Document:

exv4w18

Exhibit 4.18

FORM OF SUBSCRIPTION RIGHTS CERTIFICATE

	 	 	 
	Rights Certificate No.:                     
	 	Number of Rights:                     

THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE HEALTH BENEFITS DIRECT
CORPORATION (THE “COMPANY”) PROSPECTUS, DATED JANUARY 22,
2010 (THE “PROSPECTUS”) AND ARE
INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE
COMPANY.

HEALTH BENEFITS DIRECT CORPORATION

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

SUBSCRIPTION RIGHTS CERTIFICATE

EVIDENCING SUBSCRIPTION RIGHTS TO PURCHASE

______ UNITS

SUBSCRIPTION PRICE: $1,000 PER UNIT

THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY 26, 2010, UNLESS EXTENDED OR THE RIGHTS OFFERING IS TERMINATED BY HEALTH BENEFITS DIRECT
CORPORATION.

REGISTERED OWNER:                                         

     THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the
number of subscription rights (“Rights”) set forth above. Each whole Right entitles the holder
thereof, to subscribe for and purchase, at the subscription price of $1,000 (the “Subscription
Price”), one “Unit”, consisting of 250 shares of Series A preferred stock, par value $0.001 per
share, and a five-year warrant to purchase 5,000 additional shares of common stock, par value
$0.001 per share, of the Company at an exercise price of $0.20 per share, pursuant to a rights
offering (the “Rights Offering”), on the terms and subject to the conditions set forth in the
Prospectus and the “Instructions for Use of Health Benefits Direct Corporation Subscription Rights
Certificates” accompanying this Subscription Rights Certificate (the “Basic Subscription Right”).

     If any of the Units available for purchase in the Rights Offering are not purchased by other
holders of Rights pursuant to the exercise of their Basic Subscription Right (the “Excess Units”),
any Rights holder that exercises its Basic Subscription Right in full may subscribe for

 

 

Excess Units pursuant to the terms and conditions of the Rights Offering, subject to proration, as
described in the Prospectus (the “Over-Subscription Privilege”). The Rights represented by this
Subscription Rights Certificate may be exercised by completing Form 1 and any other appropriate
forms on the reverse side hereof and by returning the full payment of the Subscription Price for
each Right subscribed for pursuant to the Over-Subscription Privilege, in addition to the payment
due for Units purchased through your Basic Subscription Right, in accordance with the “Instructions
for Use of Health Benefits Direct Corporation Subscription Rights Certificates” that accompany this
Subscription Rights Certificate.

     Rights evidenced by this Subscription Rights Certificate may not be transferred or sold. The
subscription rights will not be listed for trading on any stock exchange or on the OTC Bulletin
Board.

     IN WITNESS WHEREOF, the Company has caused this Subscription Rights Certificate to be duly
executed under their corporate seals.

Dated:
January 22, 2010

	 	 	 	 	 	 	 
	 	 	HEALTH BENEFITS DIRECT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Anthony R. Verdi
	 	 
	 

	 	Title:
	 	Chief Financial Officer and

Chief Operating Officer	 	 

 

 

DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE

FOR DELIVERY BY HAND DELIVERY, FIRST CLASS MAIL OR COURIER SERVICE:

Health Benefits Direct Corporation

150 N. Radnor-Chester Road

Suite B-101

Radnor, Pennsylvania 19087

Attention: Francis L. Gillan III

DELIVERY OTHER THAN IN THE MANNER OR TO THE ADDRESSES LISTED

ABOVE WILL NOT CONSTITUTE VALID DELIVERY

PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY

 

 

FORM 1 — EXERCISE OF SUBSCRIPTION RIGHTS

     To subscribe for Units pursuant to your Basic Subscription Right, please complete lines (a)
and (c) and sign under Form 3 below. To subscribe for Units pursuant to your Over-Subscription
Privilege, please also complete line (b) and sign under Form 3 below.

If you have exercised your Basic Subscription Right in full and wish to subscribe for additional
Units pursuant to your Over-Subscription Right:

(c)      Total Amount of Payment Enclosed  = $___

METHOD OF PAYMENT (CHECK ONE):

o Check or bank draft drawn on a U.S. bank, or postal, telegraphic or express money order payable
to “Health Benefits Direct Corporation.” Funds paid by an uncertified check may take at least five
business days to clear.

o Wire transfer of immediately available funds directly to the account maintained by Health
Benefits Direct Corporation for purposes of accepting subscriptions in this Rights Offering (the
“Subscription Account”):

	 	 	 	 	 
	Account Holder:

	 	 	Health Benefits Direct Corporation

	Bank:

	 	 	PNC Bank

	ABA #:

	 	 	031000053	 
	Account No.:

	 	 	862187984	 

 

 

FORM 2 — DELIVERY TO DIFFERENT ADDRESS

     If you wish for the shares of our preferred stock, as well as the warrants, underlying your
subscription rights to be delivered to an address different from that shown on the face of this
Subscription Rights Certificate, please enter the alternate address below, sign under Form 3 and
have your signature guaranteed under Form 4.

 

 

FORM 3 — SIGNATURE

     I acknowledge that I have received the Prospectus for this Rights Offering and I hereby
irrevocably subscribe for the number of Units indicated above on the terms and conditions specified
in the Prospectus.

	 	 	 
	Signature(s)
	 	 
	 

	 	 

IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this
Subscription Rights Certificate in every particular, without alteration or enlargement, or any
other change whatsoever.

 

 

FORM 4 — SIGNATURE GUARANTEE

This form must be completed if you have completed Form 2.

Signature Guaranteed:

	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	(Name of Bank or Firm)	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(Signature of Officer)	 	 

IMPORTANT: The signature(s) should be guaranteed by an eligible guarantor institution (bank, stock
broker, savings & loan association or credit union) with membership in an approved signature
guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.exv4w1

Exhibit 4.1

OSTEOTECH, INC.

