Document:

exv4w1

 

Exhibit 4.1

PACKETEER, INC.

AND

COMPUTERSHARE TRUST COMPANY, N.A.

as Rights Agent

RIGHTS AGREEMENT

Dated as of APRIL 1, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	Page
	 
	1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	2. Appointment of Rights Agent
	 	 	6	 
	 
	 	 	 	 
	3. Issuance of Right Certificates
	 	 	6	 
	 
	 	 	 	 
	4. Form of Right Certificates
	 	 	8	 
	 
	 	 	 	 
	5. Countersignature and Registration
	 	 	8	 
	 
	 	 	 	 
	6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
	 	 	9	 
	 
	 	 	 	 
	7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	10	 
	 
	 	 	 	 
	8. Cancellation and Destruction of Right Certificates
	 	 	11	 
	 
	 	 	 	 
	9. Reservation and Availability of Shares of Preferred Stock
	 	 	11	 
	 
	 	 	 	 
	10. Preferred Stock Record Date
	 	 	13	 
	 
	 	 	 	 
	11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price
	 	 	13	 
	 
	 	 	 	 
	12. Certification of Adjustments or Number of Shares
	 	 	22	 
	 
	 	 	 	 
	13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	22	 
	 
	 	 	 	 
	14. Fractional Rights and Fractional Shares
	 	 	25	 
	 
	 	 	 	 
	15. Rights of Action
	 	 	26	 
	 
	 	 	 	 
	16. Agreement of Right Holders
	 	 	27	 
	 
	 	 	 	 
	17. Right Certificate Holder Not Deemed a Stockholder
	 	 	27	 
	 
	 	 	 	 
	18. Concerning the Rights Agent
	 	 	27	 
	 
	 	 	 	 
	19. Merger or Consolidation or Changed Name of Rights Agent
	 	 	28	 
	 
	 	 	 	 
	20. Duties of Rights Agent
	 	 	30	 
	 
	 	 	 	 
	21. Change of Rights Agent
	 	 	32	 
	 
	 	 	 	 
	22. Issuance of New Right Certificates
	 	 	33	 
	 
	23. Redemption
	 	 	34	 

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TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	Page
	 
	24. Exchange of Rights for Common Stock
	 	 	34	 
	 
	 	 	 	 
	25. Notice of Proposed Actions
	 	 	36	 
	 
	 	 	 	 
	26. Notices
	 	 	37	 
	 
	 	 	 	 
	27. Supplements and Amendments
	 	 	37	 
	 
	 	 	 	 
	28. Successors
	 	 	38	 
	 
	 	 	 	 
	29. Benefits of this Rights Agreement
	 	 	38	 
	 
	 	 	 	 
	30. Determinations and Actions by the Board of Directors
	 	 	38	 
	 
	 	 	 	 
	31. Governing Law
	 	 	39	 
	 
	 	 	 	 
	32. Counterparts
	 	 	39	 
	 
	 	 	 	 
	33. Descriptive Headings
	 	 	39	 
	 
	 	 	 	 
	34. Severability
	 	 	39	 

ii

 

RIGHTS AGREEMENT

     This Rights Agreement (the “Rights Agreement”), is dated as of April 1, 2008, between
Packeteer, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A. (the
“Rights Agent”).

W I T N E S S
E T H:

     WHEREAS, the Board of Directors of the Company on April 1, 2008 (i) authorized the issuance
and declared a dividend of one right (“Right”) for each share of the common stock, par value $0.001
per share, of the Company outstanding as of the Close of Business (as such term is hereinafter
defined) on April 14, 2008 (the “Record Date”), each Right representing the right to purchase one
one-thousandth of a share of Series A Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation attached hereto as Exhibit A upon
the terms and subject to the conditions hereinafter set forth, and (ii) further authorized and
directed the issuance of one Right with respect to each share of Common Stock of the Company that
shall become outstanding between the Record Date, and the Distribution Date (as such term is
hereinafter defined);

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

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

          (a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such
term is hereinafter defined) of such Person shall be the Beneficial Owner (as such term is
hereinafter defined) of fifteen percent (15%) or more of the outstanding Common Stock of the
Company, without the prior approval of the Board of Directors; provided, however, that in no event
shall a Person who or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of less than 15% of the Company’s outstanding Common Stock, become an Acquiring
Person solely as a result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company, which reduction
increases the percentage of outstanding shares of Common Stock Beneficially Owned by such Person,
provided, further, that if a Person shall become the Beneficial Owner of 15% or
more of the Company’s outstanding Common Stock then outstanding solely by reason of a reduction of
the number of shares of outstanding Common Stock, and shall thereafter become the Beneficial Owner
of any additional shares of Common Stock of the Company, then such Person shall be deemed to be an
Acquiring Person unless upon the consummation of the acquisition of such additional shares of
Common Stock such person does not own 15% or more of the shares of Common Stock then outstanding.
An Acquiring Person shall not include an Exempt Person (as such term is hereinafter defined).
Notwithstanding the foregoing, if (i) either (X) the Board of Directors determines in good faith
that a Person who would otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently (including, without limitation,

 

 

because (A) such Person was unaware that it Beneficially Owned a percentage of Common Stock that
would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the
extent of its Beneficial Ownership but had no actual knowledge of the consequences of such
Beneficial Ownership under this Rights Agreement) and without any intention of changing or
influencing control of the Company, or (Y) within two Business Days of being requested by the
Company to advise the Company regarding same, such Person certifies in writing that such Person
acquired Beneficial Ownership of 15% or more of the Company’s outstanding Common Stock
inadvertently or without knowledge of the terms of the Rights, and (ii) such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that such Person would no
longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph
(a), then such Person shall not be deemed to be or to have become an “Acquiring Person” for any
purposes of this Rights Agreement.

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

          (c) A Person shall be deemed the “Beneficial Owner” of, shall be deemed to “Beneficially Own”
and shall be deemed to have “Beneficial Ownership” of, any securities

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

               (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has (A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, to Beneficially Own
or to have Beneficial Ownership of, securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, or any comparable or successor rule), including pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however, that a Person shall
not be deemed the Beneficial Owner of, to Beneficially Own, or to have Beneficial Ownership of, any
securities if the agreement, arrangement or understanding to vote such security (1) 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 rules and regulations of the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

               (iii) which are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of

2

 

acquiring, holding, voting except as described in the proviso to clause (B) of subparagraph (ii) of this Section 1(c) or disposing of
any securities of the Company; provided, however, that no Person who is an officer,
director or employee of an Exempt Person shall be deemed, solely by reason of such Person’s status
or authority as such, to be the Beneficial Owner of, to have Beneficial Ownership of or to
Beneficially Own any securities that are Beneficially Owned (as defined in this Section 1(c)),
including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such
officer, director or employee of an Exempt Person.

     For all purposes of this Rights Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including any calculation 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 in effect on the date hereof.

          (d) “Board of Directors” shall mean the Company’s Board of Directors.

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

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

          (g) “Common Stock” when used with reference to the Company shall mean the common stock, par
value $0.001 per share, of the Company. “Common Stock” when used with reference to any Person
other than the Company which shall be organized in corporate form shall mean the capital stock or
other equity security with the greatest per share voting power of such Person or, if such Person is
a Subsidiary of or is controlled by another Person, the Person which ultimately controls such
first-mentioned Person. “Common Stock” when used with reference to any Person other than the
Company 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 per unit of such Person.

          (h) “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

          (i) “Company” shall have the meaning set forth in the preamble hereto.

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

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

3

 

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

          (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          (n) “Exempt Person” shall mean the Company or any Subsidiary of the Company, including,
without limitation, in its fiduciary capacity, any employee benefit plan or employee or director
stock plan of the Company or of any Subsidiary of the Company, or any Person, organized, appointed,
established or holding Common Stock for or pursuant to the terms of any such plan or any Person
funding other employee benefits for employees of the Company or any Subsidiary of the Company.

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

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

          (q) “Flip-In Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B) or
11(a)(ii)(C) hereof.

          (r) “Flip-In Exercise Payment” shall have the meaning set forth in Section 11(a)(ii) hereof.

          (s) “Flip-In Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.

          (t) “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section
13(a) hereof.

          (u) “Flip-Over Exercise Payment” shall have the meaning set forth in Section 13(a) hereof.

          (v) “NASDAQ” shall have the meaning set forth in Section 9(b) hereof.

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

          (x) “Preferred Stock” shall mean the Series A Preferred Stock, $0.001 par value per share of
the Company having the rights, powers and preferences set forth in Exhibit A hereto, and,
to the extent that there is not a sufficient number of shares of Series A Preferred Stock
authorized to permit the full exercise of the Rights, any other series of Preferred Stock, $0.001
par value per share, of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Preferred Stock.

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

4

 

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

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

          (bb) “Record Date” shall have the meaning set forth in the Recitals within this Rights
Agreement.

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

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

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

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

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

          (hh) “Stock Acquisition Date” shall mean the first date of public announcement by the Company
or an Acquiring Person that an Acquiring Person has become such or such earlier date as a majority
of the directors shall become aware of the existence of an Acquiring Person.

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

          (jj) “Subsidiary” of a Person shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power sufficient to elect a majority of the
board of directors or other persons performing similar functions are Beneficially Owned, directly
or indirectly, by such Person and any corporation or other entity that is otherwise controlled by
such Person.

          (kk) “Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.

          (ll) “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.

          (mm) “Triggering Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
or 11(a)(ii)(C) or Section 13 hereof.

          (nn) “Voting Power” shall mean the voting power of all securities of the Company then
outstanding and generally entitled to vote for the election of directors of the Company.

5

 

     Any determination required by the definitions contained in this Section 1 shall be made by the
Board of Directors in its good faith judgment, which determination shall be binding on the Rights
Agent and the holders of the Rights.

     2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as rights 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 a co-rights agent
as it may deem necessary or desirable, upon ten (10) days’ prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-rights agent. In the event the Company appoints one or more
co-rights agents, the respective duties of the Rights Agents and any co-rights agents shall be as
the Company shall determine.

     3. Issuance of Right Certificates.

          (a) Until the earlier of (i) the tenth day after the Stock Acquisition Date (or, if the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii)
the tenth Business Day (or such later date as may be determined by action of the Board of Directors
which is taken on or after the date hereof and prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than an Exempt Person)
of, or of the first public announcement of the intent of any Person (other than an Exempt Person)
to commence (which intention to commence remains in effect for five business days after such
announcement), a tender or exchange offer, including an offer commenced prior to the date hereof,
upon the successful consummation of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 15% or more of the outstanding Common Stock (irrespective of
whether any shares are actually purchased pursuant to any such offer) (including any such date
which is after the date of this Rights Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights will be
evidenced (with a copy of the Summary of Rights attached thereto) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock and not by separate Right
Certificates, and (y) each Right will be transferable only in
connection with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested 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, as shown by the records of the Company, to the address of such
holder shown on such records, a Right certificate in substantially the form of Exhibit B
hereto (a “Right Certificate”) evidencing one Right for each share of Common Stock so held. In the
event that an adjustment in the number of Rights per share of Common Stock has been made pursuant
to Sections 11 or 13 hereof, at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof), so that Rights Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the Distribution Date the Rights
will be evidenced solely by such Right Certificates. 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 the same in

6

 

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.

