) the term “Acquiring Person”
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 or entity organized,
appointed or established by the Company for or pursuant to the terms of any such plan (including,
without limitation, any trust or other entity organized, appointed, established or holding common
stock for or pursuant to the terms of any such plan), or (v) any Person together with all
Affiliates and Associates of such Person who or which becomes the Beneficial Owner of 15% or more
of the then outstanding shares of Common Stock as a result of the acquisition of Common Stock
directly from the Company (each of (i) through (v), an “Exempted Person”); (B) no Person
shall become an “Acquiring Person” as a result of an acquisition of Common Stock by the Company
which, by reducing the number of such shares then outstanding, increases the proportionate number
of shares beneficially owned by such

 

 

Person together with all Affiliates and Associates of such Person to 15% or more of the
outstanding Common Stock, except that if such Person, after such share purchases by the Company,
becomes the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the
then outstanding shares of Common Stock other than pursuant to a Permitted Offer, such Person shall
be deemed to be an “Acquiring Person”; and (C) if the Board of Directors of the Company determines
in good faith that a Person, together with all Affiliates and Associates of such Person, who would
otherwise be an “Acquiring Person” has become such inadvertently, and such Person, together with
all Affiliates and Associates of such Person, divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person, together with all Affiliates and Associates
of such Person, would no longer be an Acquiring Person, then such Person shall not be deemed to be
an “Acquiring Person.” The term “outstanding,” when used with reference to a Person’s Beneficial
Ownership of securities of the Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then actually issued and outstanding
which such Person would be deemed to beneficially own hereunder.

          (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) of this
Agreement.

          (d) “Affiliate” shall have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as amended and in effect on the date hereof.

          (e) “Associate” of a Person shall mean (i) with respect to a corporation (other than the
Company or a majority-owned Subsidiary of the Company), any officer or director thereof or of any
Subsidiary (as such term is hereinafter defined) thereof, or any Beneficial Owner (as such term is
hereinafter defined) of 10% or more of any class of equity security thereof, (ii) with respect to
an association, joint venture or other unincorporated organization, any officer or director thereof
or of a Subsidiary thereof or any Beneficial Owner of 10% or more ownership interest therein, (iii)
with respect to a partnership, any general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 10% or greater ownership interest therein, (iv)
with respect to a limited liability company, any officer, director or manager thereof or of a
Subsidiary thereof or any member thereof who is, directly or indirectly, the Beneficial Owner of a
10% or greater ownership interest therein, (v) with respect to a business trust, any officer or
trustee thereof or of any Subsidiary thereof, (vi) with respect to any other trust or an estate,
any trustee, executor or similar fiduciary or any Person who has a 10% or greater interest as a
beneficiary in the income from or principal of such trust or estate, (vii) with respect to a
natural person, any relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a director or officer of the registrant or any of its parents or
subsidiaries, and (viii) any Affiliate of such Person.

          (f) 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, has the right or obligation to acquire (whether such right or

2

 

obligation is exercisable immediately or only after the passage of time or the fulfillment of
a condition or any or all of the foregoing) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange rights, other
rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to beneficially own,” (A) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or
(B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such Person’s Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof
(“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 as amended and
in effect on the date hereof), including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “beneficially own,” any security under this subparagraph (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 rules and regulations under the Exchange Act as amended and as in effect on the date hereof,
and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report, other than by reference to a proxy or consent solicitation being
conducted by such Person); or

               (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or
Associates) has any agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (f)) or disposing of any voting securities of the
Company; provided, however, that nothing in this paragraph (f) shall cause a person engaged in
business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,”
any securities acquired through such person’s participation in good faith in a bona fide firm
commitment underwriting until the expiration of forty days after the date of such acquisition.
Notwithstanding anything in this definition of Beneficial Owner to the contrary, a Person who,
prior to the Distribution Date, is a member of the Board of Directors or an officer of the Company
or who is an Affiliate or Associate of a member of the Board of Directors or officer of the Company
(each, an “Excluded Person”) shall not be deemed to “beneficially own” shares of Common Stock held
by another Excluded Person solely by reason of any agreement, arrangement or understanding, written
or otherwise, entered into in opposition to any transaction or in support of a Permitted Offer.

3

 

          (g) “Board of Directors” shall mean the Board of Directors of the Company as constituted from
time to time.

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

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

          (j) “Common Stock” shall mean the common stock, par value $0.001 per share, of the Company (or
in the event of a subdivision, combination or reclassification with respect to such shares of
Common Stock, the shares of Common Stock resulting from such subdivision, combination or
reclassification), except, subject to the proviso in Section 13(b) of this Agreement, that “Common
Stock” when used with reference to any Person other than the Company (A) which shall be organized
in corporate form, shall mean the capital stock or other equity security or equity interest with
the greatest voting power to control the management of such Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned
Person, or (B) which shall not be organized in corporate form, shall mean units of beneficial
interest which shall represent the right to participate in profits, losses, deductions and credits
of such Person and which shall be entitled to exercise the greatest voting power to direct the
management of such Person, or if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

          (k) “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) of this
Agreement.

          (l) “Company” shall have the meaning set forth in the introductory paragraph of this
Agreement.

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

          (n) “Current Value” shall have the meaning set forth in Section 11(a)(iii) of this Agreement.

          (o) “Distribution Date” shall have the meaning set forth in Section 3(a) of this Agreement.

          (p) “Equivalent preferred stock” shall have the meaning set forth in Section 11(b) of this
Agreement.

          (q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and in effect on
the date hereof.

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

4

 

          (s) “Excluded Person” shall have the meaning set forth in Section 1(f) of this Agreement.

          (t) “Exempted Person” shall have the meaning set forth in Section 1(a) of this Agreement.

          (u) “Expiration Date” shall have the meaning set forth in Section 7(a) of this Agreement.

          (v) “Final Expiration Date” shall have the meaning set forth in Section 7(a) of this
Agreement.

          (w) “Interested Stockholder” shall mean any Acquiring Person or any Affiliate or Associate of
an Acquiring Person or any other Person in which such Acquiring Person, Affiliate or Associate has
an interest, or any other Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.

          (x) “NASDAQ” shall mean the National Association of Securities Dealers Automated Quotation
System.

          (y) “Original Rights” shall have the meaning set forth in Section 1(f)(i) of this Agreement.

          (z) “Permitted Offer” shall mean an acquisition of shares of Common Stock pursuant to a tender
offer or an exchange offer for all outstanding shares of Common Stock that meets all of the
following requirements:

               (i) the consideration of the offer is cash or publicly traded securities and, in the case of a
cash offer, is fully-financed;

               (ii) such offer remains open for at least 60 calendar days from the date it commenced (within
the meaning of Rule 14d-2(a), as in effect on the date hereof, under the Exchange Act);

               (iii) on or prior to the date such offer is commenced (within the meaning of Rule 14d-2(a), as
in effect on the date hereof, under the Exchange Act), the Person on whose behalf such offer is
being made has, and has provided to the Company, firm written commitments from responsible
financial institutions, which have been accepted by such Person (or one of its Affiliates), to
provide, subject only to customary terms and conditions, funds for such offer which, when added to
the amount of cash and cash equivalents which such Person then has available and has irrevocably
committed in writing to the Company to utilize for purposes of such offer, will be sufficient to
pay for all shares of Common Stock then outstanding and all related expenses;

               (iv) shares representing at least a majority of the Common Stock then outstanding as of the
day immediately prior to the date of commencement of such offer (within the meaning of Rule
14d-2(a), as in effect on the date hereof, under the Exchange Act), but excluding therefrom any
shares of Common Stock beneficially owned immediately prior to such

5

 

offer by the Person on whose behalf such offer is being made and such Person’s Affiliates and
Associates, are tendered and purchased pursuant to such offer;

               (v) prior to or on the date that such offer is commenced (within the meaning of Rule 14d-2(a),
as currently in effect, under the Exchange Act), the Person on whose behalf such offer is being
made makes an irrevocable written commitment to the Company (A) to consummate a transaction or
transactions promptly upon the completion of such offer in which the consideration in such
transaction or transactions is fully-financed cash or publicly-traded securities and whereby all
shares of Common Stock not purchased in such offer will be acquired at the same price per share of
Common Stock paid in such offer, provided that the Board of Directors shall have granted any
approvals required to enable such Person to consummate such transaction or transactions following
consummation of such offer without obtaining the vote of any other stockholder, (B) that such
Person will not make any amendment to the original offer which reduces the per share price offered
(other than a reduction to reflect any dividend declared by the Company after the commencement of
such offer or any material change in the capital structure of the Company initiated by the Company
after the commencement of such offer, whether by way of recapitalization, reorganization,
repurchase or otherwise), changes the form of consideration offered, reduces the number of shares
being sought or which is in any other respect materially adverse to the holders of Common Stock
(other than the Person on whose behalf such Offer is being made and such Person’s Affiliates and
Associates); and

               (vi) such offer is at a price and on other terms determined by at least a majority of the
members of the Board of Directors, after receiving an opinion from one or more nationally
recognized investment banking firms selected by the Board of Directors that the price offered is
fair, from a financial point of view, to be (A) fair (taking into account all factors which the
Board of Directors may deem relevant, including, without limitation, the Company’s long-term
prospects and prices which could reasonably be achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value) to stockholders (other than the Person or any
Affiliate or Associate hereof on whose behalf the offer is being made) and (B) otherwise in the
best interests of the Company and its stockholders (other than the Person or any Affiliate or
Associate thereof on whose behalf the offer is being made) taking into account all factors that the
Board of Directors may deem relevant; provided, however, that (1) such determination is made by the
Board of Directors prior to the purchase of shares under such tender offer or exchange offer, and
(2) a majority of the members of the Board of Directors are independent (within the meaning of Rule
4200 of the NASDAQ Stock Market rules (or any successor rule) and under applicable Nevada case law)
and disinterested (each such member is neither an Acquiring Person or a Person on whose behalf the
tender offer for Common Stock is being made, nor an Affiliate, Associate, nominee or representative
of an Acquiring Person or a Person on whose behalf the tender offer for Common Stock is being
made).