AND

REGISTRAR AND TRANSFER COMPANY,

as Rights Agent

RIGHTS AGREEMENT

dated as of

January 22, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	Section 1.	 	Certain Definitions
	 	 	1	 
	Section 2.	 	Appointment of Rights Agent
	 	 	7	 
	Section 3.	 	Issue of Right Certificates
	 	 	7	 
	Section 4.	 	Form of Right Certificates
	 	 	9	 
	Section 5.	 	Countersignature and Registration
	 	 	9	 
	Section 6.	 	Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates
	 	 	9	 
	Section 7.	 	Exercise of Rights: Purchase Price; Expiration Date of Rights
	 	 	10	 
	Section 8.	 	Cancellation and Destruction of Right Certificates
	 	 	11	 
	Section 9.	 	Reservation and Availability of Shares of Preferred Stock
	 	 	12	 
	Section 10.	 	Preferred Stock Record Date
	 	 	13	 
	Section 11.	 	Adjustment of Purchase Price, Number of Shares or Number of Rights
	 	 	13	 
	Section 12.	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	21	 
	Section 13.	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	Section 14.	 	Fractional Rights and Fractional Shares
	 	 	24	 
	Section 15.	 	Rights of Action
	 	 	25	 
	Section 16.	 	Agreement of Right Holders
	 	 	25	 
	Section 17.	 	Right Certificate Holder Not Deemed a Stockholder
	 	 	26	 
	Section 18.	 	Concerning the Rights Agent
	 	 	26	 
	Section 19.	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	27	 
	Section 20.	 	Duties of Rights Agent
	 	 	27	 
	Section 21.	 	Change of Rights Agent
	 	 	30	 
	Section 22.	 	Issuance of New Right Certificates
	 	 	30	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	Section 23.	 	Redemption
	 	 	31	 
	Section 24.	 	Exchange
	 	 	32	 
	Section 25.	 	Notice of Certain Events
	 	 	32	 
	Section 26.	 	Notices
	 	 	33	 
	Section 27.	 	Supplements and Amendments
	 	 	34	 
	Section 28.	 	Successors
	 	 	34	 
	Section 29.	 	Benefits of this Agreement
	 	 	34	 
	Section 30.	 	Determinations and Actions by the Board of Directors of the Company
	 	 	35	 
	Section 31.	 	Periodic Review by Independent Directors
	 	 	35	 
	Section 32.	 	Severability
	 	 	35	 
	Section 33.	 	Governing Law
	 	 	36	 
	Section 34.	 	Descriptive Headings; References
	 	 	36	 
	Section 35.	 	Counterparts
	 	 	36	 
	Section 36.	 	Force Majeure
	 	 	36	 

Exhibit A

Form of Certificate of Designations for Series E Junior Participating Preferred Stock

Exhibit B

Form of Right Certificate

Form of Assignment

Form of Election to Purchase

Exhibit C

Summary of Rights to Purchase Preferred Stock

ii

 

RIGHTS AGREEMENT

     This Rights Agreement, dated as of January 22, 2010 (this “Agreement”), is
entered into by and between OSTEOTECH, INC., a Delaware corporation (the “Company”), and
REGISTRAR AND TRANSFER COMPANY, as Rights Agent (the “Rights Agent”).

WITNESSETH:

     WHEREAS, the Board of Directors of the Company has authorized and declared a dividend
distribution of one preferred share purchase right (a “Right”) for each outstanding share
of Common Stock (as defined below) outstanding as of the close of business on February 2, 2010 (the
“Record Date”), and has authorized the issuance of one Right (subject to adjustment) in
respect of each share of Common Stock issued between the Record Date and the earliest to occur of
the Distribution Date, the Redemption Date and the Expiration Date (as such terms are hereinafter
defined), with each Right representing the right to purchase one one-thousandth (1/1,000th) of one
share of Series E Junior Participating Preferred Stock of the Company having the rights and
preferences set forth in the form of Certificate of Designations attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth;

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

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

     (a) “Acquiring Person” shall mean any Person who or that, together with all
Affiliates and Associates of such Person, shall be or become the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, but shall not include (i) any employee
benefit plan of the Company or of any Subsidiary of the Company, or (ii) any entity
organized, appointed or established pursuant to the terms of any such plan, or (iii) the
Company or (iv) any Subsidiary of the Company. Notwithstanding the foregoing, no Person
shall be deemed to be an “Acquiring Person” solely by reason that such Person, alone
or together with Affiliates and Associates of such Person, Beneficially Owns on the date of
this Agreement, 15% or more of the shares of Common Stock currently outstanding;
provided, however, that if after the date of this Agreement, such Person,
alone or together with Affiliates and Associates of such Person, becomes the Beneficial
Owner of an additional amount of Common Stock equal to 1% or more of the shares of Common
Stock then outstanding (other than by reason of a stock dividend, stock split or other
corporate action effected by the Company), then such Person shall be deemed to be an
“Acquiring Person,” subject to the following sentences of this Section 1(a),
unless, upon consummation of the acquisition of such additional Common Stock, such Person,
alone or together with all Affiliates and Associates of such Person, does not beneficially
own 15% or more of the Common Stock then outstanding.

     Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as
the result of an acquisition of Common Stock by the Company or any Subsidiary of the
Company that, by reducing the number of shares outstanding, increases the proportionate

 

 

number of shares Beneficially Owned by a Person to 15% or more of the Common Stock then
outstanding; provided, however, that if such Person becomes the Beneficial
Owner of 15% or more of the Common Stock then outstanding by reason of share acquisitions by
the Company and its Subsidiaries and shall, after such share acquisitions by the Company and
its Subsidiaries, become the Beneficial Owner of any additional Common Stock (other than by
reason of a stock dividend, stock split or other corporate action effected by the Company),
then such Person shall be deemed to be an “Acquiring Person,” subject to the
following sentence of this Section 1(a), unless, upon consummation of the
acquisition of such additional Common Stock, such Person does not beneficially own 15% or
more of the Common Stock then outstanding.

     Notwithstanding the foregoing, if the Board of Directors of the Company determines in
good faith that a Person who otherwise would be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this Section 1(a), became the Beneficial
Owner of a number of shares of Common Stock such that such Person would otherwise be an
Acquiring Person inadvertently (including, without limitation, because (X) such Person was
unaware that it Beneficially Owned a percentage of Common Stock that would cause such Person
to be an “Acquiring Person” or (Y) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of changing or
influencing control of the Company, then such Person shall not be deemed to be an
“Acquiring Person” or to have become an “Acquiring Person,” for all purposes
of this Agreement (such that, for the avoidance of doubt, under such circumstances no
Distribution Date shall be deemed to have occurred and no adjustment pursuant to Section
11(a)(ii) or Section 13 shall be made in respect thereof) unless such Person
fails to divest itself as soon as practicable if the Company so requests (as determined in
good faith by the Board of Directors of the Company) of a sufficient number of shares of
Common Stock (or of Derivative Securities underlying a transaction entered into by or
acquired by such Person or any of such Person’s Affiliates or Associates) so that such
Person would no longer qualify as an Acquiring Person; provided, however,
that if such Person, after such determination and divestment, becomes the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding by reason of becoming the
Beneficial Owner of any additional shares of Common Stock, then such Person shall be deemed
to be an “Acquiring Person” unless a subsequent determination and divestment is
made.