          (b) On the Record Date, or as soon as practicable thereafter, the Company will send a copy of
a Summary of Rights to Purchase Preferred Stock, substantially in the form attached hereto as
Exhibit C (a “Summary of Rights”), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company.

          (c) Rights shall be issued in respect of all shares of Common Stock that are issued (either as
an original issuance or from the Company’s treasury) after the Record Date prior to the earlier of
the Distribution Date or the Expiration Date. With respect to certificates representing such
shares of Common Stock, the Rights will be evidenced by such certificates for Common Stock
registered in the names of the holders thereof together with the Summary of Rights. Until the
Distribution Date (or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date (with or without a copy of the Summary
of Rights attached thereto), shall also constitute the surrender for transfer of the Rights
associated with the Common Stock represented thereby.

          (d) Certificates issued for Common Stock (including, without limitation, certificates issued
upon transfer or exchange of Common Stock) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend in substantially the following form:

This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Packeteer, Inc. and Computershare Trust Company, N.A.,
as Rights Agent, dated as of April 1, 2008, as the same may be amended or supplemented from
time to time (the “Rights Agreement”), the terms of which hereby are
incorporated herein by reference and a copy of which is on file at the principal executive
office of Packeteer, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights (as such term is defined in the Rights Agreement) will be evidenced
by separate certificates and will no longer be evidenced by this certificate. Packeteer,
Inc. will mail to the holder of this certificate a copy of the Rights Agreement without
charge after receipt by it of a written request therefor. Under certain circumstances as
provided in the Rights Agreement, Rights issued to, Beneficially Owned by or transferred to
any Person who is or becomes an Acquiring Person (as such terms are defined in the Rights
Agreement) or an Associate or Affiliate (as such terms are defined in the Rights Agreement)
thereof and certain transferees thereof will be null and void and will no longer be
transferable.

With respect to such certificates containing the foregoing legend, the Rights associated with the
Common Stock represented by such certificates shall, until the Distribution Date, be evidenced by
such certificates alone, and registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common Stock represented
thereby. In the event that the Company purchases or acquires any shares of Common Stock after

7

 

the Record Date but prior to the earlier of the Distribution Date, the Redemption Date or the
Expiration Date, any Rights associated with such shares of Common Stock shall be deemed cancelled
and retired so that the Company shall not be entitled to exercise any Rights associated with the
shares of Common Stock no longer outstanding.

     Notwithstanding this subsection (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.

     4. Form of Right Certificates.

          (a) The Right Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof), when, as and if issued, shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement, or as may be required to comply with
any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11, 13 and 22 hereof, the Right Certificates evidencing the
Rights issued on the Record Date, whenever such certificates are issued, shall be dated as of the
Record Date and the Right Certificates evidencing Rights to holders of record of Common Stock
issued after the Record Date shall be dated as of the Record Date but shall also be dated to
reflect the date of issuance of such Right Certificate. On their face, Right Certificates shall
entitle the holders thereof to purchase, for each Right, one one-thousandth of a share of Preferred
Stock, or other securities or property as provided herein, as the same may from time to time be
adjusted as provided herein, at the price per one one-thousandth of a share of Preferred Stock of
$21.00, as the same may from time to time be adjusted as provided herein (the “Purchase Price”).

          (b) Notwithstanding any other provision of this Rights Agreement, any Right Certificate that
represents Rights that are or were at any time on or after the earlier of the Stock Acquisition
Date or the Distribution Date Beneficially Owned by an Acquiring Person or any Affiliate or
Associate thereof (or any transferee of such Rights) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Company or the Rights Agent has knowledge that such Person is
an Acquiring Person or an Associate or Affiliate thereof or transferee of such Persons or a nominee
of any of the foregoing) a legend in substantially the following form:

The Beneficial Owner of the Rights represented by this Right Certificate is an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or a subsequent holder of such
Right Certificates Beneficially Owned by such Persons (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate and the Rights represented hereby
are null and void and will no longer be transferable as provided in the Rights Agreement.

The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Right Certificates.

8

 

     5. Countersignature and Registration.

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

          (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, records for registration and transfer of the
Right Certificates issued hereunder. Such records shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates, the date of each of the Right Certificates and the certificate numbers for
each of the Right Certificates.

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

          (a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of Business on the
Expiration Date, and following receipt in writing by the Rights Agent of notice to that effect, any
Right Certificate or Certificates (other than Right Certificates representing Rights that have
become null and void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be (i) transferred or (ii) split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder desiring to transfer any
Right Certificate shall surrender the Right Certificate at the office of the Rights Agent
designated for such purposes with the form of assignment on the reverse side thereof duly endorsed
(or enclose with such Right Certificate a written instrument of transfer in form satisfactory to
the Company and the Rights Agent), duly executed by the registered holder thereof or his attorney
duly authorized in writing, and with such signature guaranteed by a member of a securities approved
medallion program. Any registered holder desiring to split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be split up, combined or
exchanged at the office of the Rights Agent designated

9

 

for such purpose. The Right Certificates
are transferable only on the registry books of the Rights Agent. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates until the registered holder thereof shall have
(i) completed and signed the certificate contained in the form of assignment set forth on the
reverse side of each such Right Certificate, (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced thereby
and the Affiliates and Associates of such Beneficial Owner (or former Beneficial Owner) 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 Right Certificates as required by Section 9(d) hereof. Thereupon the Rights Agent
shall, subject to Sections 4(b), 7(e), 11 and 14 hereof, manually countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so
requested, registered in such name or names as may be designated by the surrendering registered
holder. The Company may require payment from the holder of a Right Certificate of a sum sufficient
to cover any tax or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. The Rights Agent shall have no duty or obligation
to take any action under this Section or any other section of this Rights Agreement which requires
the payment by a Rights holder of applicable taxes or charges unless and until the Rights Agent is
satisfied that all such taxes and/or charges have been paid.

          (b) Subject to the provisions of Section 11(a)(ii) 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 Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make,
execute and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

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

          (a) Subject to Section 11(a)(ii) hereof, the Rights shall become exercisable, and may be
exercised to purchase Preferred Stock, except as otherwise provided herein, in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed (with such signature duly
guaranteed), to the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price with respect to each Right exercised, subject to
adjustment as hereinafter provided, at or prior to the Close of Business on the earlier of (i)
March 31, 2009 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (such date being herein referred to as the “Redemption Date”) or
(iii) the time at which all such Rights are exchanged as provided in Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the “Expiration Date”). Except for
those provisions herein which expressly survive the termination of this Rights Agreement, this
Rights Agreement shall terminate at such time as the Rights are no longer exercisable hereunder.

10

 

          (b) The Purchase Price and the number of shares of Preferred Stock or other securities or
consideration to be acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof. The Purchase Price shall be payable in lawful money
of the United States of America, in accordance with Section 7(c) hereof.

          (c) Except as provided in Section 11(a)(ii) hereof, upon receipt of a Right Certificate with
the form of election to purchase duly executed, accompanied by payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable tax or charge, by
cash, certified check or official bank check payable to the order of the Company or the Rights
Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) requisition
from any transfer agent of the Preferred Stock (or make available if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock so elected to be purchased
and the Company will comply and hereby authorizes and directs such transfer agent to comply with
all such requests, (ii) requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14(b) hereof, and (iii) promptly after
receipt of such Preferred Stock certificates cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or names as may
be designated by such holder, and, when appropriate, after receipt of the cash requisitioned
from the Company promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event of a purchase of securities, other than Preferred Stock, pursuant
to Section 11(a) or Section 13 hereof, the Company shall promptly provide written notice to the
Rights Agent and the Rights Agent, relying on such notice, shall promptly take the appropriate
actions corresponding to the foregoing clauses (i) through (iii). In the event that the Company is
obligated to issue other securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(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 appropriate.

          (d) Except as otherwise provided herein, in case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject
to the provisions of Sections 6 and 14 hereof.

          (e) Notwithstanding anything in this Rights Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right 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 as the Company or the Rights Agent
shall reasonably request.

     8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise. transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for

11

 

cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

     9. Reservation and Availability of Shares of Preferred Stock.

          (a) The Company covenants and agrees that at all times it will cause to be reserved and kept
available, out of and to the extent of its authorized and unissued shares of Preferred Stock not
reserved for another purpose (and, following the occurrence of a Triggering Event, other securities) or held in its treasury, the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, other securities) that, as provided in this
Rights Agreement, including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in
full of all outstanding Rights; provided, however, that the Company shall be
required to reserve and keep available shares of Preferred Stock or other securities sufficient to
permit the exercise in full of all outstanding Rights pursuant to the adjustments set forth in
Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof only if, and to the extent that, the
Rights become exercisable pursuant to such adjustments.

          (b) The Company shall (i) use its best efforts to cause, from and after such time as the
Rights become exercisable, the Rights and all shares of Preferred Stock (and following the
occurrence of a Triggering Event, other securities) issued or reserved for issuance upon exercise
thereof to be reported by the National Association of Securities Dealers, Inc. Automated Quotations
System (“NASDAQ”) or such other system then in use, and if the Preferred Stock shall become listed
on any national securities exchange, to cause, from and after such time as the Rights become
exercisable, the Rights and all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) issued or reserved for issuance upon exercise thereof to be
listed on such exchange upon official notice of issuance upon such exercise and (ii) if then
necessary, to permit the offer and issuance of such shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities), register and qualify such share of Preferred
Stock (and, following the occurrence of a Triggering Event, other securities) under the Securities
Act and any applicable state securities or “blue sky” laws (to the extent exemptions therefrom are
not available), cause such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications effective until the
Expiration Date of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. The Company shall notify the Rights Agent whenever it makes a
public announcement pursuant to this Section 9(b) and give the Rights Agent a copy of such
announcement. Notwithstanding any provision of this Rights Agreement to the contrary, the Rights
shall not be exercisable in any

12

 

jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration statement under the Securities Act
(if required) shall have been declared effective.

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

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

     10. Preferred Stock Record Date. Each Person in whose name any certificate for shares
of Preferred Stock (or other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the shares of Preferred
Stock (or other securities, as the case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes or charges) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to the 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, if any, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

     11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price. The
number and kind of shares subject to purchase upon the exercise of each Right, the number of Rights
outstanding and the Purchase Price are subject to adjustment from time to time as follows:

          (a)

               (i) In the event the Company shall at any time after the date of this Rights Agreement (A)
declare or pay any dividend on Preferred Stock payable in shares of Preferred Stock, (B) subdivide
or split the outstanding shares of

13

 

Preferred Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Preferred Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Preferred Stock, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Preferred
Stock or capital stock, as the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of
capital stock or other securities, which, if such Right had been exercised immediately prior to
such date, the holder thereof 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).