          (aa) “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, trust or other entity, and shall include any successor (by merger or otherwise) thereof or
thereto.

          (bb) “Preferred Stock” shall mean shares of Series A Participating Preferred Stock, par value
$0.001 per share, of the Company (or in the event of a subdivision, combination

6

 

or reclassification
with respect to such shares of Preferred Stock, the shares of Preferred Stock
resulting from such subdivision, combination or reclassification), and, to the extent that
there is not a sufficient number of shares of Series A Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar to the terms of the Series A
Participating Preferred Stock.

          (cc) “Principal Party” shall have the meaning set forth in Section 13(b) of this Agreement.

          (dd) “Purchase Price” shall have the meaning set forth in Section 4(a) of this Agreement.

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

          (ff) “Redemption Date” shall have the meaning set forth in Section 7(a) of this Agreement.

          (gg) “Redemption Price” shall have the meaning set forth in Section 23 of this Agreement.

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

          (ii) “Rights Agent” shall have the meaning set forth in the introductory paragraph of this
Agreement.

          (jj) “Rights Certificates” shall have the meaning set forth in Section 3(a) of this Agreement.

          (kk) “Rights Dividend Declaration Date” shall have the meaning set forth in the first
“WHEREAS” clause at the beginning of this Agreement.

          (ll) “Section 11(a)(ii) Event” shall have the meaning set forth in Section 11(a)(ii) of this
Agreement.

          (mm) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section 11(a)(iii)
of this Agreement.

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

          (oo) “Spread” shall have the meaning set forth in Section 11(a)(iii) of this Agreement.

          (pp) “Stock Acquisition Date” shall mean the earlier of the date of (i) the public
announcement (which, for purposes of this definition, shall include, without limitation, a

7

 

report filed under the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such or (ii) the public disclosure of facts by the Company or an Acquiring
Person indicating that an Acquiring Person has become an Acquiring Person, which date may occur
prior to the Record Date; provided, however, that if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a)(C) hereof, then no Stock Acquisition Date shall be
deemed to have occurred.

          (qq) “Subsidiary” shall mean, with reference to any Person, any corporation or other Person of
which an amount of voting securities sufficient to elect at least a majority of the directors or
others having similar authority over such corporation or other Person is beneficially owned,
directly or indirectly, by such first-named Person, or otherwise controlled by such first-named
Person.

          (rr) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii) of this
Agreement.

          (ss) “Summary of Rights” shall have the meaning set forth in Section 3(b) of this Agreement.

          (tt) “Trading Day” shall have the meaning set forth in Section 11(d)(i) of this Agreement.

          (uu) “Transaction” shall mean any merger, consolidation or sale of assets or earning power
described in Section 13(a) hereof or any acquisition of Common Stock which, without regard to any
required approval of the Company, would result in a Person becoming an Acquiring Person.

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

          (ww) “Vote” shall mean, with respect to any entity, the ability to cast a vote at a
stockholders’, members’ or comparable meeting of such entity with respect to the election of
directors, managers or other members of such entity’s governing body, or the ability to cast a
general partnership or comparable vote.

          (xx) “Voting Power” shall mean, with respect to any entity as at any date, the aggregate
number of Votes outstanding as at such date in respect of such entity.

          (yy) “Voting Securities” shall mean the Common Stock and any other securities of the Company
the holders of which are ordinarily, in the absence of contingencies, entitled to Vote, even though
the right to such Vote has been suspended by the happening of such a contingency.

          (zz) “Voting Stock” shall mean (i) the Common Stock of the Company and (ii) any other shares
of capital stock of the Company entitled to vote generally in the election of directors. For
purposes of this Agreement, Voting Stock shall include securities of the type referred to in
clauses (i) and (ii) above that trade on a “when issued” basis on a national securities exchange or
an inter-dealer quotation system. For purposes of this Agreement, a stated percentage of the
Voting Stock shall mean a number of shares of the Voting Stock as shall equal
in voting power that stated

8

 

percentage of the total voting power of the then outstanding
shares of Voting Stock in the election of a majority of the Board of Directors or in respect of any
merger, consolidation, sale of all or substantially all of the Company’s assets, liquidation,
dissolution or winding up.

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

     Section 3. Issue of Rights Certificates.

          (a) Until the earlier of (i) the Close of business on the tenth Business Day 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 the Board of Directors shall determine) after the date of the
earlier of commencement by any Person (other than an Exempted Person) of, or the first public
announcement of the intention of any Person (other than an Exempted Person) to commence, a tender
or exchange offer (other than a Permitted Offer) the consummation of which would result in any
Person becoming an Acquiring Person (including any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) (the earlier of (i) and (ii) being herein
referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) of this Agreement) by the certificates for the Common Stock registered
in the names of the record 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); provided, however, that if a tender or exchange offer is
terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as
a result of such tender or exchange offer. The Board of Directors may defer the date set forth in
clause (ii) of the preceding sentence (with prompt written notice thereof to the Rights Agent) to a
specified later date or to an unspecified later date, each to be determined by action of the Board
of Directors. As soon as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested and provided with all necessary information, 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 registry books for
the Common Stock of the Company, one or 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. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to Section 11(q) 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.

9

 

As of and after the Distribution Date, the Rights will be evidenced solely
by such Rights
Certificates and may be transferred by the transfer of the Rights Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of Common Stock.

          (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary
of Rights”), 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 transfer agent. With respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common
Stock and the record holders of the Common Stock shall also be the record holders of the associated
Rights. Until the earlier of the Distribution Date or 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.

          (c) The Company shall promptly notify the Rights Agent in writing upon the occurrence of the
Distribution Date and, if such notification is given orally, the Company shall confirm same in
writing on or prior to the Business Day next following. Until such notice is received by the
Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date
has not occurred.

          (d) Rights shall be issued in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date, and, in certain circumstances provided in Section 22
of this Agreement, after the Distribution Date. Certificates representing such shares 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 Meadow Valley Corporation (the “Company”)
and Corporate Stock Transfer, Inc., a Colorado corporation (the “Rights Agent”),
dated as of February 13, 2007, as it may be amended 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 Beneficially Owned 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 Beneficially Owned or
held by or on behalf of such Person or by any subsequent holder, may become null and
void.

10

 

With respect to such certificates containing the foregoing legend, until the earlier of the
Distribution Date or the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone and record holders
of Common Stock shall also be the record holders of the associated Rights, and the transfer of any
of such certificates shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates. In the event the Company purchases or acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are no longer outstanding.
Notwithstanding this paragraph (d), 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.

          (e) In addition, in connection with the issuance or sale of shares of Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (i) shall, with respect to
shares of Common Stock so issued or sold (x) pursuant to the exercise of stock options or under any
employee plan or arrangement or (y) upon the exercise, conversion or exchange of other securities
issued by the Company prior to the Distribution Date and (ii) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance or sale; provided
that no such Rights Certificate shall be issued if, and to the extent that, (i) 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 or (ii)
appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

     Section 4. Form of Rights Certificates.

          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) 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 (but which do not affect the
rights, duties or immunities of the Rights Agent) and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto, or with any rule or regulation of any stock exchange or
inter-dealer quotation system or transactor reporting system on which or with whom the Rights may
from time to time be listed or quoted, or to conform to usage or otherwise. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall entitle the record 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 the type
of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.

          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights Beneficially Owned by: (i) an Acquiring Person or any 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

11

 

(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 regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which 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 the Rights Agent has notice thereof and 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, or may have
already become, null and void in the circumstances specified in Section 7(e) of such
Agreement.