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

     (c) “Agreement” shall have the meaning set forth in the preamble hereto.

     (d) “Associate,” when used to indicate a relationship with any Person, shall
mean each, any and all of the following:

     (i) any firm, corporation, limited liability company, partnership, joint
venture, bank, trust or other entity of which such Person (A) is an officer or

2

 

partner or (B) is, directly or indirectly, the Beneficial Owner of 10% or more of
any class of equity securities; provided, however, that a firm,
corporation, limited liability company, partnership, joint venture, bank, trust or
other entity described in clause (B) shall not be an “Associate” of a Person
if, and only for so long as, such Person (1) has reported Beneficial Ownership of
the equity securities of such firm, corporation, limited liability company,
partnership, joint venture, bank, trust or other entity on Schedule 13G under the
Exchange Act and is not required to report its ownership of such equity securities
on Schedule 13D under the Exchange Act, (2) satisfies the criteria set forth in both
Rule 13d-1(b)(1)(i) and Rule 13d-1(b)(1)(ii) of the General Rules and Regulations
under the Exchange Act, (3) is the Beneficial Owner of less than 15% of the shares
of Common Stock then outstanding (including any such shares that are beneficially
owned by such Person’s Affiliates and Associates after giving effect to this
proviso) and (4) has not reported and is not required to report its ownership of
Common Stock on Schedule 13D under the Exchange Act;

     (ii) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity; and

     (iii) any relative or spouse of such Person, or any relative of such spouse,
who has the same home as such Person.

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

     (i) that such Person, or any of such Person’s Affiliates or Associates,
beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of
this Agreement;

     (ii) that such Person, or any of such Person’s Affiliates or Associates, has
(A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) 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), written or
otherwise, 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, or to “beneficially own,” 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 pursuant to any agreement, arrangement or understanding, written or
otherwise; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under
this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public

3

 

proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report);

     (iii) that 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 acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to Section 1(e)(ii)(B)) or disposing of any securities of the
Company; provided, however, that nothing in this Section
1(e) shall cause a Person engaged in business as an underwriter of securities to
be the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such Person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such acquisition,
and then only if such securities continue to be owned by such Person at the
expiration of such forty-day period. Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase “then outstanding,” when
used with reference to a Person’s Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued and outstanding together with
the number of such securities not then actually issued and outstanding that such
Person would be deemed to own beneficially hereunder; or

     (iv) that are the subject of a derivative transaction entered into by such
Person or any of such Person’s Affiliates or Associates, or derivative security
acquired by such Person or any of such Person’s Affiliates or Associates, which
gives such Person or any of such Person’s Affiliates or Associates the economic
equivalent of ownership of an amount of such securities due to the fact that the
value of the derivative is explicitly determined by reference to the price or value
of such securities, or which provides such Person or any of such Person’s Affiliates
or Associates an opportunity, directly or indirectly, to profit, or to share in any
profit, derived from any change in the value of such securities, in any case without
regard to whether (A) such derivative conveys any voting rights in such securities
to such Person or any of such Person’s Affiliates or Associates, (B) the derivative
is required to be, or capable to being, settled through delivery of such securities,
or (C) such Person or any of such Person’s Affiliates or Associates may have entered
into other transactions that hedge the economic effect of such derivative. In
determining the number of shares of Common Stock of the Company Beneficially Owned
by virtue of the operation of this Section 1(e)(iv), the subject Person
shall be deemed to Beneficially Own (without duplication) the notional or other
number of shares of Common Stock of the Company specified in the documentation
evidencing the derivative position as being subject to be acquired upon the exercise
or settlement of the applicable right or as the basis upon which the value or
settlement amount of such right, or the opportunity of the holder of such right to
profit or share in any profit, is to be calculated in whole or
in part, and in any case (or if no such number of shares of Common Stock of the
Company is specified in such documentation or otherwise), as determined by the

4

 

Board
of Directors in good faith to be the number of shares of Common Stock of the Company
to which the derivative position relates. Such shares of Common Stock of the
Company that are deemed so Beneficially Owned pursuant to the operation of this
Section 1(e)(iv) shall be referred to herein as “Derivative Common
Shares;”

provided, however, that a Person will not be deemed to be the Beneficial Owner of,
or to beneficially own, any security if such beneficial ownership arises solely out of such
Person’s status either as a bona fide swaps dealer or as a “clearing agency,” as defined in Section
3(a)(23) of the Exchange Act, and such Person is acting in the ordinary course of its business and
without any intent to evade, or assist any other Person to evade, the purposes and intent of this
Agreement.

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

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

     (h) “Common Stock” shall mean the common stock, $0.01 par value (or as such par
value may be changed from time to time), of the Company.

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

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

     (k) “Current Market Price Per Share” shall have the meaning set forth in
Section 11(d).

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

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

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

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

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

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

     (r) “Independent Directors” shall mean members of the Board of Directors of the
Company who are not officers, employees or Affiliates (or designees of Affiliates) of either
the Company or any Acquiring Person.

5

 

     (s) “Invalidation Time” shall have the meaning set forth in Section
11(a)(ii).

     (t) “NASDAQ” shall mean the NASDAQ Stock Market.

     (u) “Person” shall mean any individual, firm, corporation, limited liability
company or other entity, and shall include any successor (by merger or otherwise) of such
entity.

     (v) “Preferred Stock” shall mean the Series E Junior Participating Preferred
Stock of the Company having the rights and preferences set forth in the form of Certificate
of Designations attached hereto as Exhibit A.

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

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

     (y) “Record Date” shall have the meaning set forth in the recitals hereof.

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

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

     
(bb) “Right” shall have the meaning set forth in the recitals hereof.

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

     (dd) “Rights Agent” shall have the meaning set forth in the preamble hereto.

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

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

     (gg) “Security” shall have the meaning set forth in Section 11(d).

     (hh) “Senior Voting Stock” shall have the meaning set forth in Section 13(b).

     (ii) “Shares Acquisition Date” shall mean the first date of public announcement
by the Company or an Acquiring Person (including, without limitation, pursuant to a report
filed or amended pursuant to Section 13(d) of the Exchange Act) that a Person has become an
“Acquiring Person” for purposes of this Agreement, or such earlier date as a
majority of the Board of Directors shall become aware of the existence of an Acquiring
Person.