               (ii) Subject to Section 24, in the event

                    (A) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time
after the date of this Rights Agreement, directly or indirectly, (1) shall consolidate with or
merge with and into the Company or any of its Subsidiaries or otherwise combine with the Company or
any of its Subsidiaries and the Company or such Subsidiary shall be the continuing or surviving
corporation of such consolidation, merger or combination and the Common Stock of the Company shall
remain outstanding and no shares thereof shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or any other property, or (2) shall, in
one or more transactions, other than in connection with the exercise of a Right or Rights and other
than in connection with the exercise or conversion of securities exercisable for or convertible
into securities of the Company or of any Subsidiary of the Company, transfer any assets or property
to the Company or any of its Subsidiaries in exchange (in whole or in part) for any shares of any
class of capital stock of the Company or any of its Subsidiaries or any securities exercisable for
or convertible into shares of any class of capital stock of the Company or any of its Subsidiaries,
or otherwise obtain from the Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of capital stock of the Company
or any of its Subsidiaries (other than as part of a pro rata offer or distribution by the Company
or such Subsidiary to all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than as a pro rata dividend) or dispose of,
to, from or with, as the case may be (in one transaction or a series of transactions), the Company
or any of its Subsidiaries, any assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such Subsidiary would be able to
obtain in arm’s-length negotiation with an unaffiliated third party, or (4) shall receive any
compensation from the Company or any of its Subsidiaries for services other than compensation for
employment as a regular or part-time employee, or fees for serving as a director, at rates in
accordance with the Company’s (or its Subsidiary’s) past practices, or (5) shall receive the
benefit, directly or

14

 

indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or tax advantage provided by
the Company or any of its Subsidiaries, or (6) shall engage in any transaction with the Company (or
any of its Subsidiaries) involving the sale, license, transfer or grant of any right in, or
disclosure of, any patents, copyrights, trade secrets, trademarks, know-how or any other
intellectual or industrial
property rights recognized under any country’s intellectual property laws which the Company
(including its Subsidiaries) owns or has the right to use on terms and conditions not approved by
the Board of Directors; or

                    (B) any Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person; or

                    (C) during such time as there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or any recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its Subsidiaries (whether or not with or
into or otherwise involving an Acquiring Person or any Affiliate or Associate of such Acquiring
Person) which has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities of the Company or
any of its Subsidiaries, or securities exercisable for or convertible into equity securities of the
Company or any of its Subsidiaries, which is directly or indirectly Beneficially Owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person (any of (A), (B) or (C)
being referred to herein as a “Flip-In Event”);

then upon the first occurrence of such Flip-In Event (i) the Purchase Price shall be adjusted to be
the Purchase Price in effect immediately prior to the Flip-In Event multiplied by the number of one
one-thousandth of a share of Preferred Stock for which a Right was exercisable immediately prior to
such Flip-In Event, whether or not such Right was then exercisable, and (ii) each holder of a
Right, except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase Price
(as so adjusted), in accordance with the terms of this Rights Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock as shall equal the result obtained by
dividing the Purchase Price (as so adjusted) by 50% of the Current Market Price per share of the
Common Stock (determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon the exercise of a Right shall, following the Flip-In
Event, be subject to further adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Rights Agreement to the contrary, however, from and after the
Flip-In Event, any Rights that are Beneficially Owned by (x) any Acquiring Person (or any Affiliate
or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-In Event pursuant to either (I) a transfer from the Acquiring Person to
holders of its equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding, whether written or otherwise, regarding the transferred Rights or
(II) a transfer which the Board of Directors has determined is part of a plan, agreement,
arrangement or understanding, whether written or otherwise, which has the purpose or effect of

15

 

avoiding the provisions of this paragraph, and subsequent transferees of such Persons, shall be
null and void without any further action and any holder of such Rights shall thereafter have no
rights whatsoever with respect to such Rights under any provision of this Rights Agreement. The
Company shall use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
are complied with, but shall have no liability to any holder of Right Certificates or other Person
as a result of its failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and after the Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become null and void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or have become null and
void pursuant to the provisions of this paragraph shall be cancelled. 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 Rights 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) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value equal to the Current Market
Price of a share of Common Stock. In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Board of Directors shall, to the
extent permitted by applicable law and any material agreements then in effect to which the Company
is a party (A) determine the excess (such excess, the “Spread”) of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right in accordance with the foregoing subparagraph
(ii) (the “Current Value”) over (2) the Purchase Price (as adjusted in accordance with the
foregoing subparagraph (ii)), and (B) with respect to each Right (other than Rights which have
become null and void pursuant to the foregoing subparagraph (ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with the foregoing paragraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in accordance therewith),
(1) cash, (2) a reduction in such Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by the Board of
Directors to have substantially the same value as the shares of Common Stock (such shares of
Preferred Stock and shares or fractions of shares of preferred stock being hereinafter referred to
as “Common Stock Equivalents”), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having a value which, when added to the value of the shares of Common
Stock actually issued upon exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in such Purchase Price), where such aggregate value
has been determined by the Board of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; provided, however,
that if the Company shall not make adequate provision to deliver value pursuant to clause (B) above
within 30 days following the date of the Flip-In Event (the “Flip-in Trigger Date”), then the
Company
shall be obligated to deliver, to the extent permitted by applicable law and any material

16

 

agreements then in effect to which the Company is a party, upon the surrender for exercise of a
Right and without requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors shall determine in good faith that it is likely
that sufficient additional shares of Common Stock and/or Common Stock Equivalents could be
authorized for issuance upon exercise in full of the Rights, the 30-day period set forth above may
be extended to the extent necessary, but not more than 90 days after the Flip-In Trigger Date, in
order that the Company may seek stockholder approval for the authorization of such additional
shares of Common Stock or Common Stock Equivalents (such 30-day period, as it may be extended being
hereinafter referred to as the “Substitution Period”). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of this Section
11(a)(iii), the Company (x) shall provide, subject to the last sentence of Section 11(a)(ii)
hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to be made
pursuant to the first sentence of Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the Current Market Price per share of the Common Stock on the
Flip-In 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. The Board of
Directors may, but shall not be required to, establish procedures to allocate the right to receive
Common Stock upon the exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).

          (b) In case the Company shall fix a record date for the issuance of rights (other than the
Rights), options or warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase Preferred Stock (for a period expiring within 45 calendar days after such record date),
shares having the same rights, privileges and preferences as the Preferred Stock (a “Preferred
Stock Equivalent”) or securities convertible into Preferred Stock or Preferred Stock Equivalent at
a price per share of Preferred Stock or Preferred Stock Equivalent (or having a conversion price
per share, if a security is convertible into Preferred Stock or Preferred Stock Equivalent) 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 outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock
and/or Preferred Stock Equivalent (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or
Preferred Stock Equivalent 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 is in a form other than cash,
the value of such non-cash consideration shall be as determined in good faith by the Board of

17

 

Directors, whose determination shall be described in a statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness, cash, 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 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) of the portion of the
cash, assets or evidences of indebtedness 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 the Common Stock for the 30
consecutive Trading Days immediately prior to, but not including, such date, and for purpose of
computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share of
the Common Stock on any date shall be deemed to be the average of the daily closing prices per
share of the Common Stock for the 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 the Common Stock of (i) any dividend or distribution on the Common Stock (other than a
regular quarterly cash dividend and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the requisite 30 Trading Day
or 10 Trading Day period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such
subdivision, combination or reclassification occurs, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with

18

 

respect to securities
listed or admitted to trading on NASDAQ or, if the shares of Common Stock are not listed or
admitted to trading on 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 quoted sale price or,
if not so quoted, the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on any such date the 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 and shall be binding on the Rights Agent. 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 (or
one one-thousandth of a 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 (or one one-thousandth of a 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 Rights
Agreement) multiplied by the Current Market Price per share of the Common Stock and the “Current
Market Price” per one one-thousandth of a share of Preferred Stock shall, be equal to the Current
Market Price per share of the Common Stock (as appropriately adjusted). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded, “Current Market Price” 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.

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

          (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to receive any 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

19

 

adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Preferred Stock contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m) hereof, 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 shares 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-thousandth
of a share of Preferred Stock (calculated to the nearest one-hundred-thousandth) obtained by
(i) multiplying (x) the number of one one-thousandth of a share of Preferred Stock covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.

          (i) The Company may elect on or after the date of any adjustment of the Purchase Price or any
adjustment to the number of shares of Preferred Stock for which a Right may be exercised made
pursuant to Sections 11(a)(i), 11(b) or 11(c), to adjust the number of Rights in lieu of any
adjustment in the number of shares 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 shares of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment to be made. The
Company shall notify the Rights Agent whenever it makes a public announcement pursuant to this
Section 11(i) and shall promptly give the Rights Agent a written notice of such announcement. This
record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed
and delivered by the

20

 

Company, and countersigned and delivered by the Rights Agent, in the manner provided for
herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Right Certificates on the record date specified
in the public announcement.

          (j) Irrespective of any adjustment or change in the Purchase Price or the number of shares of
Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share and the number of shares
which were expressed in the initial Right Certificate 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 shares of Common Stock, Preferred Stock or other capital stock
issuable upon exercise of the Rights, the Company shall take any corporate action, including using
its best efforts to obtain any required stockholder approvals, which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock, Preferred Stock or other capital stock 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 of the Company, shall be allocated as the
payment for each share of Common Stock of the Company 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 holder of any Right exercised after such record date the shares of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such exercise over and
above the shares 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 of
Preferred Stock and other capital stock 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 permitted
or required by this Section 11, as and to the extent that in their 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 for cash of any shares of Preferred Stock at less than the Current
Market Price, (iii) issuance for cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such stockholders.

21

 

          (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person, (ii) merge with or into any other Person, 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, if (x) at the time of or immediately after such consolidation, merger or sale there are
any charter or by-law provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect which 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.
The Company shall not consummate any such consolidation, merger or sale 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 subsection.

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

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

     12. Certification of Adjustments 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 Sections 11 and 13 hereof,
the Company shall (a) promptly prepare a certificate signed by its Chief Executive Officer, its
President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company setting forth such adjustment or describing such event, and
a brief, reasonably detailed statement of the facts, computations and methodology accounting for
such adjustment or event, (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 holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common Stock) in

22

 

accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any adjustment or
statement therein contained and shall not be deemed to have knowledge of any such adjustment or
event unless and until it shall have received such certificate. Any adjustment to be made pursuant
to Sections 11 and 13 of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment.

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

          (a) In the event that following the first occurrence of a Flip-In Event, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person or
Persons and the Company, as the case may be, shall not be the surviving or continuing Person of
such consolidation or merger, or (y) any Person or Persons shall consolidate with, or merge with
and into, the Company, and the Company shall be the continuing or surviving Person 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 of the Company or cash or any other property other than, in the case of the
transactions described in subparagraphs (x) or (y), a merger or consolidation which would result in
all of the Voting Power represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being converted into
securities of the surviving entity) all of the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation and the
holders of such securities not having changed as a result of such transactions), or (z) the Company
or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer to any other Person
or any Affiliate or Associate of such Person, 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), then, on the first occurrence of any such
event (a “Flip-Over Event”), proper provision shall be made so that (i) each holder of a Right
(other than Rights which have become null and void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the terms of
this Rights Agreement and in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall equal the result
obtained by dividing the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) by 50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided, however, that the Purchase Price
(as theretofore adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares of
Common Stock of such Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such
Principal Party after the occurrence of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
Flip-Over Event,

23

 

all the obligations and duties of the Company pursuant to this Rights Agreement;
(iii) the term “Company” for all purposes of this Rights Agreement shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the provisions of Section 11
hereof shall only apply to such Principal Party following the first occurrence of a Flip-Over
Event; and (iv) such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance with Section 9
hereof) 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;
provided, however, that, upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right, such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had he, at the time of such
transaction, owned the shares of Common Stock of the Principal Party purchasable upon the exercise
of a Right, and such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and other property.