     The provisions of Section 7(e) of this Agreement shall be operative whether or not the
foregoing legend is contained in 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 of Directors, its Chief Executive Officer, its President, its Chief Financial Officer 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 an authorized signatory of the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by an authorized signatory of 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. 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 and receipt by the Rights Agent of notice to that effect
and all other relevant information referred to in Section 3(a), the Rights Agent will keep or cause
to be kept, at its office designated for such purpose, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and addresses of the
respective record holders of the Rights Certificates, the number of Rights

12

 

evidenced on its face by
each of the Rights Certificates and the date of each of the Rights Certificates. The Company and
Rights Agent may deem and treat the person in whose name any
Rights Certificate (or prior to the Distribution Date, the associated Common Stock
certificate) is recorded on the books for the registration and transfer of Rights (or, the Common
Stock) as the absolute owner thereof, for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.

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

          (a) Subject to the provisions of Section 4(b), Section 7(e), Section 7(f), Section 11, Section
14, Section 23 and Section 24 hereof, at any time after the Close of business on the Distribution
Date, and at or prior to the Close of business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing Rights that have become null and void
pursuant to Section 7(e) 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 record 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 record holder desiring
to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such
request in writing in a form acceptable and delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be split up, combined or exchanged at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate or Certificates until the record holder shall have (i) properly completed and signed
the certificate contained in the form of assignment on the reverse side of such Rights Certificate
or Certificates, (ii) provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof, or of the Rights evidenced thereby,
as the Company or the Rights Agent shall reasonably request, and (iii) paid a sum sufficient to
cover any tax or charge that may be imposed in connection with any transfer, split up, combination
or exchange of Rights Certificates as required by Section 9(e) hereof. Thereupon, the Rights Agent
shall, subject to Section 4(b), Section 7(e), Section 7(f), Section 11, Section 14, Section 23 and
Section 24 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company or the Rights Agent may
require payment by the record holder of a Rights Certificate of a sum sufficient to cover any
applicable tax or governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates, and the Company and the Rights Agent shall have
no duty or obligation under this Section unless and until it is satisfied that all such taxes
and/or governmental charges have been paid.

          (b) Subject to the provisions of Section 4(b), Section 7(e), Section 7(f), Section 11, Section
14, Section 23 and Section 24 hereof, 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 to the Rights
Agent and the Company satisfactory to the Rights Agent and the Company

13

 

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 record holder 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), Section 7(f) and Section 14 hereof, the record 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)(ii), Section 11(a)(iii), Section 23(a) and Section 24(b) 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, along with a signature
guarantee and such other and further documentation as the Rights Agent may reasonably request,
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, following the occurrence of a Triggering Event,
Common Stock or other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of (i) the Close of business on
February 13, 2017 (the “Final Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the “Redemption Date”), (iii) the time at which
such Rights are exchanged as provided in Section 24 hereof, or (iv) the consummation of a
transaction contemplated by Section 13(d) 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 $50.00, and shall be subject to adjustment from time to
time as provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph
(c) below.

          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed and properly completed, 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 as set forth below and an amount equal to any tax or charge required to be paid by the
holder of such Rights Certificate in accordance with Section 9 hereof, 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 irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights hereunder with a 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 will

14

 

direct the depositary agent to comply with
such request, (ii) when appropriate, 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 record holder of such Rights Certificate,
registered in such name or names as may be designated by such holder, and (iv) when appropriate,
after receipt thereof, deliver such cash, if any, to or upon the order of the record holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or bank draft payable
to the order of the Company, in each case in lawful money of the United States of America. 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
will make all arrangements necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when necessary to comply with this
Agreement. The Company reserves the right to require, prior to the occurrence of a Triggering
Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares
of Preferred Stock would be issued.

          (d) In case the record 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 exercisable and unexercised shall be issued by the Rights Agent and delivered to, or upon
the order of, the record 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 Affiliate or Associate 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 regarding the
transferred Rights or (B) a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action, and any record holder of such Rights shall
have no rights whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions
of this Section 7(e) and Section 4(b) hereof are complied with, but neither the Rights Agent nor
the Company shall have any liability to any record holder of Rights Certificates or any other
Person as a result of the Company’s failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. The Company or the Rights Agent may
require (or cause any transfer agent of the Company to require) any Person who submits a Rights
Certificate (or a certificate representing shares of Common Stock that evidences, or but for the
provisions of this Section 7(e) would evidence, Rights) for transfer on the registry books or to
exercise the Rights represented thereby to establish to the satisfaction of the Company in its sole
discretion that such Rights have not become null and void pursuant to the provisions of this
Section 7(e).

15

 

          (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 record holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such holder shall have
(i) properly completed and duly executed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner), or Affiliates or Associates thereof, or any transferee referred to in clause
(ii) or (iii) of Section 7(e) hereof, or of the Rights evidenced thereby, in any such case, as the
Company or the Rights Agent 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 canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates in accordance with applicable law and
regulations, and in such case shall deliver a certificate of destruction 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 in accordance with this Agreement.

          (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange or national automated quotation system,
the Company shall use its best efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such exchange or authorized to be
quoted on such quotation system upon official notice of issuance upon such exercise.

          (c) If then required by applicable law, 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, a registration statement under the
Act with respect to the securities purchasable upon exercise of the Rights on an

16

 

appropriate form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, (B) the Expiration Date
or (C) the date the Company receives an opinion of counsel to the effect that the maintenance of
such registration statement in effect is no longer necessary. If then required by applicable law,
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 one hundred
twenty (120) 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 comply with such blue sky laws. Upon any such suspension, the
Company shall make a public announcement, and shall give simultaneous written notice to the Rights
Agent, stating that the exercisability of the Rights has been temporarily suspended, as well as a
public announcement, and simultaneous written notice to the Rights Agent, at such time as the
suspension is no longer in effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has been declared
effective, and shall provide the Rights Agent with written notice of such suspension.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.

          (d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all one one-thousandths of a share of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities, as the case may be) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such shares, Common
Stock, or other securities, as the case may be (subject to payment of the Purchase Price), be duly
and validly authorized and issued, and fully paid and nonassessable including, without limitation,
effecting such changes to the accounts of the Company as may be necessary to accomplish the
foregoing purposes.

          (e) The Company further covenants and agrees that it will pay when due and payable any and all
taxes and governmental charges which 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 or other securities, as the case may be) upon the exercise of the
Rights. The Company shall not, however, be required to pay any tax or charge which may be payable
in respect of any transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts 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 respect
of a name other than that of, the record holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or, following the occurrence of a Triggering Event,
Common Stock or other securities, as the case may be) in a name other than that of the record
holder upon the exercise of any Rights until such tax or charge shall have been paid (any such tax
or charge being payable by the holder of such Rights

17

 

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

     Section 10. Securities 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 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 and payment of the Purchase Price (and all applicable taxes or charges) 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 record
holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.

     Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares 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 record 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, he would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or reclassification. If an event
occurs which 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.

18

 

               (ii) Subject to Section 24 hereof, in the event any Person, alone or together with its
Affiliates and Associates, shall, at any time after the Rights Dividend Declaration Date, become an
Acquiring Person (such an event being referred to herein as a “Section 11(a)(ii) Event”),
then, promptly following the occurrence of such Section 11(a)(ii) Event, proper provision shall be
made by the Company so that each holder of a Right (except as provided below and in Section 7(e)
hereof) shall have the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of fractional interests in shares of
Preferred Stock, such number of shares of Common Stock of the Company as shall equal 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 at issue, 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 being referred to as the “Adjustment Shares”);
provided, however, that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
The Company shall give the Rights Agent written notice of the identity of any such Acquiring
Person, Associate or Affiliate, or the nominee of any of the foregoing, and the Rights Agent may
rely on such notice in carrying out its duties under this Agreement and shall be deemed not to have
any knowledge of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee
of any of the foregoing unless and until it shall have received such notice.