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

     (kk) “Subsidiary or Subsidiaries” of a Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.

6

 

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

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

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

     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights (who, in accordance with Section 3,
shall, prior to the Distribution Date, also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable, upon ten
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 Agents.

     Section 3. Issue of Right Certificates.

     (a) Until the close of business on the tenth day after the Shares Acquisition Date (the
“Distribution Date”), (i) the Rights will be evidenced (subject to the provisions of
Section 3(b)) by the certificates for the Common Stock registered in the names of
the holders thereof (which certificates shall be deemed also to be Right Certificates) and
not by separate Right Certificates, and (ii) the right to receive Right Certificates will be
transferable only in connection with the transfer of the 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 so requested by written notice and provided with a stockholder list and all other
relevant information that the Rights Agent may reasonably request, send), by first class,
postage-prepaid mail, to each record holder of Common Stock as of the close of business on
the Distribution Date (other than an Acquiring Person or any Affiliate or Associate of an
Acquiring Person), at the address of such holder shown on the records of the Company, 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. 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. 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 make
available a copy of a Summary of Rights to Purchase Preferred Stock, in substantially the
form attached hereto as Exhibit C (the “Summary of Rights”), to any
holder of Rights who may so request from time to time prior to the Expiration Date.
With respect to shares of Common Stock outstanding as of the Record Date, until the
Distribution Date (or the earlier of the Redemption Date or the Expiration Date), the Rights
will be evidenced by the certificates for such shares registered in the names of the holders
thereof. Until the Distribution Date (or the earlier of the Redemption Date or the
Expiration Date), the surrender for transfer of any certificate for Common Stock

7

 

outstanding
on the Record Date, with or without a copy of the Summary of Rights, shall also constitute
the transfer of the Rights associated with the Common Stock represented thereby.

     (c) Rights shall be issued in respect of all shares of Common Stock issued or disposed
of (including, without limitation, upon disposition of Common Stock out of treasury stock or
issuance or reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption Date and the
Expiration Date or, in certain circumstances provided in Section 22, after the
Distribution Date. Certificates issued for Common Stock (including, without limitation,
upon transfer of outstanding Common Stock, disposition of Common Stock out of treasury stock
or issuance or reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption Date and the
Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:

This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Osteotech, Inc. and
Registrar and Transfer Company, as Rights Agent, dated as of January 22,
2010, as the same may be supplemented or amended from time to time (the
“Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Osteotech, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. Registrar
and Transfer Company will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to, acquired or beneficially owned by any Person
who is or becomes an Acquiring Person or any Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) and
their transferees will become null and void and will no longer be
transferable.

     With respect to such certificates containing the foregoing legend, until the Distribution
Date, the Rights associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common Stock represented by
such certificates.

     In the event that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such shares of Common
Stock shall be deemed cancelled and retired so that the Company shall not be entitled to exercise
any Rights associated with the shares of Common Stock that are no longer outstanding.

8

 

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

     Section 4. Form of Right Certificates. The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate (but that do
not affect the rights, duties or obligations of the Rights Agent as set forth in this Agreement)
and as are not inconsistent with the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or automated quotation system on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 22, the Right
Certificates, in each case, on their face shall entitle the holders thereof to purchase such number
of shares (or fraction of a share) of the Preferred Stock as shall be set forth therein at the
price per share (or fraction of a share) set forth therein (the “Purchase Price”), but the
amount and type of securities purchasable upon exercise of each Right, and the Purchase Price,
shall be subject to adjustment as provided herein.

     Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf
of the Company in the manner provided in the By-Laws of the Company for Common Stock certificates.
The Right Certificates shall be countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so countersigned.

     In case any officer of the Company who shall have signed any of the 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 with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such person was not such
an officer.

     Following the Distribution Date, and receipt by the Rights Agent of (i) written notice of the
Distribution Date pursuant to Section 3(a), and (ii) a stockholder list and all relevant
information reasonably requested by the Rights Agent pursuant to Section 3(a), the Rights
Agent will keep or cause to be kept, at its office designated for such purposes, books for
registration
and transfer of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates and the date of each of the Right Certificates.

     Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates. Subject to the provisions of Section 7(e)and
Section 14, at any time after the close of business on the Distribution Date, and prior to
the close of business on the earlier of the Redemption Date and the Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing Rights that have

9

 

become void pursuant to Section 11(a)(ii) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a like number of
shares (or fraction of a share) of the Preferred Stock (or, following an event described in either
Section 11(a)(ii) or Section 13, Common Stock, other securities, cash or other
assets, as the case may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent designated for such
purposes. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto
a Right Certificate or Right Certificates, as the case may be, as so requested. As a condition to
such transfer, division, combination or exchange, the Company may require payment by the
surrendering holder 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 any section of this Agreement that
requires the payment by a Rights holder of applicable taxes and/or charges unless and until it is
satisfied that all such taxes and/or charges have been paid.

     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 the case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor
to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

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

     (a) The registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purposes, together with payment of the
Purchase Price for each one one-thousandth of one share of the Preferred Stock (or
other securities, cash or assets, as the case may be) as to which the Rights are exercised,
at or prior to the earliest of (i) the close of business on January 22, 2020 (the
“Expiration Date”), or (ii) the date on, and time at, which the Rights are redeemed
as provided in Section 23 (“Redemption Date”), or (iii) the time at which
such Rights are exchanged as provided for in Section 24.

     (b) The Purchase Price for each one one-thousandth of one share of the Preferred Stock
pursuant to the exercise of a Right shall initially be $23.00, shall be subject to
adjustment from time to time as provided in Section 11 and Section 13, and
shall be payable in lawful money of the United States of America in accordance with
Section 7(c).

10

 

     (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase Price for each
one one-thousandth of one share of the Preferred Stock (or other securities, cash or assets,
as the case may be) to be purchased and an amount equal to any applicable tax or charge
required to be paid by the holder of such Right Certificate in accordance with Section
6 in cash, or by certified check or cashier’s check payable to the order of the Company,
the Rights Agent shall thereupon (i) (A) promptly requisition from any transfer agent of the
Preferred Stock of the Company, or make available if the Rights Agent is the transfer agent
of the Preferred Stock, certificates for the number of shares (or fractions thereof) of the
Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) promptly requisition from the depositary
agent depositary receipts representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case, certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to comply with
such request, (ii) when appropriate, promptly requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section
14, (iii) after receipt of such certificates or depositary receipts, promptly cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt, promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or property are available for
distribution by the Rights Agent, if and when appropriate.