          (b) “Principal Party” shall mean

               (i) in the case of any transaction described in (x) or (y) of the first sentence of
Section 13(a) hereof: (A) the Person that is the issuer of the 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 the Common Stock of which has the greatest aggregate market value
or (B) if no securities are so issued, (x) the Person that is the other party to the merger or
consolidation and that survives said merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the greatest market value or (y) if the Person
that is the other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation (including the Company if
it survives); and

               (ii) in the case of any transaction described in (z) of the first sentence in Section 13(a)
hereof, 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 that is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding;

provided, however, that in any such case described in the foregoing paragraphs (b)(i) or
(b)(ii), (1) if the Common Stock of such Person is not at such time and has not been continuously
over the preceding 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, the term “Principal Party” shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of all
of which are and have been so registered, the term “Principal Party” shall refer to whichever of

24

 

such Persons is the issuer of the Common Stock having the greatest market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the
joint venture as if the Person owned by the joint venture was a Subsidiary of both or all of such
joint venturers, and the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the total of such
interests.

          (c) The Company shall not consummate any consolidation, merger, sale, disposition or transfer
referred to in Section 13(a) unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the
Company and the Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Sections 13(a) and (b) hereof shall promptly
be performed in accordance with their terms and that such consolidation, merger, sale, disposition
or transfer of assets shall not result in a default by the Principal Party under this Rights
Agreement as the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and
(b) hereof and further providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party at its own expense shall:

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

               (ii) use its best efforts, if the Common Stock of the Principal Party shall become listed on a
national securities exchange, to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause the Rights and the
securities purchased upon exercise of the Rights to be reported by NASDAQ or such other system then
in use;

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

               (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.

25

 

In the event that any of the transactions described in Section 13(a) hereof shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall thereafter be exercisable in the manner described in
Section 13(a).

          (d) Furthermore, in case the Principal Party which is to be a party to a transaction referred
to in this Section 13 has a provision in any of its authorized securities or in its Certificate of
Incorporation or Bylaws or other instrument governing its corporate affairs, 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 referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the then Current Market Price per share (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible into, Common Stock
of such Principal Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13; then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have been cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the consummation of the proposed
transaction.

     14. Fractional Rights and Fractional Shares.

          (a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the holders of record of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the then current
market value of a whole Right. For the purposes of this Section 14(a), the then current market
value of a Right shall be determined in the same manner as the Current Market Price of a share of
Common Stock shall be determined pursuant to Section 11(d) hereof.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock or
Preferred Stock Equivalent (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock Equivalent (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 or Preferred Stock
Equivalent may, at the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as Beneficial Owners of the shares of
Preferred Stock or Preferred Stock Equivalent 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 or Preferred Stock Equivalent, the
Company may pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent. For

26

 

purposes of this Section 14(b), the current market value of one one-thousandth of a share of
Preferred Stock or Preferred Stock Equivalent shall be the Current Market Price of a share of
Common 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 Flip-In Event, the Company shall not be required to issue
fractions of shares or units of Common Stock or Common Stock Equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional shares of such
Common Stock or Common Stock Equivalents or other securities. In lieu of fractional shares or
units of such Common Stock or Common Stock Equivalents or other securities, the Company may pay to
the registered holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the Current Market Value of a share or
unit of such Common Stock or Common Stock Equivalent or other securities. For purposes of this
Section 14(c), the Current Market Value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the date of such exercise and, if
such Common Stock Equivalent is not traded, each such Common Stock Equivalent shall have the value
of one one-thousandth of a share of Preferred Stock.

          (d) The holder of a Right by the acceptance of a Right expressly waives his right to receive
any fractional Right or any fractional shares upon exercise of a Right.

          (e) Whenever a payment for fractional Rights or fractional shares or other securities of the
Company 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 payment
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.

     15. Rights of Action. As of the Record Date, all rights of action in respect of this
Right Agreement, other than any rights of action vested in the Rights Agent pursuant to Sections 18
and 20 hereunder, are vested in the respective holders of record of the Right Certificates (and,
prior to the Distribution Date, the holders of record of the Common Stock); and any holder of
record of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the Company or any other
Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and, accordingly, that they will be entitled to specific
performance of the obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any
Person subject to this Rights Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys’ fees, incurred by them in any action to enforce
the provisions of this Rights Agreement.

27

 

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

          (a) prior to the Distribution Date, the Rights will not be evidenced by a Right Certificate
and will be transferable only in connection with the transfer of Common Stock;

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

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

          (d) notwithstanding anything in this Rights 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 Rights 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 obligation; provided, however, that the Company must use its best
efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise
overturned as soon as possible.

     17. Right Certificate Holder Not Deemed a Stockholder. No holder of a Right, as such,
shall be entitled to vote, receive dividends in respect of or be deemed for any purpose to be the
holder of Common Stock or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote in 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 in respect of any
such stock or securities, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.

     18. Concerning the Rights Agent.

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

28

 

its reasonable
expenses and counsel fees and other disbursements incurred in the preparation, negotiation,
delivery, administration, amendment and execution of this Rights Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability or expense incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent for any thing done or omitted to be
done by the Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including the cost and expenses of defending against any claim of liability in the
premises. The indemnity provided herein shall survive the expiration of the Rights and the
termination of this Rights Agreement. Notwithstanding anything in this Rights Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or consequential 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 damage and regardless of the form of action.

          (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Rights
Agreement in reliance upon any Right Certificate, certificate for Common Stock or 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, guaranteed, verified or
acknowledged, by the proper Person or Persons.

     19. Merger or Consolidation or Changed 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
shareholder services business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights 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 Rights
Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and, in case at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Rights Agreement.

          (b) In case at any time the name of the Rights Agent shall be changed and at such time any of
the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver such Right Certificates so countersigned; and
in case at that time any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior

29

 

name or in its changed name; and
in all such cases such Right Certificate shall have the full force provided in the Right
Certificates and in this Rights Agreement.

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

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

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

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

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

          (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Rights Agreement or the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11, 13, 23 or 24 hereof
or responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a Certificate furnished pursuant to
Section 12 describing any such adjustment); 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 to be issued pursuant to this Rights Agreement or any Right Certificate or
as to whether any shares of Common Stock will, when issued, be validly authorized and issued, fully
paid and nonassessable.

30

 

          (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 Rights Agreement.

          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President or the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any such officer. Any
application by the Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent
under this Rights Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. Subject to Section 20(c) hereof, the Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which date shall not be
less than five Business Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an omission), the Rights
Agent shall have received written instructions in response to such application specifying the
action to be taken or omitted.

          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not the Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent 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 or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.

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

          (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has 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 of transfer without first consulting with the
Company.

31

 

     21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Rights Agreement upon 30 days’ notice in writing, or
such earlier period as shall be agreed to in writing, mailed to the Company and to each transfer
agent of the Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. In the event the transfer agency relationship in effect between
the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned
automatically and be discharged from its duties under this Agreement as of the effective date of
such termination, and the Company shall be responsible for sending any required notice. The
Company may remove the Rights Agent or any successor Rights Agent (with or without cause) upon
30 days’ notice in writing, or such earlier period as shall be agreed to in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent. Notwithstanding
the foregoing provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person
organized and doing business under the laws of the United States or any State thereof, in good
standing, which is authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or
(b) an Affiliate controlled by a Person described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the resignation,
replacement or removal of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.

     22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this
Rights Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price per share and the number or kind or

32

 

class of shares
of stock or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights 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 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, or upon the exercise, conversion or exchange of securities hereinafter issued by the
Company, in each case existing prior to the Distribution Date, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be issued, if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.

     23. Redemption.

          (a) The Board of Directors may, at its option, at any time prior to the earlier of (x) the
first occurrence of a Flip-In Event or (y) the Close of Business on the Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter referred to as
the “Redemption Price”).

          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights (or at such later time as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall be to receive
the Redemption Price. The Company shall promptly give public notice of any such redemption (with
prompt written notice thereof to the Rights Agent); provided, however, that the
failure to give, or any defect in, any such notice shall not affect the legality or validity of
such redemption. Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights (or such later time as the Board of Directors may establish for the
effectiveness of such redemption), the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made. The failure to give notice
required by this Section 23(b) or any defect therein shall not affect the legality or validity of
the action taken by the Company.

          (c) In the case of a redemption permitted under Section 23(a) hereof, the Company may, at its
option, discharge all of its obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of the Redemption Price
to the registered holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the

33

 

registry books of the transfer
agent of the Common Stock, and upon such action, all outstanding Right Certificates shall be null
and void without any further action by the Company.

     24. Exchange of Rights for Common Stock.

          (a) The Board of Directors may, at its option, at any time after the occurrence of a Flip-In
Event, exchange all or part of the then outstanding and exercisable Rights (which (i) shall not
include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) and
(ii) shall include, without limitation, any Rights issued after the Distribution Date in accordance
with Section 22 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 (the “Exchange Ratio”). Notwithstanding the foregoing
the Board of Directors shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares of Common
Stock then outstanding. From and after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to
this Section 24(a).

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

          (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute,
and, in the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable upon exchange
of a Right, a number of shares of Preferred Stock or Preferred Stock Equivalent or fractions
thereof having an aggregate current per share market price (determined pursuant to Section 11(d)
hereof) equal to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d) hereof) as of the date of the Flip-In Event.

34

 

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

          (e) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this paragraph (d), the current market value of a whole share
of Common Stock shall be the Current Market Price of a share of Common Stock (as defined in
Section 11(d) hereof for the purposes of computations made other than pursuant to
Section 11(a)(iii)) for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.

     25. Notice of Proposed Actions.

          (a) In case the Company, after the Distribution Date, shall propose (i) to effect any of the
transactions referred to in Section 11(a)(i) or to pay any dividend to the holders of record of its
Preferred Stock payable in stock of any class or to make any other distribution to the holders of
record of its Preferred Stock (other than a regular periodic cash dividend), or (ii) to offer to
the holders of record of its Preferred Stock or options, warrants, or other rights to subscribe for
or to purchase shares of Preferred Stock (including any security convertible into or exchangeable
for Preferred Stock) or shares of stock of any other class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or any recapitalization or reorganization of the Company,
or (iv) to effect any consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 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, or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to the Rights Agent
and to each holder of record of a Right Certificate, in accordance with Section 26 hereof, notice
of such proposed action, which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i), or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, disposition, liquidation, dissolution or winding up is to take place and the record date
for determining participation therein by the holders of record 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 10 days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of record of Preferred Stock, whichever shall be the earlier.

35

 

          (b) In case any of the transactions referred to in Section 11(a)(ii)(A) or (C) or Section 13
of this Rights Agreement are proposed, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of Rights, in accordance with
Section 26 hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and the consequences
of the event to holders of Rights under Section 11(a)(ii) or Section 13 hereof, as the case may be,
and, upon consummation of such transaction, or any transaction contemplated by Section
11(a)(ii)(B), shall similarly give notice thereof to each holder of Rights.

          (c) The failure to give notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote upon any such
action.

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

Packeteer, Inc.

10201 North De Anza Blvd.

Cupertino, California 95014

Attention: General Counsel

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

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Client Services

Notices or demands authorized by this Rights Agreement to be given or made by the Company or the
Rights Agent to the holder of record of any Right Certificate or Right 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 it appears upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the Transfer Agent.