               (iii) Subject to such limitations existing as of the date hereof as are necessary to prevent a
default under any agreement to which the Company is a party, in the event that the number of shares
of Common Stock which are authorized by the Company’s articles 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, acting by resolution of its Board of Directors shall (A) determine
the excess of (x) the value of the Adjustment Shares issuable upon the exercise of a Right
determined as set forth below (the “Current Value”), over (y) the Purchase Price (such
excess, the “Spread”), and (B) with respect to each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for the Adjustment Shares, upon the exercise of a Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without limitation, shares or
units of shares of preferred stock, such as the Preferred Stock, which the Board of Directors has
deemed to have essentially the same value or economic rights as shares of Common Stock (such shares
of preferred stock or other equity securities being referred to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been determined by the Board of
Directors based upon the advice of a nationally recognized investment banking firm selected by the
Board of Directors; provided, however, that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days following the date on which
the Company’s right of redemption pursuant to Section 23(a)

19

 

expires (such date 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 (other than an amount equal to the par value of the
shares of Common Stock to be issued), shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the
Board of Directors determines 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 stockholder
approval for the authorization of such additional shares (such thirty (30) day period, as it may be
extended, is herein called the “Substitution Period”). To the extent that action is to be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (1)
shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek such stockholder approval for such 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 make a public announcement and shall give simultaneous written notice to the Rights
Agent stating that the exercisability of the Rights has been temporarily suspended, as well as a
public announcement, and simultaneous written notice to the Rights Agent, at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the Current Value of
each Adjustment Share shall be the Current Market Price per share of the Common Stock on the
Section 11(a)(ii) Trigger Date, and the per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per share of 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 record 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 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 and equivalent
preferred stock outstanding on such record date, plus the number of shares of Preferred Stock and
equivalent 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 and
equivalent 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

20

 

determined in good faith by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights. Shares of Preferred Stock and equivalent preferred stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price 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 record holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the Current Market Price (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 of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and
the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price
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 immediately prior to but not including such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per
share of Common Stock on any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the ten (10) consecutive Trading Days immediately following but not
including such date; provided, however, that in the event that the Current Market Price per share
of 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 the ex-dividend or
ex-distribution date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred prior to the commencement of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to reflect the current market per share
equivalent. The closing price for each day shall be the last sale price, regular way, or,

21

 

in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the NASDAQ or, if the shares of Common
Stock are not listed or admitted to trading on the NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to securities listed 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 sale price, regular way, or, if such last sale price is not reported, the
average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the 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 of Directors.
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 as determined in good faith by the Board of Directors shall be used. The term
“Trading Day” shall mean a day on which the principal national securities exchange on which
the shares of Common 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 of Directors, 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 of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes
of this Agreement, the Current Market Price of 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 hundred-thousandth of a share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no

22

 

later than the earlier of (i) three (3) 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 shares of
capital stock other than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (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 shares.

          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a 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 one- 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-millionth) 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 and shall give simultaneous written notice to the Rights Agent of its election
to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued,
shall be at least 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
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

23

 

holders 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.

          (j) Irrespective of any adjustment or change in the Purchase Price or the number by 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-thousandths 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, or
the par value, if any, of any shares of any other capital stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue such number of fully paid and
non-assessable one one-thousandths of a share of Preferred Stock (or such other shares) at such
adjusted Purchase Price. If upon any exercise of the Rights, a holder is to receive a combination
of Common Stock and Common Stock Equivalents, a portion of the consideration paid upon such
exercise, equal to at least the then par value of a share of Common Stock, shall be allocated as
the payment for each share of Common Stock so received.

          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
(with prompt written notice thereof to the Rights Agent), until the occurrence of such event, the
issuance to the record 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 its good faith judgment the Board of Directors
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 thereof, (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

24

 

	this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such holders.

          (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date and so long as the Rights have not been redeemed pursuant to Section 23 hereof or exchanged
pursuant to Section 24 hereof, (i) consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(p) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which complies with Section
11(p) 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(p) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any articles of incorporation or
bylaw provisions or any rights, warrants or other instruments or securities outstanding or
agreements in effect or other actions taken which 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 and
Associates, and (z) the form or nature of organization of the Principal Party would preclude or
limit the exercise of Rights or otherwise diminish or substantially limit the benefits intended to
be afforded by the Rights.

          (o) The Company shall not consummate any such consolidation, merger, sale or transfer 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).

          (p) 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.

          (q) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration 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 or split the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or consolidate the outstanding shares of Common Stock into a smaller
number of shares or effect a reverse split of the outstanding shares of Common Stock, then, and in
each such event, 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 total number of shares of

25

 

Common Stock outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding immediately following the
occurrence of such event.

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made or any event affecting the Rights or their exercisability (including without
limitation an event which causes the Rights to become null and void) occurs as provided in Section
11 and Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event, and a brief, reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each record holder of a Rights Certificate
(or, if prior to the Distribution Date, to each record holder of a certificate representing shares
of Common Stock) in accordance with Section 26 hereof. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment or statement therein contained and shall
have no duty or liability with respect to, and shall not be deemed to have knowledge of, any
adjustment or any such event 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, following the Stock Acquisition Date (which for purposes of this
Section 13(a) only shall also include the date of the first public announcement (including, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) that 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 or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), together with any of such Person’s
Affiliates and Associates, has become the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding pursuant to a Permitted Offer), directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(p) hereof), and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than
a Subsidiary of the Company in a transaction which complies with Section 11(p) 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(p) hereof), then, upon the first
occurrence of such event (except as may be 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

26

 

of the Principal Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (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 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 (2) 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, provided that the Purchase Price and the
number of shares of Common Stock of such Principal Party issuable upon exercise of each Right shall
be further adjusted as provided in Section 11(f) of this Agreement to reflect any events occurring
in respect of such Principal Party after the date 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 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): (A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or consolidation, or if there is more than one
such issuer, the issuer of the shares of Common Stock which has the greatest aggregate market value
of shares outstanding, or (B) if no securities are so issued, (1) the Person that is the other
party to the merger, if such Person survives said merger, or, if there is more than one such
Person, the Person the shares of Common Stock of which has the greatest aggregate market value of
shares outstanding or (2) if the Person that is the other party to the merger does not survive the
merger, the Person that does survive the merger (including the Company if it survives) or (3) the
Person resulting from the 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 or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of the shares of Common Stock having the
greatest aggregate market value of shares outstanding; provided, however, that in any

27

 

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 of shares outstanding; 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 venturers and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person
bear to the total of such interests.

          (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued shares of Common Stock or out of its authorized and issued shares
held in its treasury, the number of shares of its Common Stock that will be sufficient to permit
the exercise in full of all outstanding Rights under 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 confirming that the requirements set forth in paragraphs (a) and (b) of this
Section 13 shall be promptly performed in accordance with their terms and further providing that,
as soon as practicable after executing such agreement pursuant to 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 and similarly comply with applicable state securities laws;

               (ii) use its best efforts, if the shares of Common Stock of the Principal Party shall be
listed or admitted to trading on a national securities exchange or NASDAQ to list or admit to
trading (or continue the listing of) the Rights and the securities purchasable upon exercise of the
Rights on such securities exchange or NASDAQ and, if the shares of Common Stock of the Principal
Party shall not be listed or admitted to trading on a national securities exchange or NASDAQ, to
cause the Rights and the securities purchasable upon exercise of the Rights to be eligible for
trading in the over-the-counter market and reported by such other system then in use;

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

28

 

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

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 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). If, for any reason, the
Rights cannot be exercised for Common Stock of the Company or such Principal Party, then a holder
of Rights will have the right to exchange such Rights for cash from the Company or such Principal
Party in an amount equal to the number of shares of such Common Stock such holder would otherwise
be entitled to purchase times 50% of the then Current Market Price, as determined pursuant to
Section 11(d)(i) hereof, of such stock of such Principal Party or the Company. If, for any reason,
including, without limitation, such Principal Party is an individual, private partnership or
private company, the foregoing formulation cannot be applied to determine the cash amount into
which the Rights are exchangeable, then the Board of Directors, based upon advice from one or more
nationally recognized investment banking firms, shall determine such amount reasonably and with
utmost good faith to the holders of Rights. Any such determination shall be binding and final.

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

          (e) The Company shall not enter into any transaction of the kind referred to in this Section
13 if at the time of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Without limiting the generality of the preceding sentence, in case the
Principal Party which is to be a party to a transaction of the kind referred to in this Section 13
has a provision in any of its authorized securities or in its certificate or articles of
incorporation or bylaws or other instrument governing its corporate affairs (or organizational
affairs if organized other than in corporate form), which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence of, the consummation
of a transaction of the kind referred to in this Section 13, Common Stock of such Principal Party
at less than the then Current Market Price per share (determined pursuant to Section 11(d)(i)) or
securities exercisable for or convertible into Common Stock of such Principal Party at less than
such then Current Market Price per share (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special payment, tax or similar provisions in connection with the
issuance

29

 

of Common Stock of such Principal Party pursuant to the provisions of Section 13; then, in
such event, the Company shall not consummate any such transaction unless prior thereto the
provision in question of such Principal Party shall have been canceled, waived or amended so as to
avoid any of the effects referred to in clauses (i) and (ii) of this paragraph, or the authorized
securities shall have been redeemed, so that the applicable provision will have no effect in
connection with, or as a consequence of, the consummation of the proposed transaction.