     (d) In case the registered holder of any Right Certificate shall exercise less than all
the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to such holder’s duly authorized assigns, subject to the
provisions of Section 14.

     (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with respect to the
purported transfer or exercise of Rights pursuant to Section 6 or this Section
7 unless the registered holder shall have duly completed and executed the form of
assignment or election to purchase on the reverse side of the Right Certificate surrendered
for such transfer or exercise and shall have provided such additional evidence of the
identity of the Beneficial Owner (or such former or proposed Beneficial Owner) thereof or
such Beneficial Owner’s Affiliates or Associates as the Company or the Rights Agent shall
reasonably request.

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

11

 

and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. Subject
to applicable law and regulation, the Rights Agent shall maintain, in a retrievable database,
electronic records of all cancelled or destroyed stock certificates which have been canceled or
destroyed by the Rights Agent. The Rights Agent shall maintain such electronic records or physical
records for the time period required by applicable law and regulation. Upon written request of the
Corporation (and at the expense of the Corporation), the Rights Agent shall provide to the
Corporation or its designee copies of such electronic records or physical records relating to
rights certificates cancelled or destroyed by the Rights Agent.

     Section 9. Reservation and Availability of Shares of Preferred Stock. The Company covenants and
agrees that it will cause to be reserved and kept available out of its authorized and unissued
Preferred Stock, or its authorized and issued Preferred Stock held in its treasury, the number of
shares of the Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Agreement.

     So long as the Preferred Stock (and, following the time that a Person becomes an Acquiring
Person, shares of Common Stock) issuable upon the exercise of Rights may be listed or admitted to
trading on any national securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for such issuance to be
listed or admitted for trading on such exchange upon official notice of issuance upon such
exercise.

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

     The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates or of any certificates representing shares of the Preferred
Stock upon the exercise of Rights. The Company shall not, however, be required (a) to pay any tax
or charge that may be payable in respect of any transfer involved in the transfer or delivery of
Right Certificates or the issuance or delivery of certificates for the Preferred Stock in a name
other than that of the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (b) to issue or deliver any certificates for shares of the Preferred Stock upon the
exercise of any Rights until any such tax or 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.

     The Company shall, if legally required, (i) prepare and file, as soon as reasonably
practicable following the Distribution Date, a registration statement under the Securities Act with
respect to the securities purchasable upon exercise of or exchangeable for the Rights on an
appropriate form, (ii) cause such registration statement to become effective as soon as reasonably

12

 

practicable after such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act) until no longer
required to do so under the Securities Act with respect to securities purchasable upon exercise of
or exchangeable for the Rights. The Company also shall take all such action as may be required or
as is appropriate under the securities or “blue sky” laws of such jurisdictions as may be necessary
or appropriate with respect to the securities purchasable upon the exercise of or exchangeable for
the Rights. The Company may temporarily suspend, for a period not to exceed 120 days following the
Distribution Date, the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension of exercisability of Rights
referred to in this paragraph, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law, or a registration statement shall not have been declared effective.

     Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for shares of
the Preferred Stock is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights, together with the
form of election to purchase duly completed and executed, was duly surrendered and payment of the
Purchase Price (and any applicable taxes or charges) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Preferred Stock transfer
books of the Company are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be exercisable,
including, without
limitation, the right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

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

     (a) (i) If the Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Stock payable in Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares
of Preferred Stock or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital

13

 

stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of shares of capital stock that,
if such Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, the holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of Preferred Stock issuable upon exercise of one Right. If an event
occurs that would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), 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 23(a) and Section 24, in the event any Person
becomes an Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the Purchase Price in effect immediately
prior to such Person becoming an Acquiring Person multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of Common Stock as shall equal the result obtained by (A) multiplying such
Purchase Price by the number of one one-thousandths of a share of Preferred Stock for which
a Right is then exercisable and dividing that product by (B) 50% of the Current Market Price
Per Share of the Common Stock (determined pursuant to Section 11(d)) on the date of
the occurrence of such event; provided, however, that if the transaction
that would otherwise give rise to the adjustment is also subject to the provisions of
Section 13, then only the provisions of Section 13 shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii). In the event that any
Person shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action that would eliminate or diminish the benefits intended to
be
afforded by the Rights. Notwithstanding anything in this Agreement to the contrary,
however, from and after the time (the “Invalidation Time”) when any Person first
becomes an Acquiring Person, any Rights that are or were acquired or beneficially owned by
any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), including,
without limitation, any such Rights when held by (1) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee after the Invalidation Time,
(2) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the Invalidation Time pursuant to either (x) 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, written or otherwise,
regarding the transferred Rights or (y) a transfer that the Board of Directors of the
Company determines is part of a plan, arrangement or understanding, written or otherwise,
that has the purpose or effect of avoiding the provisions of this Section 11(a)(ii),
or (3) a subsequent transferee of any Person described in the foregoing clauses (1) or (2),
shall be void without any further action and any holder of such Rights shall thereafter have
no right to exercise such Rights under any provision of this Agreement. 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 Rights or other Person as a
result of its failure to make any determinations with

14

 

respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. No Right Certificate shall be issued
pursuant to Section 3, Section 6 or Section 7(d) that represents
Rights beneficially owned by an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person or any Associate or
Affiliate whose Rights would be void pursuant to the provisions of this paragraph shall be
cancelled.

          (iii) The Company may, at its option, substitute for a share of Common Stock issuable
upon the exercise of Rights in accordance with Section 11(a)(ii) a number of shares
of Preferred Stock or fraction thereof such that the Current Market Price Per Share of one
share of Preferred Stock multiplied by such number or fraction is equal to the Current
Market Price Per Share of one 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 Section 11(a)(ii), the
Board of Directors of the Company shall, with respect to such deficiency, 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
Section 11(a)(ii) (the “Current Value”) over (2) the Purchase Price in
effect immediately prior to any Person becoming an Acquiring Person and (B) with respect to
each Right (other than Rights that have become void pursuant to Section 11(a)(ii)),
make adequate provision to substitute for the shares of Common Stock issuable in accordance
with Section 11(a)(ii) upon exercise of the Right and payment of the applicable
Purchase Price, (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 that, 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 of the Company 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 are 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 that, when added to the value of the shares of
Common Stock 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 of the Company upon the advice
of a nationally recognized investment banking firm selected in good faith by the Board of
Directors of the Company; provided, however, that if the Company shall not
make adequate provision to deliver value pursuant to clause (B) above within thirty (30)
days following the date on which any Person becomes an Acquiring Person (the date on which
any Person becomes an Acquiring Person being the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring

15

 

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, upon any
Person becoming an Acquiring Person, the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, then, if the Board of Directors
of the Company so elects, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is herein called the
“Substitution Period”). To the extent that 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 Section 11(a)(ii) and the
last sentence of this Section 11(a)(iii), 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 such
second sentence and to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the shares of Common Stock shall be the Current Market Price Per Share (as
determined pursuant to Section 11(d)) on the Section 11(a)(ii) Trigger Date and the
per share or fractional value of any Common Stock Equivalent shall be deemed to equal the
Current Market Price Per Share of the Common Stock. The Board of Directors of the Company
may, but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).