     27. Supplements and Amendments. Except as otherwise provided herein, for so long as
the Rights are then redeemable, the Company may in its sole and absolute discretion supplement or
amend any provision of this
Rights Agreement in any respect without the approval of any holders of the Rights, any such
supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent.
At any time when the Rights are no longer redeemable, except as provided in the penultimate
sentence of this Section 27, the Company may supplement or amend this Rights Agreement without the
approval of any holders of Right Certificates in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained

36

 

herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause the Rights 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 that
states that the proposed supplement or amendment complies with this Section 27, the Rights Agent
shall execute such supplement or amendment. 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.

     28. Successors. All of the covenants and provisions of this Rights 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.

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

     30. Determinations and Actions by the Board of Directors. The Board of Directors
shall have the exclusive power and authority to administer this Rights Agreement and to exercise
the 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 Rights Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this Rights Agreement and (ii)
make all determinations deemed necessary or advisable for the administration of this Rights
Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to
amend or not amend this Rights 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, including but not
limited to those made under Sections 1 and 11 hereunder, (x) shall be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights, as such, and all other Persons, and
(y) not subject the Board to any liability to the holders of the Rights.

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

     32. Counterparts. This Rights 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.

37

 

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

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

     35. Force Majeure. Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in performance resulting from acts
beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage
of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss
of data due to power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.

38

 

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

	 	 	 	 	 	 	 	 	 	 	 
	[SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	PACKETEER, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	/s/ Marie Wilson 	 	 	 	By:	 	/s/ Dave Côté	 	 
	 
	 	 
	 	 	 	 	 	 	 	 
	 
	 	Name: Marie Wilson
	 	 	 	 	 	Name: Dave Côté	 	 
	 
	 	Title: General Counsel
	 	 	 	 	 	Title: CEO & President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	COMPUTERSHARE TRUST COMPANY, N.A.
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	/s/ Paul L. Eori 	 	 	 	By:	 	/s/ Dennis Moccia 	 	 
	 
	 	 
	 	 	 	 	 	 	 	 
	 
	 	Name: Paul L. Eori
	 	 	 	 	 	Name: Dennis Moccia	 	 
	 
	 	Title: Relationship Manager
	 	 	 	 	 	Title: Managing Director	 	 

 

 

EXHIBIT A

PACKETEER, INC.

CERTIFICATE

OF DESIGNATION, PREFERENCES AND RIGHTS

OF THE TERMS OF THE

SERIES A PREFERRED STOCK

     Pursuant to Section 151 of the General Corporation Law of the State of Delaware

     We, the President and Chief Executive Officer and the Secretary, respectively, of Packeteer,
Inc., organized and existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the Certificate of
Incorporation of the said Corporation, the said Board of Directors on March 31, 2008, adopted the
following resolution creating a series of 100,000 shares of Preferred Stock designated as Series A
Preferred Stock:

     RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation
in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as follows:

     Section 1. Designation and Amount. The shares of such series shall be designated as “Series A
Preferred Stock” (the “Series A Preferred Stock”), $0.001 par value per share, and the number of
shares constituting such series shall be 100,000.

     Section 2. Dividends and Distributions.

          (A) The dividend rate on the shares of Series A Preferred Stock shall be for each quarterly
dividend (hereinafter referred to as a “quarterly dividend period”), which quarterly dividend
periods shall commence on January 1, April 1, July 1 and October 1 each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”) (or in the case of original issuance,
from the date of original issuance) and shall end on and include the day next preceding the first
date of the next quarterly dividend period, at a rate per quarterly dividend period (rounded to the
nearest cent) equal to, subject to the provisions for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in 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

1

 

reclassification or otherwise), declared (but not withdrawn) on the Common Stock, par value $0.001
per share, of the Corporation (the “Common Stock”) during the immediately preceding quarterly
dividend period, or, with respect to the first quarterly dividend period, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the event this Company shall
at any time after April 14, 2008 (the “Rights Declaration Date”) (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 amount to which holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

          (B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time outstanding. The Board 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 45 days prior to the date fixed for the payment thereof.

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

          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (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 number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

2

 

          (B) Except as otherwise provided herein, in the Certificate of Incorporation or Bylaws, the
holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the Corporation.

          (C) Except as set forth herein, in the Certificate of Incorporation and in the Bylaws, 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. 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.

     Section 5. 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 Series A Preferred Stock shall be entitled to receive an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock. In the event the
Corporation shall at any time after the Rights Declaration Date (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 amount to which holders of shares of Series A Preferred Stock were entitled immediately prior
to such event pursuant to clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.

     Section 6. 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 Series A Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (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 amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.

3

 

     Section 7. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

     Section 8. 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 have the benefit of all other
rights of holders of Series A Preferred Stock. All payments made with respect to fractional shares
hereunder shall be rounded to the nearest whole cent.

     Section 9. Certain Restrictions.

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

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

          (ii) declare or pay dividends 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, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled;

          (iii) redeem or purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred 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
stock of the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or

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

4

 

          (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 9, purchase or otherwise acquire such shares at such
time and in such manner.

     Section 10. Ranking. The Series A Preferred Stock shall be junior to all other Series of the
Corporation’s preferred stock as to the payment of dividends and the distribution of assets, unless
the terms of any series shall provide otherwise.

     Section 11. Amendment. The Certificate of Incorporation of the Corporation shall not be
amended in any manner which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of two-thirds or more of the outstanding shares of Series A Preferred Stock voting
together as a single class.

     IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and do affirm
the foregoing as true under the penalties of perjury this ____ day of April, 2008.

	 	 	 	 	 
	 

	 	 

Dave Côté
	 	 
	 

	 	President and Chief Executive Officer	 	 

5

 

EXHIBIT B

Form of Right Certificate

			
	Certificate No. W-        
	 	                          Rights

NOT EXERCISABLE AFTER MARCH 31, 2009, OR EARLIER IF REDEEMED OR EXCHANGED. AT THE OPTION OF
THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $0.001 PER RIGHT OR EXCHANGED FOR COMMON STOCK ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR CERTAIN TRANSFEREE OF
THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY SHALL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

RIGHT CERTIFICATE

PACKETEER, INC.

     This certifies that                     , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement dated as of April 1, 2008
(the “Rights Agreement”) between Packeteer, Inc., a Delaware corporation (the “Company”), and
Computershare Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (Eastern time) on March 31, 2009, at the principal office of the Rights Agent, or of its
successors as Rights Agent, designated for such purpose, one one-thousandth of a fully paid and
nonassessable share of Series A Preferred Stock of the Company (the “Preferred Stock”) at a
purchase price of $21.00 per one one-thousandth of a share, as the same may from time to time be
adjusted in accordance with the Rights Agreement (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly executed.
Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Rights Agreement.

 

 

     As provided in the Rights Agreement, the Purchase Price and the number of shares of Preferred
Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening of certain events
and, upon the happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this Right Certificate, as
provided by the Rights Agreement.

     Upon the occurrence of a Flip-In Event, if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person, (ii) a transferee of any such Acquiring Person, 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 any Affiliate or Associate of an Acquiring
Person, such Rights shall be null and void and will no longer be transferable and no holder hereof
shall have any right with respect to such Rights from and after the occurrence of such Flip-In
Events.

     This Right Certificate is subject to all the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are 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 of the Rights Agent, the Company
and the holders of record of the Right Certificates, which limitation of rights include the
temporary suspension of the exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal
executive office of the Company and are available upon written request to the Company.

     This Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent designated for such purpose, may be exchanged for another
Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the
holder of record to purchase a like aggregate number of shares of Preferred Stock as the Rights

2

 

evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, at any time prior to the earlier of (i) the
occurrence of a Flip-In Event (as such term is defined in the Rights Agreement) or (ii) the
Expiration Date (as such term is defined in 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.
Subject to the provisions of the Rights Agreement, the Company may, at its option, at any time
after a Flip-In Event, exchange all or part of the Rights evidenced by this Certificate for shares
of the Company’s Common Stock or for Preferred Stock (or shares of a class or series of the
Company’s preferred stock having the same rights, privileges and preferences as the Preferred
Stock).

     In the event (i) any Person or group becomes an Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described above as self-dealing transactions occur, and
prior to the acquisition by such person or group of 50% or more of the outstanding shares of Common
Stock, the Board of Directors may require all or any portion of the outstanding Rights (other than
Rights owned by such Acquiring Person which have become null and void) to be exchanged for Common
Stock on a pro rata basis, at an exchange ratio of one share of Common Stock or one one-thousandth
of a share of Preferred Stock (or of a share of a class or series of the Company’s Preferred Stock
having equivalent rights, preferences and privileges), per Right (subject to adjustment).

     No fractional shares of Preferred Stock shall 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 option of the Company, be evidenced by depositary
receipts), and no fractional shares of Common Stock will be issued upon the exchange of any Right
or Rights evidenced hereby, and in lieu thereof, as provided in the Rights

3

 

Agreement, fractions of
shares of Preferred Stock or Common Stock shall receive an amount in cash equal to the same
fraction of the then Current Market Price (as such term is defined in the Rights Agreement) of a
share of Preferred Stock or Common Stock, as the case may be.

     No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of Common 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 in 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 (other
than certain actions specified in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been
exercised or exchanged as provided in the Rights Agreement.

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

4

 

     WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of                                         , 2008.

	 	 	 	 	 	 	 
	ATTEST:	 	PACKETEER, INC.	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	 	 	 
	Secretary
	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	 
	 	Title:	 	 	 	 
	 
	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	COUNTERSIGNED:	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 	 	As Rights Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	Authorized Officer	 	 

5

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder

desires to transfer any or all of the Rights

represented by this Right Certificate)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

 

(Name, address and social security or other

identifying number of transferee)

                                                            
(                  ) of the Rights
represented by this Right Certificate, together with all right, title and
interest in and to said Rights, and hereby irrevocably constitutes and
appoints                                          attorney to transfer said Rights 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) the rights evidenced by this Right Certificate [    ] are [    ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring Person (as such
capitalized terms are defined in 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 Right Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Dated:	 	                                                             ,	 	                     	 	                                                                                            	 	 
	 

	 	 	 	 	 	 	 	(Signature)
	 	 

Signature Guaranteed:

6

 

Form of Reverse Side of Right Certificate

(continued)

NOTICE

     The signatures to the foregoing Assignment and the foregoing Certificate, if applicable, must
correspond to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever, and must be guaranteed by a participant
in a Securities Transfer Association (“STA”) recognized signature program.

     In the event that the foregoing Certificate is not duly executed, with signature guaranteed, the
Company may deem the Rights represented by this Right Certificate to be Beneficially Owned by an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such capitalized terms are
defined in the Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.

7

 

Form of Reverse of Right Certificate

(continued)

FORM OF ELECTION TO PURCHASE

(To be executed by the registered holder if such holder

desires to exercise any or all of the Rights

represented by this Right Certificate)

To Packeteer, Inc.:

     The undersigned hereby irrevocably elects to exercise                      (                    ) of the Rights
represented by this Right Certificate to purchase the shares of the Common Stock of the Company, or
other securities or property issuable upon the exercise of said number of Rights pursuant to the
Rights Agreement.