     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(q) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the record
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 NASDAQ or, if the Rights are not listed or admitted to trading on the NASDAQ, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are listed or admitted to
trading, or if the Rights are not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors. If on any such date no such market maker is making
a market in the Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors shall be used.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than, except as provided in Section 7(c), fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of 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, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided, however, that such
agreement shall provide that the holders of such depositary receipts shall have the rights,
privileges and preferences to which they are entitled as beneficial owners of the shares of
Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred
Stock that are not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may pay to the record 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),

30

 

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 or distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock the Company may pay to the record
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 share of Common Stock. For
purposes of this Section 14(c), the current market value of one share of Common Stock shall be
determined in a manner set forth in Section 11(d)(i) hereof for the Trading Day immediately prior
to the date of such exercise.

          (d) The record holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares (other than, except as provided in Section
7(c), fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of a Right or to receive any certificates which evidence such Rights or shares,
except as permitted by this Section 14.

          (e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in
the form of fully collected funds to make such payments. The Rights Agent shall be fully protected
in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed
to have knowledge of any payment for fractional Rights or fractional shares under any Section of
this Agreement relating to the payment of fractional Rights or fractional shares unless and until
the Rights Agent shall have received such a certificate and sufficient monies.

     Section 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent, are vested in the respective record
holders of the Rights Certificates (and, prior to the Distribution Date, the record holders of the
Common Stock); and any record 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 record 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 record
holders of Rights, it is specifically acknowledged that such holders of Rights would not have an
adequate remedy at law for any breach by the Company of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against actual or
threatened violations by the Company of the obligations hereunder of any Person subject to this
Agreement. After a Triggering Event, holders of Rights shall be entitled to reissue the reasonable
costs and expenses, including attorneys’ fees, incurred by them to enforce the provisions of this
Agreement.

31

 

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

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

          (b) after the Distribution Date, the Rights Certificates are transferable only on the transfer
books of the Rights Agent if surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate
forms and certificates 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 on the transfer books of the Rights Agent as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be required to be affected by any notice to the contrary;

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

          (e) Rights that become Beneficially Owned by the Persons specified in Section 7(e) hereof are
automatically null and void pursuant to that Section.

     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.

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     Section 18. Concerning the Rights Agent.

          (a) The Company agrees to pay to the Rights Agent reasonable compensation as shall be agreed
upon in writing between the Company and the Rights Agreement for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the preparation, negotiation, execution, delivery,
amendment and administration of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent including its members, directors,
officers, employees, shareholders and agents, for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including,
without limitation, the reasonable fees and expenses of legal counsel) incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent (each as determined by
a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction),
for any action taken, suffered or omitted by the Rights Agent in connection with the acceptance,
administration, exercise and performance of its duties under this Agreement, including, without
limitation, the costs and expenses of defending against and appealing any claim of liability
arising therefrom, directly or indirectly. The provisions of this Section 18 and Section 20 below
shall survive the exercise or expiration of the Rights, the termination of this Agreement, or the
resignation or removal of the Rights Agent. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company.

          (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its acceptance and
administration of this Agreement and the exercise and performance of its duties hereunder, in
reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed, and where necessary, verified, guaranteed 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 Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided, that such Person would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent 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

33

 

name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.

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

     Section 20. Rights and Duties of Rights Agent. The Rights Agent undertakes to perform
the duties and obligations expressly imposed by this Agreement, and no implied duties or
obligations, upon the following terms and conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:

          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company
or an employee of the Rights Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it and in accordance with
such advice or opinion.

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “Current Market Price”) be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by the Chairman of the Board, any
Vice Chairman, the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by
it under the provisions of this Agreement in reliance upon such certificate.

          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Anything
to the contrary notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage. Any liability of the Rights Agent under this Rights Agreement will be limited
to the amount of fees paid by the Company to the Rights Agent.

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

34

 

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

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

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

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

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

          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself (through its directors, officers or employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, omission,

35

 

default, neglect or misconduct, absent gross negligence or bad faith (each as determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction) 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 it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

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

          (l) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any
holders of shares of Common Stock for interest or earnings on any moneys held by the Rights Agent
pursuant to this Agreement.

          (m) The Rights Agent shall not be required to take notice or be deemed to have notice of any
event or condition hereunder, including, but not limited to, a Distribution Date, a Redemption
Date, any adjustment of the Purchase Price of the Common Stock, and adjustment to the Purchase
Price of the Preferred Stock, the existence of an Acquiring Person or any other event or condition
that may require action by the Rights Agent, unless the Rights Agent shall be specifically notified
in writing of such event or condition by the Company, and all notices or other instruments required
by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received
by the Rights Agent as specified in Section 26 hereof, and in the absence of such notice so
delivered, the Rights Agent may conclusively assume no such event or condition exists.

     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 shall provide notice thereof to each transfer agent of the
Common Stock or Preferred Stock known to the Rights Agent by registered or certified mail and to
the holders of the Rights Certificates in accordance with Section 26 hereof, or if prior to the
Distribution Date, to the holders of Rights through any filing made by the Company pursuant to the
Exchange Act. 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 shall provide notice thereof to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and to the holders of the Rights Certificates in accordance
with Section 26 hereof, or, if prior to the Distribution Date, to the holders of Rights through any
filing made by the Company pursuant to the Exchange Act. 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 record holder of
a Rights Certificate (who shall, with such notice, submit his

36

 

Rights Certificate for inspection by the Company), then the Company shall become the Rights
Agent until a successor Rights Agent has been appointed, and any record holder of any Rights
Certificate or the Rights Agent may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a Person organized and doing business under the laws of the United
States or of the State of Arizona or the State of New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking institution in the
State of Arizona or the State of New York), in good standing, and is subject to supervision or
examination by federal or state authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a Person
described in clause (a). After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates in accordance with Section
26 hereof, or, if prior to the Distribution Date, give notice to the holders of Rights through any
filing made by the Company pursuant to the Exchange Act. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

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

37

 

     Section 23. Redemption and Termination.

     (a) The Board of Directors, at its option, at any time prior to the earlier of (i) the close
of business on the tenth Business Day 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), or (ii) the time at which the Rights expire pursuant to
this Agreement, redeem all but not less than all the then outstanding Rights at a redemption price
of $0.001 per Right (such redemption price being hereinafter referred to as the “Redemption
Price”). 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. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market Price of the Common
Stock at the time of redemption) or any other form of consideration deemed appropriate by the Board
of Directors. The redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may establish.

     (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights pursuant to Section 23(a) (or at such later time as the Board of Directors may establish for
the effectiveness of such redemption), notice of which shall have been provided to the Rights
Agent, and without any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action by the Board of Directors ordering the
redemption of the Rights becoming effective, the Company shall provide notice of such redemption to
the holders of the then outstanding Rights, with prompt written notice thereof to the Rights Agent,
each in accordance with Section 26 hereof (provided that the failure to provide, or any defect in,
such notice shall not affect the legality or validity of such redemption). Any notice which is
provided in the manner herein provided shall be deemed given, whether or not the record holder
receives the notice. Each such notice of redemption will state the method by which the payment of
the Redemption Price will be made.

     Section 24. Exchange.

          (a) The Board of Directors may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of Section 7(e)
hereof) 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”), provided that the shares of Common Stock so exchanged shall be of the same class or
series which the holders of such Rights would have been entitled to receive upon the exercise
thereof. Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than an Exempted Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of Voting Securities of the
Company then outstanding representing 50% or more of the Voting Power of the Company.

38

 

          (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 24(a) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of the holders 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, provided that the shares of Common Stock so
exchanged shall be of the same class or series which the holder of such Rights would have been
entitled to receive upon the exercise thereof. The Company shall promptly make a public
announcement of any such exchange (with prompt written notice thereof to the Rights Agent);
provided, however, that the failure to make, or any defect in, such public announcement shall not
affect the legality or validity of such exchange. Promptly after the action of the Board of
Directors ordering the exchange of the Rights becoming effective, the Company shall provide notice
of such exchange to the holders of the then outstanding Rights in accordance with Section 26 hereof
(provided that the failure to give, or any defect in, such notice shall not affect the validity of
such exchange). Any notice which is mailed in the manner provided in Section 26 hereof shall be
deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock 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 based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.

          (c) In the event that there shall not be authorized and unissued shares of the applicable
class or series of Common Stock and/or authorized and issued shares of the applicable class or
series of Common Stock held in its treasury sufficient to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such action as may be
necessary to authorize additional shares of the applicable class or series of Common Stock for
issuance upon exchange of the Rights. In the event the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize such additional shares of the
applicable class or series of Common Stock, the Company shall substitute, for each share of such
class or series of Common Stock that would otherwise be issuable upon exchange of a Right, a number
of shares of the applicable series of Preferred Stock or fraction thereof (subject to Section 14(b)
hereof) such that the Current Market Price per share of the applicable series of Preferred Stock
multiplied by such number or fraction is equal to the Current Market Price per share of such class
or series of Common Stock as of the date of issuance of such shares of such series of Preferred
Stock or fraction thereof.