     (b) If the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Stock (or
shares having the same rights, privileges and preferences as the Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or Equivalent Preferred
Stock (or having a conversion price per share, if a security convertible into Preferred
Stock or Equivalent Preferred Stock) less than the Current Market Price Per Share of the
Preferred Stock (as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock that the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for

16

 

subscription
or purchase (or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of the shares of
Preferred Stock issuable upon exercise of one Right. In case such subscription price may be
paid in consideration part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a written statement filed with the Rights
Agent and shall be conclusive for all purposes. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price that would then be in effect if such record date
had not been fixed.

     (c) If the Company shall fix a record date for the making of 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 or assets (other than (i) a regular periodic cash dividend, the record date for
which occurs at a time when there is no Acquiring Person, or (ii) a regular periodic cash
dividend, the record date for which occurs at a time when there is an Acquiring Person, at a
rate not in excess of 125% of the rate of the last cash dividend theretofore paid or (iii) a
dividend payable in Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), 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 the Preferred Stock (as defined in Section 11(d)) on
such record date, less the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a written statement
filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to one share of
Preferred Stock and the denominator of which shall be such Current Market Price Per Share of
the Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of Preferred Stock issuable upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price that would then be in effect if such record date had not been fixed.

     (d) (i) For the purpose of any computation hereunder, the “Current Market Price Per
Share” of any security (a “Security”) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the Current Market Price Per Share
of the Security is determined during the period following the announcement by the issuer of
such Security of (A) a dividend or distribution on such Security payable in shares of such
Security or securities convertible into shares of such Security, or (B) any subdivision,
combination or reclassification of such Security, and prior to the expiration of 30 Trading
Days after the

17

 

ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case, the Current
Market Price Per Share shall be appropriately 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 ask prices,
regular way, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low ask 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 Security is not quoted
by such organization, the average of the closing bid and ask prices as furnished by a
professional market maker making a market in the Security selected by the Board of Directors
of the Company. The term “Trading Day” shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not listed or admitted to trading on
any national securities exchange, a Business Day.

          (ii) For the purpose of any computation hereunder, the Current Market Price Per Share
of Preferred Stock shall be determined in the same manner as set forth above for Common
Stock in Section 11(d)(i). If the Preferred Stock is not publicly traded or if the
current market price per share of Preferred Stock cannot be determined in the manner
provided above, the current market price per share of Preferred Stock shall be
conclusively deemed to be the current market price per share of Common Stock (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by one thousand. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, the Current Market Price Per Share of
Preferred Stock shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a written statement
filed with the Rights Agent and shall be conclusive for all purposes.

     (e) No adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments that 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 (other than
Preferred Stock) or ten-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of (A) three years from the
date of the transaction that mandates such adjustment or (B) the Expiration Date.

18

 

     (f) If as a result of an adjustment made pursuant to Section 11(a), the holder
of any Right thereafter exercised shall become entitled to receive any shares of capital
stock of the Company or of any Principal Party other than shares of the Preferred Stock,
thereafter (i) the number of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained in
Section 11(a), Section 11(b), Section 11(c), Section 11(e),
Section 11(h), Section 11(i) and Section 11(m), and (ii) the
provisions of Section 7, Section 9, Section 10, Section 13
and Section 14 with respect to the shares of the Preferred Stock shall apply on like
terms to any such other shares.

     (g) All Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-thousandths of a share of the 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 Section 11(b) and Section 11(c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest ten-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share 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
to adjust the number of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of the Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of record prior
to such adjustment of the number of Rights shall become that number of Rights (calculated to
the nearest ten-millionth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after
the adjustment of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights (with prompt written notice thereof to the Rights
Agent), indicating the record date for the adjustment to be made and, if known at the time,
the amount of the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least ten 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, the additional Rights to

19

 

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 countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.

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

     (k) Before taking any action that would cause an adjustment reducing the Purchase Price
below one one-thousandth of the then par value, if any, of the shares of the Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate action that 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 such Preferred Stock at such adjusted
Purchase Price.

     (l) In any case in which this Section 11 shall require that an adjustment in
the Purchase Price be made effective as of a record date for a specified event, the Company
may elect (with prompt written notice of such election to the Rights Agent) to defer until
the occurrence of such event the issuing 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 the 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 upon the occurrence of the event requiring such adjustment.

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

20

 

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

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

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 and Section 13, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief written statement of the
facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Stock and the Preferred Stock a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate (if the Distribution Date has
occurred) or of a certificate representing shares of Common Stock (if prior to the Distribution
Date) in accordance with Section 25. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment or statement contained therein and shall have no duty
or liability with respect to and shall not be deemed to have knowledge of such adjustment or event
unless and until it shall have received such certificate.

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

     (a) If, following the Shares Acquisition Date, (i) the Company shall consolidate with,
or merge with and into, any other Person, (ii) any Person shall consolidate with or merge
with and into the Company and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part of the Common Stock shall be
changed into or exchanged for stock or other securities of any other Person (or the Company)
or cash or any other property, or (iii) the Company shall

21

 

sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly owned Subsidiaries in or
more transactions, each of which complies with Section 11(o)), then, and in each
such case (except as contemplated by Section 13(f)), proper provision shall be made
so that (A) each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at the Purchase Price in effect
immediately prior to such Person becoming an Acquiring Person multiplied by the number of
one one-thousandths of a share of Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of validly issued, fully paid, non-assessable and freely tradable Senior
Voting Stock (as hereinafter defined) of the Principal Party (as hereinafter defined)
(including the Company as successor thereto or as the surviving corporation), unencumbered
and not subject to any liens, encumbrances, rights of call or first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying such Purchase Price by
the then number of one one-thousandths of share of Preferred Stock for which a Right is then
exercisable and dividing that product by (2) 50% of the Current Market Price Per Share of
the Senior Voting Stock of such Principal Party (determined in the manner described in
Section 11(d)) on the date of consummation of such consolidation, merger, sale or
transfer; (B) the Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the provisions
of Section 11 shall apply to such Principal Party following the occurrence of such
consolidation, merger, sale or transfer; and (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares of its
Senior Voting Stock in accordance with Section 9, with each reference to Preferred
Stock in Section 9 being deemed to be a reference to the shares of its Senior Voting
Stock) in connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Senior Voting Stock thereafter deliverable upon the exercise
of the Rights.