     The undersigned hereby requests that a certificate for any such securities and any such property be
issued in the name of and delivered to:

 

 

(Name, address and social security or other

identifying number of issuee)

     The undersigned hereby further requests that if said number of Rights shall not be all the Rights
represented by this Right Certificate, a new Right Certificate for the remaining balance of such
Rights be issued in the name of and delivered to:

 

 

(Name, address and social security or other

identifying number of issuee)

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Dated:	 	                                                             ,	 	                     	 	                                                                                            	 	 
	 

	 	 	 	 	 	 	 	(Signature)
	 	 

Signature Guaranteed:

8

 

Form of Reverse Side of Right Certificate

(continued)

CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights evidenced by this Right 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 any such
Acquiring Person or an Affiliate or Associate of any such 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 Right Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Dated:	 	                                                             ,	 	                     	 	                                                                                            	 	 
	 

	 	 	 	 	 	 	 	(Signature)
	 	 

Signature Guaranteed:

NOTICE

     The signature to the foregoing Election to Purchase and the foregoing Certificate, if applicable,
must correspond to the name as written upon the face of the this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever, and must be guaranteed by a
member firm of a registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent
in the United States.

     In the event that the foregoing Certificate is not executed, with signature guaranteed, the Company
may deem the Rights represented by this Right Certificate to be Beneficially Owned by an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such capitalized terms are defined
in the Rights Agreement), and not issue any Right Certificate or Right Certificates in exchange for
this Right Certificate.

9

 

EXHIBIT C

     UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED APRIL 1, 2008 (THE
“RIGHTS AGREEMENT”) BETWEEN PACKETEER, INC. AND COMPUTERSHARE TRUST COMPANY, N.A., RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT)
THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

PACKETEER, INC.

Summary of Terms of

Rights Agreement

	 	 	 
	Nature of Right:

	 	When exercisable, each Right (a
“Right”) will initially entitle the
holder to purchase one
one-thousandth of a share of Series
A Preferred Stock (“Preferred
Stock”) of Packeteer, Inc. (the
“Company”).
	 
	 	 
	Means of Distribution:

	 	The Rights will be distributed to
holders of the Company’s
outstanding Common Stock as a
dividend of one Right for each
share of Common Stock. The Rights
will also be attached to all future
issuances of Common Stock prior to
the Distribution Date (as defined
below).
	 
	 	 
	Exercisability:

	 	Rights become exercisable on the
earlier of: (i) the tenth day after
the date of public announcement by
the Company or by any person or
group (an “Acquiring Person”) that
such person or group has acquired
beneficial ownership of 15% or more
of the Company’s outstanding Common
Stock, or (ii) the tenth business
day (unless extended by the Board
prior to the time a person becomes
an Acquiring Person) following the
commencement, or announcement of an
intention to commence, by any
person or group of a tender or
exchange offer, including an offer
commenced prior to the date hereof,
which would result in such person
owning 15% or more of the
outstanding Common Stock of the
Company (the earlier of such dates
is referred to as the “Distribution
Date”), provided that an Acquiring
Person does not include an Exempt
Person (as such term is defined in
the Rights Agreement). Rights will
trade separately from the Common
Stock once the Rights become
exercisable.
	 
	 	 
	Purchase Price:

	 	$21.00 per one one-thousandth of a
share of Series A Preferred, which
is the amount that in the judgment
of the Board of Directors
represents the long-term value of
one share of Common Stock over the
term of the Rights Agreement (the
“Purchase Price”).
	 
	 	 
	Term:

	 	The Rights will expire upon the
earlier of (i) one year after the
date of issuance, or March 31, 2009
or (ii) redemption or exchange by
the Company as described below.
	 
	 	 
	Redemption of Rights:

	 	Rights are redeemable at a price of
$0.001 per Right, by the vote of
the Company’s Board of Directors,
at any time until the occurrence of
a Flip-In Event (defined below).

 

 

	 	 	 
	Preferred Stock:

	 	The Preferred Stock purchasable
upon exercise of the Rights will be
nonredeemable and junior to any
other series of preferred stock the
Company may issue (unless otherwise
provided in the terms of such other
series). Each share of Preferred
Stock will have a preferential
cumulative quarterly dividend in an
amount equal to 1,000 times the
dividend declared on each share of
Common Stock. In the event of
liquidation, the holders of
Preferred Stock will receive a
preferred liquidation payment equal
to an amount per share equal to
1,000 times the aggregate payment
to be distributed per share of
Common Stock. Each share of
Preferred Stock will have 1,000
votes, voting together with the
shares of 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
securities, cash and/or other
property, each share of Preferred
Stock will be entitled to receive
1,000 times the amount and type of
consideration received per share of
Common Stock. The rights of the
Preferred Stock as to dividends,
liquidation and voting, and in the
event of mergers and
consolidations, are protected by
customary anti-dilution provisions.
Fractional shares (in integral
multiples of one one-thousandth) of
Preferred Stock will be issuable;
however, the Company may elect to
distribute depositary receipts in
lieu of such fractional shares. In
lieu of fractional shares other
than fractions that are multiples
of one one-thousandth of a share,
an adjustment in cash will be made
based on the market price of the
Preferred Stock on the last trading
date prior to the date of exercise.
Because of the nature of the
Preferred Stock’s dividend,
liquidation and voting rights, the
value of one one-thousandth of a
share of Preferred Stock
purchasable upon exercise of each
Right should approximate the value
of one share of Common Stock.
	 
	 	 
	Rights in Event of Self-Dealing
Transaction or Acquisition of
Substantial Amount of Common Stock:

	 	In the event that an Acquiring
Person engages in certain
self-dealing transactions with the
Company, or any person becomes a
Beneficial Owner of 15% or more of
the outstanding Common Stock
(“Flip-In Events”), a holder of a
Right thereafter has the right to
purchase, upon payment of the then
current Purchase Price, in lieu of
one one-thousandth of a share of
Preferred Stock per outstanding
Right, such number of shares of
Common Stock having a market value
at the time of the transaction
equal to the Purchase Price divided
by one-half the Current Market
Price (as defined in the Rights
Agreement) of the Common Stock.
Notwithstanding the foregoing,
Rights held by an Acquiring Person
or any Associate or Affiliate
thereof or certain transferees will
be null and void and no longer be
transferable.
	 
	 	 
	 

	 	Self-dealing transactions are
defined to include a consolidation,
merger or other combination of an
Acquiring Person with the Company
in which the Company is the
surviving corporation, the transfer
of assets to the Company in
exchange for securities of the
Company, the acquisition of
securities of the Company (other
than in a pro rata distribution to
all stockholders), the sale,
purchase, transfer, distribution,
lease, mortgage, pledge or
acquisition of assets by the
Acquiring Person to, from or with
the Company on other than an arm’s
length basis, compensation to an
Acquiring Person for services
(other than for employment as a
regular or part-time employee or
director on a basis consistent with
the Company’s past practice), a
loan or provision of other
financial assistance (except
proportionately as a stockholder)
to an Acquiring Person, or the
licensing, sale or other transfer
of proprietary technology or
know-how from the Company to the
Acquiring Person on terms not
approved by the Board of Directors
or a reclassification,
recapitalization or other
transaction with the effect of
increasing by more than 1% the
Acquiring Person’s proportionate
share of any class of securities of
the Company.

2

 

	 	 	 
	Rights in Event of 

Business Combination:

	 	If, following the occurrence of a
Flip-In Event, the Company is
acquired by any person in a merger
or other business combination
transaction in which the Common
Stock is exchanged or converted or
in which the Company is not the
surviving corporation, or 50% or
more of its assets or earnings
power are sold to any person
(“Flip-Over Events”), each holder
of a Right (other than an Acquiring
Person, or Affiliates or Associates
thereof) shall thereafter have the
right to purchase, upon payment of
the then current Purchase Price,
such number of shares of common
stock of the acquiring company
having a current market value equal
to the Purchase Price divided by
one-half the Current Market Price
of such common stock.
	 
	 	 
	Exchange Option:

	 	In the event (i) any person or
group becomes an Acquiring Person
or (ii) any of the types of
transactions, acquisitions or other
events described above as
self-dealing transactions occur,
and prior to the acquisition by
such person or group of 50% or more
of the outstanding shares of Common
Stock, the Board may require all or
any portion of the outstanding
Rights (other than Rights owned by
such Acquiring Person which have
become void) to be exchanged for
Common Stock on a pro rata basis,
at an exchange ratio of one share
of Common Stock or one
one-thousandth of a share of
Preferred Stock (or of a share of a
class or series of the Company’s
Preferred Stock having equivalent
rights, preferences and
privileges), per Right (subject to
adjustment).
	 
	 	 
	Fractional Shares:

	 	No fractional shares of Common
Stock will be issued upon exercise
of the Rights and, in lieu thereof,
a payment in cash will be made to
the holder of such Rights equal to
the same fraction of the current
market value of a share of Common
Stock.
	 
	 	 
	Adjustment:

	 	The Purchase Price payable, and the
number of shares of Preferred Stock
or other securities or property
issuable, upon exercise of the
Rights are subject to adjustment
from time to time to prevent
dilution (i) in the event of a
stock dividend on, or a
subdivision, combination or
reclassification of the Preferred
Stock, (ii) upon the grant to
holders of the Preferred Stock of
certain rights or warrants to
subscribe for Preferred Stock or
convertible securities at less than
the current market price of the
Preferred Stock or (iii) upon the
distribution to holders of the
Preferred Stock of evidences of
indebtedness or assets (excluding
dividends payable in Preferred
Stock) or of subscription rights or
warrants (other than those referred
to above). The number of Rights
associated with each share of
Common Stock is 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 Common Stock or
subdivisions, consolidations or
combinations of the Common Stock
occurring, in any such case, prior
to the Distribution Date.
	 
	 	 
	Rights as Stockholder:

	 	The Rights themselves do not
entitle the holder thereof to any
rights as a stockholder, including,
without limitation, voting rights
or to receive dividends.
	 
	 	 
	Amendment of Rights:

	 	Until the Rights become
nonredeemable, the Company may
amend the Rights Agreement in any
manner. After the Rights become
nonredeemable, the Company may
amend the Rights Agreement to cure
any ambiguity, to correct or
supplement any provision which may
be defective or inconsistent with
any other provisions, to shorten or
lengthen any time period under the
Rights Agreement, or to change or
supplement any provision in any
manner the Company may deem
necessary or desirable, provided
that no such amendment may
adversely affect the interests of
the holders of the Rights (other
than the

3

 

	 	 	 
	 

	 	Acquiring Person or its
Affiliates or Associates) or cause
the Rights to again be redeemable
or the Rights Agreement to again be
freely amendable.

A copy of the Rights Agreement is available, free of charge, from the Company,
10201 North De Anza Blvd., Cupertino, California 95014, Attention: Secretary. This
summary description of the Rights Agreement does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as amended from time
to time, which is incorporated in this summary description by reference.

4exv10w1

 

Exhibit 10.1

SERIES 6-A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

     THIS SERIES 6-A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the “Agreement”) is
made as of the 31st day of March, 2008 by and among Tri-Isthmus Group, Inc. (f/k/a
Vsource, Inc.), a Delaware corporation (the “Company”), and the investors listed on
Exhibit A attached to this Agreement (the “Purchaser”).