          (d) 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, the Company shall pay to the registered holders of the Rights
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 Price per share of the
applicable class or series of Common Stock as of the Trading Day immediately prior to the record
date of exchange pursuant to this Section 24.

39

 

     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(p) 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(p) 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 and to the Rights Agent, 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 ten (10) 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 ten (10) days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.

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

     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) or by facsimile transmission as follows:

Meadow Valley Corporation

4602 E. Thomas Road

Phoenix, Arizona 85018

Attention: Chief Executive Officer

Facsimile No: (602) 437-1681

40

 

With a copy to:

Squire Sanders & Dempsey LLP

Two Renaissance Square

40 North Central Avenue

Phoenix, Arizona 85004-4498

Attention: Gregory R. Hall, Esq.

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 upon receipt by the Rights Agent, if sent by registered or
certified mail, postage prepaid, addressed (until another address is filed in writing with the
Company) or by facsimile transmission as follows:

Corporate Stock Transfer, Inc., as Rights Agent

3200 Cherry Creek Drive South

Suite 430

Denver, CO 80209

Attention: Carylyn Bell

Facsimile No: (303) 282-5800

With a copy to:

Corporate Stock Transfer, Inc., as Transfer Agent

3200 Cherry Creek Drive South

Suite 430

Denver, CO 80209

Attention: Carylyn Bell

Facsimile No: (303) 282-5800

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 as held and maintained by the Rights Agent (or, if prior to
the Distribution Date, on the registry books of the transfer agent for the Common Stock of the
Company).

     Section 27. Supplements and Amendments. Subject to the provisions 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 without the approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, but subject to the provisions 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 Certificates in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder,

41

 

or (iv) change or supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or amendment adversely affects the
interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person) and no such amendment may cause the Rights again to become
redeemable or cause the Agreement again to become amendable other than in accordance with this
sentence. Upon the delivery of a certificate from an appropriate officer of the Company and, if
requested by the Right Agent, an opinion of counsel, which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment; provided, however, that the Rights Agent may, but shall not be obligated
to, enter into any such supplement or amendment which adversely affects the Rights Agent’s own
rights, duties, obligations or immunities under this Agreement and the Rights Agent shall not be
bound by supplements or amendments not executed by it. 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. Determinations and Actions by the Board of Directors, Etc. For all
purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at
any particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as amended and in effect on the date hereof. The Board of Directors, except as
otherwise specifically provided for herein, shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically granted to the Board
of Directors or to the Company, 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 the Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates (and, prior to the
Distribution Date, record holders of the Common Stock) and all other parties, and (y) not subject
the Board of Directors to any liability to the holders of the Rights. The Rights Agent is entitled
always to assume the Company’s Board of Directors acted in good faith and shall be fully protected
and incur no liability in reliance thereon.

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

42

 

the sole and exclusive benefit of the Company, the Rights Agent and the record holders of the
Rights Certificates (and, prior to the Distribution Date, record holders of the Common Stock).

     Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the purpose or effect of
this Agreement, 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 Business Day (or such longer period of
time as permitted pursuant to Section 27 of this Agreement) following the date of such
determination by the Board of Directors. Without limiting the foregoing, if any provision
requiring that a determination be made by less than the entire Board of Directors (or at a time or
with the concurrence of a group of directors consisting of less than the entire Board of Directors)
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board of Directors in accordance with
applicable law and the Company’s Certificate of Incorporation and Bylaws.

     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 Nevada and
for all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State; provided, however,
that all provisions regarding the rights, duties, obligations and immunities of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely within such State.

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

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

43

 

     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.

	 	 	 	 	 
	 	MEADOW VALLEY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Bradley E. Larson 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	CORPORATE STOCK TRANSFER, INC., as Rights Agent
	 
	 	By:  	 	 
	 	 	Name:  	Carylyn Bell 	 
	 	 	Title:  	Principal 	 

 

 

	 	 	 	 	 

EXHIBIT A

CERTIFICATE OF DESIGNATION

OF SERIES A PARTICIPATING PREFERRED STOCK

OF

MEADOW VALLEY CORPORATION

     Pursuant to Sections 78.195 and 78.1955 of the Nevada Revised Statutes, Meadow Valley
Corporation, a Nevada corporation (the “Corporation”), in accordance with the provisions of
Sections 78.195 and 78.1955 of the Nevada Revised Statutes, DOES HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the Articles of
Incorporation, as amended, of the Corporation, the Board of Directors on February 13, 2007, adopted
the following resolutions creating a series of One Hundred Thousand (100,000) shares of Preferred
Stock, par value $.001 per share, designated as the Series A Participating Preferred Stock
(hereinafter referred to as “Series A Preferred Stock”):

Designation of Preferred Stock

     RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation
by the provisions of the Articles of Incorporation of the Corporation, as amended, (the “Articles
of Incorporation”), there is hereby created a series of Preferred Stock, par value $0.001 per
share, consisting of One Hundred Thousand (100,000) shares of Series A Participating Preferred
Stock, $0.001 par value per share, of the Corporation; and

     FURTHER RESOLVED, that the Series A Preferred Stock shall have the powers, preferences,
rights, qualifications, limitations and restrictions set forth in the Certificate of Designation of
Series A Participating Preferred Stock (“Certificate of Designation”) which Certificate of
Designation provides as follows:

     Section 1. Designation and Amount. The shares of such series shall be designated as
the Series A Participating Preferred Stock (hereinafter referred to as “Series A Preferred Stock”)
and the number of shares constituting such series shall be One Hundred Thousand (100,000). Such
number of shares may be increased or decreased by resolution of the Board of Directors, provided
that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding rights to purchase or convert into shares of Series A Preferred Stock.

     Section 2. Dividends and Distributions.

          (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Preferred Stock with respect
to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of
Common Stock, par value $0.001 per share (the “Common Stock”), of the Corporation and of any other
class of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding
up) to the shares of Series A Preferred Stock, together with

A-1

 

Common Stock (“Junior Stock”), shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, dividends payable in cash in an
amount per share (rounded to the nearest cent), equal to the product of the Series A Multiple (as
defined below) times the aggregate per share amount of all other cash dividends, plus the product
of the Series A Multiple times the aggregate per share amount (payable in cash, based upon the fair
market value at the time the non-cash dividend or other distribution is declared as determined in
good faith by the Board of Directors) 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 (but not withdrawn) on the Common Stock.

          (B) As used herein, the “Series A Multiple” shall initially be 1,000. In the event the
Corporation shall (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Series A Multiple 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.

          (C) The Board of Directors of the Corporation shall not declare a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common Stock) unless it shall
concurrently therewith declare a dividend or distribution on the Series A Preferred Stock. Payment
of a dividend or distribution determined on the Series A Preferred Stock shall be in preference to
payment of any dividend or distribution on the Common Stock or any Junior Stock.

          (D) The Board of Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than thirty (30) days prior to the date fixed for the
payment thereof.

     Section 3. Voting Rights. Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock shall have the following voting rights:

          (A) Each share of Series A Preferred Stock shall entitle the holder thereof to a number of
votes equal to the product of the Series A Multiple then in effect times the number of votes that
each share of Common Stock entitles its holder to vote at such meeting of the stockholders of the
Corporation.

          (B) 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.

A-2

 

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

     Section 4. Certain Restrictions.

          (A) Whenever 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
on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:

               (i) declare or pay dividends (other than a dividend payable in shares of Common Stock) on,
make any other distributions on, or redeem or purchase or otherwise acquire for consideration any
shares of Junior Stock;

               (ii) declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock (“Parity 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 Parity Stock,
provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any
such Parity Stock in exchange for shares of any Junior Stock; or

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

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

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

A-3

 

     Section 6. Liquidation, Dissolution or Winding Up.

          (A) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of the shares of the Series A Preferred Stock shall be entitled to
receive, in preference to the holders of Junior Stock, the greater of (a) $1,000 per share, plus
accrued dividends to the date of distribution, whether or not earned or declared, or (b) an amount
per share equal to the product of the Series A Multiple then in effect times the aggregate amount
to be distributed per share to holders of Common Stock.

          (B) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Parity Stock shall not receive any distributions except for
distributions made ratably on the Series A Preferred Stock and all other 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.

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

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

     Section 9. Ranking. The Series A Preferred Stock shall rank junior to all other
series of the Corporation’s Preferred Stock, or any similar stock that specifically provides that
it shall rank prior to the shares of Series A Preferred Stock, as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide otherwise. Nothing
herein shall preclude the Board of Directors from creating any series of Preferred Stock or any
similar stock ranking on a parity with or prior to the shares of Series A Preferred Stock as to the
payment of dividends or the distribution of assets.

     Section 10. 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 voting rights, receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock.

     Section 11. Amendment. The Articles of Incorporation, as amended, including this
Certificate of Designation establishing the shares of the Series A Preferred Stock, 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 two-thirds or more of the outstanding shares of Series A Preferred Stock voting
separately as a class.