     (b) “Principal Party” shall mean (i) in the case of any transaction described
in Section 13(a)(i) or Section 13(a)(ii), the Person that is the issuer of
any securities into which shares of Common Stock are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other party to the
merger or consolidation; and (ii) in the case of any transaction described in Section
13(a)(iii), the Person that is the other party to such transaction or, if more than one,
the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction; provided, however, that, in any
such case, if the Senior Voting 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, then (A) if such Person is a direct or indirect Subsidiary of another Person the Senior
Voting Stock of which is and has been so registered, the term “Principal Party”
shall refer to such other Person; or (B)
if such Person is a Subsidiary, directly or indirectly, of more than one Person and the

22

 

Senior Voting Stock of any two or more of such Persons is and has been so registered, the
term “Principal Party” shall refer to whichever of such Persons is the issuer of the
Senior Voting Stock having the greatest aggregate market value of shares outstanding; or (C)
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 (A) and (B) above shall apply to each of the owners having an interest in such
joint venture as if such joint venture were a Subsidiary of both or all of such joint
venturers and the Principal Party in each such chain shall bear the obligations set forth in
this Section 13 in the same ratio as their direct or indirect interests in such
joint venture bear to the total of such interests. “Senior Voting Stock” shall mean
the capital stock (or equity interest) of the Principal Party with the greatest voting
power.

     (c) The Company shall not consummate any such consolidation, merger, sale or transfer
unless, prior thereto the Company and such Principal Party or Parties shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the terms set forth
in Section 13(a) and Section 13(b) and further providing that, as soon as
practicable after the date of any consolidation, merger or sale or transfer of assets
mentioned in Section 13(a), the Principal Party or Parties will (i) prepare and file
a registration statement under the Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, will use its best
efforts (A) to cause such registration statement to become effective as soon as practicable
after such filing, (B) 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 (C) to similarly comply with applicable state securities laws,
and use its best efforts to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange; and (ii) will
deliver to holders of the Rights historical financial statements for the Principal Party or
Parties and each of its Affiliates that comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act.

     (d) If the Principal Party has a provision in any of its authorized securities or in
its certificate of incorporation or by-laws or other instrument governing its affairs, which
provision would have the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 13,
shares of Senior Voting Stock or Senior Voting Stock equivalents of such Principal Party at
less than the then-Current Market Price Per Share thereof (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, Senior Voting
Stock or Senior Voting Stock equivalents of such Principal Party at less than such
then-current market price or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Senior Voting Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the Company
hereby covenants and agrees with each holder of Rights that it shall not consummate any such
transaction unless, prior thereto, the Company and such Principal Party shall have executed
and delivered to the Rights
Agent a supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the authorized

23

 

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.

     (e) The Company covenants and agrees that it shall not, at any time after a Person
first becomes an Acquiring Person, enter into any transaction of the kind referred to in
this Section 13 if (x) at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or arrangements that, as a
result of the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights, (y) prior to, simultaneously with or
immediately after such transaction, the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13(b) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates or
Associates or (z) the form or nature of organization of the Principal Party would preclude
or limit the exercisability of the Rights. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other transfers.

     Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights or to distribute
Right Certificates that evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right Certificates, with regard to
which such fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the average of
the closing bid and ask prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low ask prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the average of the closing
bid and ask prices as furnished by a professional market maker making a market in the
Rights, selected by the Board of Directors of the Company. If on any such date, no such
market maker is making a market in the Rights, the fair market value of the Rights on such
date as determined in good faith by the Board of Directors of the Company shall be used.

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

24

 

Preferred Stock in integral multiples of one one-thousandth of a share of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it, provided 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 shares
of Preferred Stock. In lieu of fractional shares that are not integral multiples of one
one-thousandth of a share of Preferred Stock, the Company shall pay to the registered
holders of Right Certificates with regard to which such fractional shares would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of a whole share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of Section 11(d)(i)) for the
Trading Day immediately prior to the date of such exercise or exchange).

     (c) The Company shall not be required to issue fractions of shares of Common Stock upon
exercise or exchange of the Rights or to distribute certificates that evidence fractional
shares of Common Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of Right Certificates with regard to which such fractional shares 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 purposes of this Section 14(c), the
current market value of a whole share of Common Stock shall be the closing price of a share
of Common Stock (as determined pursuant to the second sentence of Section 11(d)(i))
for the Trading Day immediately prior to the date of such exercise or exchange).

     (d) The holder of a Right by the acceptance of the Right expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise of a Right
(except as above provided).

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

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

25

 

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

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

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

     (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor
the Rights Agent shall have any liability to any holder of a Right or other Person as a
result of the Company’s or the Rights Agent’s inability to perform any of their respective
obligations under this Agreement by reason of any preliminary or permanent injunction or
other order, judgment, decree or ruling (whether interlocutory or final) issued by a court
or by a governmental, regulatory, self-regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation.

     Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of
any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 23, Section 24 or Section
25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with the provisions
hereof.

     Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or expense (including,
without limitation, the reasonable fees and expenses of legal counsel), incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross
negligence, bad faith or willful misconduct must be determined by a final, non-appealable order,
judgment,

26

 

decree or ruling of a court of competent jurisdiction), for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance, administration and performance of
its duties under this Agreement, including the costs and expenses of defending against any claim of
liability in the premises and the enforcement of this indemnification. This indemnification shall
survive the termination of this Agreement, the exercise of or expiration of the Rights and the
resignation, replacement or removal of the Rights Agent.

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

     Section 19. Merger or Consolidation or Change of Name of Rights Agent. 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 appropriate business
of the Rights Agent or any successor Rights Agent shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act on the part of any
of the parties hereto, provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

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

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

     (a) The Rights Agent may consult with the legal counsel (who may be legal counsel for
the Company), and the opinion of such counsel shall be full and complete

27

 

authorization and
protection to the Rights Agent as to any action taken, suffered or omitted by it in
accordance with such opinion.