     The parties hereby agree as follows:

	1.	 	Authorization and Sale of Shares and Warrants.

     1.1 Authorization. The Company has duly authorized the sale and issuance, pursuant to
the terms of this Agreement, of up to 5,000 shares (the “Shares”) of its Series 6-A
Convertible Preferred Stock, par value $0.01 per share (the “Series 6-A Preferred”), and
warrants to purchase up to 3,000,000 shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), at an exercise price of $0.50 per share substantially in the
form attached hereto as Exhibit B (the “Warrants”). For purposes of this
Agreement, a “Unit” shall consist of one share of Series 6-A Preferred and one Warrant to
purchase 600 shares of Common Stock.

     1.2 Purchase and Sale. Upon the terms and subject to the conditions herein, and in
reliance on the representations, warranties and covenants set forth herein, at the Closing each
Purchaser named on Exhibit A hereto shall, individually and not jointly, purchase from the
Company, and the Company shall issue and sell to each such Purchaser, the number of Units set forth
opposite the name of such Purchaser on Exhibit A hereto, for a purchase price of $1,000.00
per Unit (the “Purchase Price”).

     1.3 Defined Terms Used in this Agreement. The following terms used in this Agreement
shall be construed to have the meanings set forth below.

          “Affiliate” means with respect to any person or entity (a “Person”), any
Person which, directly or indirectly, controls, is controlled by, or is under common control with
such Person, including, without limitation, any partner, officer, director, or member of such
Person.

          “Balance Sheet” means the Company’s balance sheet as of September 30, 2007 included in
the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

          “Code” means the Internal Revenue Code of 1986, as amended.

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

          “Material Adverse Effect” means a material adverse effect on the assets or liabilities
of the Company.

          “SEC” means the United States Securities and Exchange Commission.

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

1

 

	2.	 	Closing; Deliveries.

     2.1 Closing. In accordance with the terms and conditions of that certain escrow
agreement (the “Escrow Agreement”), by and among the Company, the Purchasers and
Kirkpatrick & Lockhart Preston Gates Ellis LLP, as escrow agent (the “Escrow Agent”), the
purchase and sale of the Units shall take place as of the date hereof at the offices of the Escrow
Agent (which time and place is designated as the “Closing”).

     2.2 Deliveries; Certificate of Designation.

          (a) Shares and Warrants; Purchase Price. At the Closing and in accordance with the
Escrow Agreement, the Company shall deliver to Purchasers certificates representing the Shares and
the Warrants being purchased by Purchasers against payment of the Purchase Price to the Company.

          (b) Certificate of Designation. The Company has previously filed the Certificate of
Designation of the Company, in the form attached hereto as Exhibit C (the “Certificate
of Designation”), which establishes the rights and preferences of the Series 6-A Preferred.

3. Representations and Warranties of the Company. The Company hereby represents and
warrants to Purchasers that the following representations are true and correct as of the date
hereof. For purposes of these representations and warranties, the phrase “to the Company’s
knowledge” shall mean the actual knowledge of David Hirschhorn, Todd Parker or Dennis Smith.

     3.1 Organization, Good Standing, Corporate Power and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its business as presently
conducted and as proposed to be conducted. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.

     3.2 Capitalization. The authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock, 8,177,629 shares of which are issued and outstanding, and (ii)
5,000,000 shares of preferred stock, of which (a) 67,600 shares of Series 1-A Preferred Stock, par
value $0.01 per share, (b) 3,900 shares of Series 2-A Preferred Stock, par value $0.01 per share,
and (c) 7,462 shares of Series 5-A Preferred Stock, par value $0.01 per share, are issued and
outstanding. Except as disclosed on Schedule 3.2 and as contemplated hereby, there are no
outstanding subscriptions, options, warrants, commitments, agreements or arrangements for or
relating to the issuance, or sale of, or outstanding securities
convertible into or exchangeable for, any shares of capital stock of any class or other equity
interests of the Company. As of the Closing, and after giving effect to the transactions
contemplated hereby, all of the outstanding shares of capital stock of the Company will have been
duly and validly authorized and issued and will be fully paid and non-assessable and will have been
offered,

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

2

 

issued, sold and delivered in compliance with applicable federal and state securities laws
and not subject to any preemptive rights. When issued in accordance with the terms of the Series
6-A Preferred and the Warrants, the shares of Common Stock issuable upon exercise of Series 6-A
Preferred and the Warrants will be validly issued, fully paid and non-assessable. The terms
relating to the Warrants are as set forth in Exhibit B attached hereto. The relative
rights, preferences and other terms relating to the Series 6-A Preferred are as set forth in
Exhibit C attached hereto. There are no preemptive rights, rights of first refusal, put or
call rights or obligations or any other purchase or redemption obligations or anti-dilution rights
with respect to the Company’s capital stock or any interests therein, other than as disclosed on
Schedule 3.2 or rights set forth herein or in the Company’s Certificate of Incorporation or
the Certificates of Designation establishing such capital stock. Other than as set forth herein,
there are no rights to have the Company’s capital stock registered for sale to the public in
connection with the laws of any jurisdiction, and there are no agreements relating to the voting of
the Company’s voting securities or restrictions on the transfer of the Company’s capital stock.

     3.3 Authorization; No Conflict. The execution, delivery and performance by the
Company of this Agreement, and the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding obligation of the
Company enforceable in accordance with its terms. The execution of and performance of the
transactions contemplated by this Agreement and the compliance with its provisions by the Company
will not (a) conflict with or violate any provision of the Certificate of Incorporation or Bylaws
of the Company, (b) conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under,
any material contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security Interest (as defined
below) or other arrangement to which the Company is a party or by which the Company is bound or to
which its assets are subject, (c) result in the imposition of any Security Interest upon any assets
of the Company or (d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets. For purposes of this Agreement,
“Security Interest” means any mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of law).

     3.4 Valid Issuance of Shares. The Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this Agreement, will be validly
issued, fully paid and non-assessable and free of restrictions on transfer other than restrictions
on transfer under applicable state and federal securities laws and liens or encumbrances created by
or imposed by a Purchaser. Assuming the accuracy of the representations of the Purchasers in
Section 4 of this Agreement and subject to the filings described in Section 3.5 below, the Shares will be issued in compliance
with all applicable federal and state securities laws. The Common Stock issuable upon conversion
of the Shares and exercise of the Warrants has been duly reserved for issuance, and upon issuance,
will be validly issued, fully paid and non-assessable and free of restrictions on transfer other
than restrictions on transfer under applicable federal and state securities laws and liens or
encumbrances created by or imposed by a Purchaser. Based in

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

3

 

part upon the representations of the
Purchasers in Section 4 of this Agreement, and subject to Section 3.5 below, the
Common Stock issuable upon conversion of the Shares and exercise of the Warrants will be issued in
compliance with all applicable federal and state securities laws.

     3.5 Governmental Consents and Filings. Assuming the accuracy of the representations
made by the Purchasers in Section 4 of this Agreement, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of the Company in connection
with the consummation of the transactions contemplated by this Agreement, except such filings as
shall have been made prior to and shall be effective on and as of the Closing and such filings
required to be made after the Closing under applicable federal and state securities laws.

     3.6 Subsidiaries. The Company’s subsidiaries are as set forth in the Company’s Annual
Report on Form 10-K for the fiscal year ended September 30, 2007.

     3.7 Compliance with Laws. The Company has complied in all material respects with all
laws, regulations and orders applicable to its present and currently proposed business and has all
material permits and licenses required thereby, except where the failure to have such permits or
licenses would not have a Material Adverse Effect.

     3.8 Absence of Litigation. Except as disclosed in the Company’s periodic reports
filed with the Securities and Exchange Commission (the “SEC Filings”), there is no action,
suit or proceeding pending or, to the Company’s knowledge, threatened, against the Company which
questions the validity of this Agreement or the right of the Company to enter into it, or which
might result, either individually or in the aggregate, in a Material Adverse Effect.

     3.9 Absence of Liabilities. The Company does not have any material liabilities or
obligations, whether accrued, absolute, contingent or otherwise, of the type required to be
disclosed on a balance sheet other than (i) such matters as are specifically and expressly set
forth on the Balance Sheet or (ii) those which have been incurred by the Company in the ordinary
course of business during the period from the date of the Balance Sheet to the date hereof.

     3.10 Material Contracts and Obligations. Except as disclosed in the Company’s SEC
Filings or as disclosed on Schedule 3.10, the Company is not a party to, nor is it bound by
any of the following types of agreements: (a) any agreement which requires future expenditures by
the Company in excess of $25,000 or which might result in payments to the Company in excess of
$25,000, (b) any agreement with any current officer or director of the Company, or any “affiliate” or “associate” of such persons
(as such terms are defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for the furnishing of
services by, rental of real or personal property from, or otherwise requiring payments to, any such
Person, (c) any agreement under which the Company is restricted from carrying on any business or
other services anywhere in the world, (d) any agreement for the disposition of a material portion
of the Company’s assets or (e) any agreement for the acquisition of the business or shares of
another party.

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

4

 

     3.11 Changes. Except as disclosed in the Company’s SEC Filings, and in Schedule
3.11, since September 30, 2007, there has not been:

          (a) any material change in the assets or liabilities of the Company from that reflected on the
Balance Sheet, except changes in the ordinary course of business that have not caused, in the
aggregate, a Material Adverse Effect;

          (b) any damage, destruction or loss, whether or not covered by insurance, that would have a
Material Adverse Effect;

          (c) any waiver or compromise by the Company of a valuable right or of a material debt owed to
it;

          (d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and the satisfaction or
discharge of which would not have a Material Adverse Effect;

          (e) any material change to a material contract or agreement by which the Company or any of its
assets is bound or subject;

          (f) any material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;

          (g) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company,
with respect to any of its material properties or assets, except liens for taxes not yet due or
payable and liens that arise in the ordinary course of business and do not materially impair the
Company’s ownership or use of such property or assets;

          (h) any loans or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than travel advances and
other advances made in the ordinary course of its business;

          (i) any declaration, setting aside or payment or other distribution in respect of any of the
Company’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of
any of such stock by the Company;

          (j) to the Company’s knowledge, any other event or condition of any character, other than
events affecting the economy or the Company’s industry generally, that could reasonably be expected
to result in a Material Adverse Effect; or

          (k) any agreement or commitment by the Company to do any of the foregoing.

     3.12 Employees. The Company’s only current employees are David Hirschhorn and Dennis
Smith.

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

5

 

     3.13 Tax Returns and Payments. There are no federal, state, county, local or foreign
taxes due and payable by the Company which have not been timely paid. There are no accrued and
unpaid federal, state, country, local or foreign taxes of the Company which are due, whether or not
assessed or disputed. There have been no examinations or audits of any tax returns or reports by
any applicable federal, state, local or foreign governmental agency. The Company has duly filed
all federal, state, county, local and foreign tax returns required to have been filed by it and
there are in effect no waivers of applicable statutes of limitations with respect to taxes for any
year.

     3.14 No Stop Order. No stop order suspending or prohibiting the transactions
contemplated by this Agreement has been issued by the SEC or the regulatory authorities of any
state and, to the Company’s knowledge, no proceeding for that purpose has been initiated or is
threatened or contemplated by the SEC or the regulatory authorities of any state.

     3.15 Quotation of Common Stock. The Company’s Common Stock continues to be quoted on
the OTC Bulletin Board under the ticker symbol, “TISG.OB”.

     3.16 Directors and Officer’s Liability Insurance. The Company has made all payments
under its existing policy of directors and officers’ liability insurance on a timely basis.