A-4

 

     IN WITNESS WHEREOF, this Certificate is executed on behalf of the Corporation as of this
13th day of February, 2007.

	 	 	 
	 
	 	 
	 

	 	 
	 

	 	Bradley E. Larsen
	 

	 	Chief Executive Officer

A-5

 

EXHIBIT B

FORM OF RIGHTS CERTIFICATE

			
	 	 	 
	Certificate No. R-
	 	                     Rights

NOT EXERCISABLE AFTER FEBRUARY 13, 2017 OR EARLIER IF REDEEMED BY THE COMPANY OR THE OCCURRENCE OF
A SECTION 11(a)(ii) EVENT (AS DEFINED IN THE RIGHTS AGREEMENT). THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL 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) OR A SUBSEQUENT HOLDER OF SUCH RIGHTS. ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY SHALL BECOME, OR MAY ALREADY HAVE BECOME, NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT AND MAY NOT BE TRANSFERRED TO ANY
PERSON.*

RIGHTS CERTIFICATE

MEADOW VALLEY CORPORATION

     This certifies that                                                             , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement, dated as of February 13, 2007, as it
may from time to time be supplemented or amended (the “Rights Agreement”), between Meadow Valley
Corporation, a Nevada corporation (the “Company”), and Corporate Stock Transfer, Inc, a Colorado
corporation, the Rights Agent (the “Rights Agent”), to purchase from the Company at any time prior
to 5:00 P.M. (New York City time) on February 13, 2017 (the “Final Expiration Date”) at the office
of the Rights Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series A Participating Preferred Stock (the
“Preferred Stock”) of the Company, at a purchase price of $50.00 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 and properly completed. The number of
Rights evidenced by this Rights Certificate (and the number of one one-thousandth of a share which
may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of February 15, 2007, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase Price, the number and
kind of shares of Preferred Stock or other securities of the Company or any other Person (as such
term is defined in the Rights Agreement) or other property, which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate, and the timing of

B-1

 

permitted exercise, are subject to modification and adjustment upon the happening of certain
events including a Triggering Event (as such term is defined in the Rights Agreement).

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

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

     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Preferred Stock or other
securities of the Company or another Person or other property 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 the close of business on (i) the tenth business day following the Stock
Acquisition Date, and (ii) the Final Expiration Date. In addition, subject to the provisions of the
Rights Agreement, each Right evidenced by this Certificate may be exchanged by the Company at its
option for one share of Common Stock of the Company (subject to adjustment for any stock split,
stock dividend or similar transaction) following the Stock Acquisition Date and prior to the time
an Acquiring Person owns 50% or more of the shares of Common Stock then outstanding.

     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.

B-2

 

     No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of 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 ____________, 20__. 	MEADOW VALLEY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	ATTEST:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Name:	 	 
	Title:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Countersigned:	 	 
	 
	 	 	 	 
	 ,
	 	 
	 	 	 
	as Rights Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

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 by checking the appropriate boxes that:

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

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

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: MEADOW VALLEY CORPORATION:

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

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

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

 

EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

Declaration of Rights Dividend

     On February 13, 2007, the Board of Directors of the Company declared a dividend distribution
of one Right for each outstanding share of Common Stock, $0.001 par value per share, of the Company
(“Common Stock”). The dividend is payable on February 15, 2007 to shareholders of record at the
close of business on that date (the “Record Date”). Each Right entitles the registered holder
thereof to purchase from the Company at any time following the Distribution Date (as defined below)
a unit consisting of one one-thousandths of a share (a “Unit”) of Series A Participating Preferred
Stock, $0.001 par value per share (the “Preferred Stock”), at a purchase price of $50.00 per Unit
(the “Purchase Price”), subject to adjustment as described below. The Rights are not exercisable
until the Distribution Date. The description and terms of the Rights are set forth in the Rights
Agreement

     Rights will also be issued with respect to shares of Common Stock issued by the Company or
transferred from the Company’s treasury after February 15, 2007 and prior to the Distribution Date,
and, under certain circumstances, Rights will be issued with respect to shares of Common Stock
issued or transferred by the Company after the Distribution Date.

Rights Initially Attached To and Trade with Common Stock

     Until the earlier of the Distribution Date or the date the Rights are redeemed or expire:

     (1) the Rights will be evidenced by Common Stock certificates and no separate Rights
Certificates will be distributed,

     (2) the Rights will be transferable only in connection with the transfer of the underlying
shares of Common Stock,

     (3) the surrender for transfer of any Common Stock certificate (with or without a copy of this
Summary of Rights attached thereto) will also constitute the transfer of the Rights associated with
the shares of Common Stock represented by such certificate, and

     (4) new Common Stock certificates issued after February 15, 2007 will contain a notation
incorporating the Rights Agreement by reference. Shareholders will not be required to take any
action in connection with the payment of the Rights dividend on February 15, 2007.

When Rights Separate from Common Stock and Become Exercisable

     Initially, the Rights will be attached to all certificates representing shares of Common Stock
then outstanding, and no separate certificates evidencing the Rights will be distributed. The
Rights will separate from the Common Stock and become exercisable on the Distribution Date. As
soon as practicable after the Distribution Date, Rights Certificates will be mailed to

C-1

 

holders of record of the Common Stock as of the close of business on the Distribution Date,
and thereafter the separate Rights Certificates will represent the Rights.

     The “Distribution Date” will occur upon the earlier of (1) ten business days after the Stock
Acquisition Date (as defined below) or (2) ten business days (or such later date as the Board shall
determine prior to such time as there is an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender or exchange offer, the consummation of which would
result in a Person becoming an Acquiring Person (as defined below).

     The “Stock Acquisition Date” means the earlier of (i) the date of the first public
announcement by the Company or an Acquiring Person that an Acquiring Person has become such or (ii)
the date on which the Company has actual notice, direct or indirect, or otherwise determines that a
Person has become an Acquiring Person.

     Under the Rights Agreement, an “Acquiring Person” is a Person who, together with all
affiliates and associates of such Person, and without the prior written approval of the Company, is
the Beneficial Owner (as defined in the Rights Agreement) of 15% or more of the outstanding shares
of Common Stock of the Company, subject to a number of exceptions set forth in the Rights
Agreement. The Rights Agreement exempts certain persons from the definition of “Acquiring Person,”
including (1) person who acquire shares in a Permitted Offer (as defined below), (2) the Company or
any subsidiary of the Company, and (3) any employee benefit plan of the Company or any subsidiary
and certain persons appointed pursuant to the terms of any such plan. Under the Rights Agreement,
a Person shall not be an Acquiring Person if such Person acquires beneficial ownership of 15% or
more of the outstanding shares of Common Stock pursuant to a Permitted Offer, which is a cash
tender offer for all of the outstanding shares of Common Stock which meets certain conditions
specified in the Rights Agreement. The Rights Agreement also contains exceptions for Persons who
inadvertently become Acquiring Persons or who exceed the ownership limits as a result of
repurchases of stock by the Company, if certain conditions are satisfied.

     As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent the Rights. Except in certain
circumstances specified in the Rights Agreement or as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date will be issued with
Rights.

Adjustment of Rights upon Occurrence of a Triggering Event

     In the event that a Person becomes an Acquiring Person, each holder of a Right (except the
Acquiring Person and certain other persons as described below) will no longer have the right to
purchase Units of Preferred Stock, but instead will thereafter have the right to receive, upon
exercise of the Right, shares of Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a Current Market Price (as defined in the Rights Agreement)
equal to two times the then current exercise price of the Right. For example, at a Purchase Price
of $50.00 per Right, each Right not owned by an Acquiring Person would entitle

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its holder to purchase $100.00 worth of Common Stock (or other consideration, as noted above)
for $50.00. Assuming that the Common Stock has a per share value of $10.00 at such time, the
holder of each valid Right would be entitled to purchase 10 shares of Common Stock for $50.00.
Once a Person becomes an Acquiring Person, all Rights that are, or under certain circumstances
were, beneficially owned by such Acquiring Person (or certain related parties) will be null and
void.