4. Representations and Warranties of the Purchasers. Each Purchaser hereby represents and
warrants to the Company, severally and not jointly, that:

     4.1 Authorization. The Purchaser has full power and authority to enter into this
Agreement. This Agreement, when executed and delivered by the Purchaser, will constitute the valid
and legally binding obligation of the Purchaser, enforceable in accordance with its terms.

     4.2 Purchase for Own Account; Accredited Investor. This Agreement is made with the
Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s
execution of this Agreement, the Purchaser hereby confirms, that the Shares to be acquired by the
Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or otherwise
distributing the same. By
executing this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person, with respect to any of the
Shares. The Purchaser has not been formed for the specific purpose of acquiring the Shares. The
Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.

     4.3 Experience. The Purchaser has carefully reviewed the representations concerning
the Company contained in this Agreement and has made detailed inquiry concerning the Company, its
business and its personnel. The officers of the Company have made available to the Purchaser any
and all information which the Purchaser has requested and have answered to the Purchaser’s
satisfaction all inquiries made by the Purchaser; and the Purchaser has sufficient

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

6

 

knowledge and
experience in finance and business that it is capable of evaluating the risks and merits of its
investment in the Company and the Purchaser is able financially to bear the risks thereof.

     4.4 Restricted Securities. The Purchaser understands that the issuance of the Shares
and the Warrants and the Common Stock issuable upon conversion of the Shares and exercise of the
Warrants have not been registered under the Securities Act, by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of the Purchaser’s representations as
expressed herein. The Purchaser understands that the Shares, the Warrants and the Common Stock
issuable upon conversion of the Shares and exercise of the Warrants are “restricted securities”
under applicable U.S. federal and state securities laws and that, pursuant to these laws, the
Purchaser must hold the Shares, the Warrants and such Common Stock indefinitely unless the resales
of same are registered with the SEC and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser acknowledges that, except
as otherwise provided herein, the Company has no obligation to register or qualify the resale of
the Shares, the Warrants or the Common Stock issuable upon conversion of the Shares or exercise of
the Warrants for resale. The Purchaser further acknowledges that if an exemption from registration
or qualification is available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, the Warrants and the
Common Stock issuable upon conversion of the Shares and exercise of the Warrants, and on
requirements relating to the Company which are outside of the Purchaser’s control, and which the
Company is under no obligation and may not be able to satisfy.

     4.5 Legends. The Purchaser understands that the Shares, the Warrants and any
securities issued in respect of or exchange for the Shares or exercise of the Warrants, may bear
one or all of the following legends:

          (a) “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933.”

          (b) Any legend required by the securities laws of any state to the extent such laws are
applicable to the Shares and the Warrants represented by the certificate so legended.

5. Directors’ and Officers’ Insurance and Indemnification. From and after the Closing and
for a period of six years, the Company will provide standard and customary directors’ and officers’
liability insurance coverage commercially consistent with the then-applicable size of the Company
and its operations to current and former officers and directors of the Company (all

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

7

 

such directors
and officers are referred to herein as the “Covered Persons”), including run-off for past acts.
From and after the Closing, the Company will fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification obligations of the Company with respect to each of the
Covered Persons, and any indemnification provisions under the Company’s certificate of
incorporation and bylaws will contain provisions with respect to exculpation and indemnification
that are at least as favorable to the Covered Persons as those contained in the certificate of
incorporation and bylaws of the Company as in effect on the date hereof, which provisions will not
be amended, repealed or otherwise modified for a period of six years from the Closing in any manner
that would adversely affect the rights of the Covered Persons, unless such modification is required
by law. This covenant shall be enforceable by the Covered Persons as third party beneficiaries,
and shall be binding on all successors and assigns of the Company.

	6.	 	Registration Rights.

     6.1 Registration Obligations. Upon demand by Purchasers owning at least Fifty Percent
(50%) of the outstanding Shares, the Company shall include the shares of Common Stock issuable upon
conversion of the Series 6-A Preferred and exercise of the Warrants (the “Registrable
Securities”) in a registration statement prepared by the Company and filed with the SEC within
thirty (30) days of such demand (the “Registration Statement”); provided, that no
demand shall be made sooner than the six month anniversary of the Closing and the Purchasers shall
be entitled to only one demand to register the resale of the Registrable Securities pursuant to
this Section 6.1. The Registration Statement will be on Form SB-2 or other appropriate
form (as the Company shall determine in its sole discretion) and will permit the Registrable
Securities to be offered on a continuous basis. The Company shall use its commercially reasonable
efforts to cause the Registration Statement to be declared effective under the Securities Act by
the SEC as promptly as possible after the filing thereof. The Company shall use its commercially
reasonable efforts to keep the Registration Statement continuously effective under the Securities
Act until the date which is the earliest of (a) the date on which all Registrable Securities have
been sold, (b) the date on which all Registrable Securities may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant to Rule 144(k) of
the Securities Act or (c) two years from the date the Registration Statement is declared effective
by the SEC.

     6.2 Suspension of Registration Obligations. The Company’s obligations under this
Section 8 shall be suspended if (a) the fulfillment of such obligations would require the
Company to make a disclosure that would be detrimental to the Company and the Company’s Board of
Directors determines that it is in the best interests of the Company to defer such obligations or
(b) the fulfillment of such obligations would require the Company to prepare financial statements
not required to be prepared by the Company to comply with its obligations under the Exchange Act at
the time the Registration Statement is proposed to be filed (the period during which either of the
preceding conditions is in effect is referred to as a “Permitted Black-Out Period”). A
Permitted Black-Out Period will end, as applicable, upon the making of the relevant disclosure by
the Company (or, if earlier, when such disclosure would no longer be necessary or detrimental) or
as soon as it would no longer be necessary to prepare such financial statements to comply with the
Securities Act.

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

8

 

     6.3 Expenses; Indemnification. The Company shall pay all costs and expenses incurred
by the Company in connection with the preparation and filing of the Registration Statement, other
than selling commissions and fees which shall be the sole responsibility of the Purchaser. The
Company and the Purchasers shall provide each other with customary indemnification rights in
connection with the Registration Statement prepared and filed with the SEC pursuant to this
Section 6.

	7.	 	Indemnification.

     7.1 Indemnification by the Company. The Company shall indemnify and hold harmless
each Purchaser and its officers, directors, agents, Affiliates, principal shareholders, successors
and assigns from and against any and all claims, demands, liabilities, obligations, damages, costs,
and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) arising out of
any breach of the Company’s representations, warranties, covenants or agreements set forth herein;
provided, however, that (a) the Company shall not indemnify any Purchaser for any
Losses resulting from such Purchaser’s negligence or intentional misconduct or any breach of
Purchaser’s representations, warranties, covenants or agreements hereunder; and (b) the Company’s
total liability under this Section 7.1 shall not exceed the aggregate consideration paid to
the Company by the Purchasers for the Units issued and sold pursuant to this Agreement.

     7.2 Indemnification by the Purchaser. Anthony J. Ciabattoni, the lead investor
(“Lead Investor”), will indemnify and hold harmless the Company and its officers,
directors, agents, Affiliates, principal shareholders, successors and assigns from and against any
and all Losses arising out of any breach of the Purchaser’s representations, warranties, covenants
or agreements set forth herein; provided, however, that the Lead Investor shall not
indemnify the Company for any Losses resulting from the Company’s negligence or intentional
misconduct or any breach of the Company’s representations, warranties, covenants or agreements
hereunder.

	8.	 	Miscellaneous.

     8.1 Survival of Representations and Warranties. The representations and warranties of
the Company and the Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for a period of one year following the
Closing.

     8.2 Successors and Assigns; No Third Party Beneficiaries. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

     8.3 Governing Law. This Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of Delaware, without regard to its principles of
conflicts of laws.

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

9

 

     8.4 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed and delivered by facsimile signature and in two or
more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     8.5 Notices. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c)
five (5) days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be
sent to the respective parties at their address as set forth on the signature page or Exhibit
A, or to such e-mail address, facsimile number or address as subsequently modified by written
notice given in accordance with this Section 8.5. If notice is given to the Company, a
copy shall also be sent to Kirkpatrick & Lockhart Preston Gates Ellis LLP, 1717 Main Street, Suite
2800, Dallas, Texas 75201, Attention: I. Bobby Majumder.

     8.6 No Finder’s Fees. Each party represents that it neither is nor will be obligated
for any finder’s fee or commission in connection with the transactions contemplated by this
Agreement other than commissions payable to Waveland Capital Partners, LLC. Each Purchaser agrees
to indemnify and to hold harmless the Company from any liability for any commission or compensation
in the nature of a finder’s fee arising out of the transactions contemplated hereby (and the costs
and expenses of defending against such liability or asserted liability) for which each Purchaser or
any of its officers, employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s
fee arising out of the transactions contemplated hereby (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.

     8.7 Fees and Expenses. All fees and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring such fees or
expenses.

     8.8 Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended, terminated or waived only with the written
consent of the Company and the holders of at least a majority of the then-outstanding Shares. Any
amendment or waiver effected in accordance with this Section 8.8 shall be binding upon the
Purchaser and each transferee of the Shares (or the Common Stock issuable upon conversion thereof),
each future holder of all such securities, and the Company.

     8.9 Severability. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

10

 

     8.10 Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any party under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power or remedy of such non-breaching or
non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this Agreement, or any waiver on
the part of any party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not
alternative.

     8.11 Acknowledgement. Each party hereto acknowledges that: (a) it has read this
Agreement; (b) it has been represented in the preparation, negotiation and execution of this
Agreement by legal counsel of its own choice or has voluntarily declined to seek such counsel; and
(c) it understands the terms and consequences of this Agreement and is fully aware of the legal and
binding effect of this Agreement.

     8.12 Entire Agreement. This Agreement (including the Exhibits hereto) constitutes the
full and entire understanding and agreement among the parties with respect to the subject matter
hereof, and any other written or oral agreement relating to the subject matter hereof existing
among the parties is expressly canceled.

[SIGNATURE PAGE FOLLOWS]

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

11

 

     IN WITNESS WHEREOF, the parties have executed this Series 6-A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.

	 	 	 	 	 
	 	COMPANY:

TRI-ISTHMUS GROUP, INC.

 	 
	 	By:  	 	 
	 	 	DAVID HIRSCHHORN, CEO
 	 
	 	Address:

149 S. Barrington Ave

#808

Los Angeles, CA  90049 	 
	 

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

12

 

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 	 	Company name (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 	 	Title (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

[Purchaser Signature Page]

 

 

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 	 	Company name (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 	 	Title (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

[Purchaser Signature Page]

 

 

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 	 	Company name (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 	 	Title (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

[Purchaser Signature Page]

 

 

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 	 	Company name (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 	 	Title (if applicable):
	 
	 	 	 	 
	 	 	 
	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

[Purchaser Signature Page]

 

 

EXHIBIT A

Purchasers

	 	 	 	 	 	 	 
	 	 	 	 	Number of	 	Number of
	Purchaser	 	Purchase Price	 	Shares	 	Warrants
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___
	 

	 	$___
	 	___
	 	___

EXHIBIT A TO SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

A-1

 

EXHIBIT B

Form of Warrant

EXHIBIT A TO SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

B-1

 

EXHIBIT C

Form of Certificate of Designation

EXHIBIT A TO SERIES 6-A PREFERRED STOCK AND

WARRANT PURCHASE AGREEMENT

C-1

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