     A “Permitted Offer” is a tender offer or exchange offer for (i) all outstanding shares of
Common Stock which remains open for at least sixty (60) calendar days, the consideration offered is
cash that is fully financed or a publicly traded security, (ii) that is accepted by the holders of
at least a majority of the then outstanding shares but excluding therefrom any shares beneficially
owned by the Person for whose benefit the tender offer or exchange offer is being made and its
Affiliates and Associates, (iii) that follows an irrevocable written commitment to the Company by
the Person for whose benefit the offer is made to consummate a transaction promptly upon the
completion of such offer in which the consideration offered is cash that is fully financed or a
publicly traded security and whereby all shares of Common Stock not purchased in the offer shall be
acquired at the same price per share as paid in such offer and that such Person will not make any
amendment to the original offer which reduces the per share price offered or which is in any other
respect materially adverse to the holders of Common Stock (other than the Person on whose behalf
such offer is being made and such Person’s Affiliates and Associates), (iv) that is determined,
prior to the purchase of shares pursuant to the tender offer or exchange offer, by the Company’s
Board of Directors that the price and other terms of that tender offer or exchange offer are fair
(taking into account all factors which the Board of Directors may deem relevant, including the
Company’s long-term prospects and prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) to stockholders (other than
the Person on whose behalf the tender offer is being made and its Affiliates and Associates) and is
otherwise in the best interests of the Company and its stockholders (other than the person on whose
behalf the tender offer or exchange offer is being made and its Affiliates and Associates) taking
into account all factors the Board of Directors may deem relevant, (v) the Company’s Board of
Directors has received an opinion from one or more nationally recognized investment banking firm
selected by the Company’s Board of Directors that the price offered is fair from a financial point
of view, and (vi) the Company’s Board of Directors has taken the action contemplated by clause (iv)
by at least a majority of directors who are independent (within the meaning of Rule 4200 of the
NASDAQ Stock Market rules and under applicable Nevada case law) and disinterested (i.e., the
directors are neither the Acquiring Person or a Person on whose behalf the tender offer is being
made, nor an Affiliate, Associate, nominee or representative of the Acquiring Person or a Person on
whose behalf the tender offer is being made). However, at the option of the Board of Directors of
the Company, during such time as an Acquiring Person Beneficially Owns an amount of stock less than
50% of the outstanding Common Stock, the Company may exchange, in whole or in part, each right of
each holder (other than the Acquiring Person or the Acquiring Person’s Affiliate or Associates or
their subsequent holders) for one share of Common Stock. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, Beneficially Owned by any Acquiring
Person (or any Affiliate or Associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right

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(including any purported transferee or subsequent holder) will be unable to exercise or
transfer any such right.

     An “Affiliate” of a Person (as such term is defined in the Rights Agreement) is a Person that
directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is
under common control with, the Person specified. An “Associate” of a Person shall mean (i) with
respect to a corporation (other than the Company or a majority-owned Subsidiary of the Company),
any officer or director thereof or of any Subsidiary (generally a Person as to whom another Person
has the right to elect a majority of the directors or others with similar authority) thereof, or
any Beneficial Owner of 10% or more of any class of equity security thereof, (ii) with respect to
an association, joint venture or other unincorporated organization, any officer or director thereof
or of a Subsidiary thereof or any Beneficial Owner of 10% or more ownership interest therein, (iii)
with respect to a partnership, any general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 10% or greater ownership interest therein, (iv)
with respect to a limited liability company, any officer, director or manager thereof or of a
Subsidiary thereof or any member thereof who is, directly or indirectly, the Beneficial Owner of a
10% or greater ownership interest therein, (v) with respect to a business trust, any officer or
trustee thereof or of any Subsidiary thereof, (vi) with respect to any other trust or an estate,
any trustee, a beneficiary in the income from or principal of such trust or estate, (vii) with
respect to a natural person, any relative or spouse of such person, or any a relative of such
spouse, who has the same home as such person, and (viii) any Affiliate of such Person.

     In the event that, at any time after the Stock Acquisition Date, (1) the Company is acquired
in a merger or other business combination transaction in which the Company is not the surviving
corporation (other than a merger which follows a Permitted Offer and satisfies certain other
requirements), or (2) 50% or more of the Company’s assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, Common Stock of the acquiring company having a
Current Market Price equal to two times the then current Purchase Price of the Right. The events
set forth in this paragraph and in the first paragraph of this section which allow Rights to be
exercised are referred to individually as a “Triggering Event” and collectively as “Triggering
Events.”

Exchange of Rights

     At any time after any Person becomes an Acquiring Person, the Board of Directors of the
Company may, at its option, exchange the Rights (except Rights which previously have been voided as
set forth above), in whole or in part, at an exchange ratio of one share of Common Stock for each
Right, subject to adjustment for any stock split, stock dividend or similar transaction occurring
after February 15, 2007. The Board of Directors may not cause the exchange of Rights at any time
after any Person, together with such person’s affiliates and associates, becomes the beneficial
owner of 50% or more of the shares of Common Stock then outstanding, with certain exceptions.

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Redemption of Rights

     At any time prior to the earlier of the close of business on the tenth business day after a
Stock Acquisition Date and the time the Rights expire pursuant to the Rights Agreement, the Company
may order that all Rights be redeemed at a price of $.001 per Right (payable in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors), subject to adjustment for any
stock split, stock dividend or similar transaction occurring after February 15, 2007 (the
“Redemption Price”). Immediately upon the effectiveness of the action of the Board of Directors
ordering redemption of the Rights, the right to exercise the Rights will terminate and the holders
of the Rights will only be entitled to receive the Redemption Price for each Right so held.

Amendment of Rights

     At any time and from time to time while the Rights are redeemable by the Company, the Company
may amend the Rights in any manner without the approval of any holders of Rights. At any time when
the Rights are no longer redeemable, the Company may supplement or amend the Rights without the
approval of any holders of the Rights, provided that no such supplement or amendment adversely
affects the interests of the holders of Rights as such (other than an Acquiring Person or an
affiliate or associate of an Acquiring Person).

Terms of Preferred Stock

     Each Unit of Preferred Stock (consisting of one one-thousandths of a share of Preferred Stock)
that is issuable upon exercise of the Rights after the Distribution Date and prior to the
occurrence of a Triggering Event is intended to have approximately the same economic rights and
voting power as a share of Common Stock, and the value of a Unit of Preferred Stock should
approximate the value of one share of Common Stock. Each share of Preferred Stock will be entitled
to dividend payments equal to 1000 times the other cash dividends plus 1000 times the aggregate per
share amount of all non-cash dividends (other than a dividend payable in Common Stock) declared per
share of Common Stock. In the event of liquidation, the holders of shares of Preferred Stock will
be entitled to the greater of (a) a minimum preferential liquidation payment of $1,000 per share,
or (b) 1,000 times the aggregate amount to be distributed per share of Common Stock. Each share of
Preferred Stock will have 1000 votes, voting together with, and on the same matters as, the Common
Stock. In the event of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged for or changed into other stock, securities, cash and/or other property, each
share of Preferred Stock will be entitled to receive 1000 times the amount received per share of
Common Stock. These rights are protected by customary anti-dilution provisions. Shares of
Preferred Stock are not redeemable. Pursuant to the Rights Agreement, the Company reserves the
right to require, prior to the occurrence of a Triggering Event, that upon any exercise of Rights a
number of Rights be exercised so that only whole shares of Preferred Stock will be issued.

Adjustment of Rights and Securities Upon Certain Events

     The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to

C-5

 

time to prevent dilution (1) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, or (2) upon the distribution to holders of
the Preferred Stock of certain rights, options, warrants, evidences of indebtedness or assets
(excluding regular quarterly cash dividends). No adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least 1% of the Purchase Price.

     The number of outstanding Rights attached to each share of Common Stock and the number of
Units of Preferred Stock purchasable upon exercise of a Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common Stock payable in
shares of Common Stock or a subdivision or combination of the shares of Common Stock, occurring
prior to the Distribution Date.

     The Company is not required to issue fractional Units; in lieu thereof, the Company may pay
cash for such fractional Units based on the market price of the Preferred Stock on the last trading
date prior to the date of issuance.

Rights Holder Not a Shareholder

     Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive dividends. The
holders of Rights will be able to vote and receive dividends on the Common Stock that they hold.

Tax Consequences

     While the current distribution of the Rights will not be taxable to shareholders or to the
Company, shareholders might, depending upon the circumstances, realize taxable income in the event
that the Rights become severable from the Common Stock and will likely realize taxable income in
the event such Rights become exercisable for Common Stock of the acquiring company as set forth
above or are exchanged as provided above.

Expiration of Rights

     The Rights will expire at the close of business on February 13, 2017, unless the Company
redeems or exchanges the Rights prior to such date, in each case as described above.

Number of Rights to be Outstanding

     As of February 15, 2007, there were 15,000,000 shares of Common Stock authorized and
approximately 5,124,092 shares issued and outstanding. Approximately 580,990 shares have been
reserved for issuance pursuant to employee benefit plans and pursuant to warrants issued by the
Company. Each share of Common Stock outstanding at the close of business February 15, 2007 will
receive one Right. Rights will also be issued with respect to shares of Common Stock issued or
transferred by the Company after February 15, 2007 and prior to the Distribution Date, and, under
certain circumstances, Rights will be issued with respect to shares of Common Stock issued or
transferred by the Company after the Distribution Date.

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Rights Agreement

     This summary description of the Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement and the exhibits thereto, filed herewith as Exhibit
1, which is incorporated herein by reference.

C-7

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