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such certificate shall
be full and complete authorization and protection to the Rights Agent for any action taken,
suffered or omitted by it under the provisions of this Agreement in reliance upon such
certificate.

     (c) The Rights Agent shall be liable hereunder for only its own gross negligence, bad
faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction).

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

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

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

28

 

     (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, any Vice President, the Secretary or the Treasurer of the
Company, and such instructions shall be full authorization and protection to the Rights
Agent and the Rights Agent shall not be liable for or in respect of any action taken,
suffered or omitted by it in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. The Rights Agent shall be fully
authorized and protected in relying upon the most recent instructions received by any such
officer.

     (h) The Rights Agent and any stockholder, 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 interested money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other 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, absent gross negligence, bad faith or willful
misconduct in the selection and continued employment thereof (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable order, judgment,
decree or ruling of a court of competent jurisdiction).

     (j) If, with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or form of election
to purchase, as the case may be, has either not been completed or indicates that the Rights
are beneficially owned by an Acquiring Person or an Affiliate or Associate thereof, the
Rights Agent shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.

     (k) The Rights Agent shall have no responsibility to the Company, any holders of Rights
or any holders of shares of Preferred Stock or other securities for interest or earnings on
any monies held by the Rights Agent pursuant to this Agreement, except as otherwise
specifically agreed in a separate writing by the Company and the Rights Agent.

     (l) The Rights Agent shall not be required to take notice or be deemed to have notice
of any event or condition hereunder, including, but not limited to, a Distribution
Date, a Redemption Date, any adjustment of the Purchase Price, the existence of an
Acquiring Person or any other event or condition that may require action by the Rights
Agent, unless the Rights Agent shall be specifically notified in writing of such event or
condition by the Company, and all notices or other instruments required by this Agreement to
be delivered to the Rights Agent must, in order to be effective, be received

29

 

by the Rights
Agent as specified in Section 26, and in the absence of such notice so delivered,
the Rights Agent may conclusively assume no such event or condition exists.

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company and to each transfer agent of the Common Stock and the Preferred Stock by
registered or certified mail, and, if such resignation occurs after the Distribution Date, to the
registered holders of the Right Certificates by first class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and the Preferred Stock by registered or certified mail, and, if such resignation occurs after the
Distribution Date, to the registered holders of the Right Certificates by first class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit such holder’s Right Certificate
for inspection by the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a Person (or an
Affiliate of such a Person) organized and doing business under the laws of the United States or of
the State of New Jersey or the State of New York (or of any other state of the United States so
long as such Person is authorized to do business as a banking institution in the State of New
Jersey or the State of New York), in good standing, having a principal office in the State of New
Jersey or the State of New York, that is authorized under such laws to exercise corporate trust
powers or stock transfer powers and is subject to supervision or examination by federal or state
authority and that has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock or Preferred Stock,
and, if such resignation occurs after the Distribution Date, mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

     Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions
of this Agreement or of the Rights to the contrary, the Company, at its option, may issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the Expiration Date, the Company

30

 

may, with respect to
shares of Common Stock so issued or sold pursuant to (a) the exercise of stock options, (b) under
any employee plan or arrangement, (c) the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (d) a contractual obligation of 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.

     Section 23. Redemption.

     (a) The Board of Directors of the Company may, at its option, at any time prior to the
earlier of (i) 5:00 p.m., New York time, on the Distribution Date, or (ii) 5:00 p.m., New
York time, on the Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the “Redemption Price”).
Notwithstanding anything in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of an event described in Section 11(a)(ii)
until such time as the Company’s right of redemption under this Section 23(a) has
expired. The redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the current market price of the Common Stock at the time of
redemption as determined pursuant to Section 11(d)(i)) or any other form of
consideration deemed appropriate by the Board of Directors of the Company, or any
combination thereof.

     (b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to Section 23(a), without any further action and
without any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption and, within ten days after such action
causing a redemption of the Rights pursuant to Section 23(a), 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 that is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Notwithstanding the foregoing, the
failure to give, or any defect in, any notice
required to be made or given pursuant to this Section 23(b) shall not affect
the validity of the redemption of the Rights.

     (c) Neither the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24, and other than in connection with
the purchase or repurchase by any of them of Common Stock prior to the Distribution Date.

31

 

     Section 24. Exchange.

     (a) The Board of Directors of the Company may, at its option, at any time after the
Shares Acquisition Date, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter
referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any time after
any Acquiring Person, together with all Affiliates and Associates of such Acquiring Person,
becomes the Beneficial Owner of 50% or more of the voting power of the shares of Common
Stock then outstanding. From and after the occurrence of an event specified in Section
13(a), any Rights that theretofore have not been exchanged pursuant to this Section
24(a) shall thereafter be only exercisable in accordance with Section 13 and may
not be exchanged pursuant to this Section 24(a). The exchange of the Rights by the
Board of Directors of the Company may be made effective at such time, on such basis and with
such conditions as the Board of Directors of the Company in its sole discretion may
establish.

     (b) Immediately upon the effectiveness of the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and without
any further action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall mail a notice of
any such exchange by first class mail 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 that 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 Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights that have become void
pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights.

     (c) The Company may, at its option, substitute for a share of Common Stock issuable
upon the exchange of Rights in accordance with Section 24(a) a number of shares of
Preferred Stock (or equivalent preferred stock) or fraction thereof such that the Current
Market Price Per Share of one share of Preferred Stock multiplied by such number or fraction
is equal to the Current Market Price Per Share of one share of Common Stock.

     Section 25. Notice of Certain Events. In case the Company shall propose at any time
following the Distribution Date (a) to pay any dividend payable in stock of any class to the

32

 

holders of its Preferred Stock or to make any other distribution to the holders of its Preferred
Stock (other than a regular periodic cash dividend at a rate not in excess of 125% of the rate of
the last cash dividend theretofore paid), (b) to offer to the holders of its Preferred Stock rights
or warrants to subscribe for or to purchase any additional shares of the Preferred Stock or shares
of stock of any class or any other securities, rights or options, (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (e) to
effect the liquidation, dissolution or winding up of the Company or (f) to declare or pay any
dividend on the shares of Common Stock payable in shares of Common Stock or to effect a
subdivision, combination or consolidation of the shares of Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock), then, in each such case, the
Company shall give to each holder of a Right Certificate, in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common Stock and/or the 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 (a) or (b) above at least ten days prior to the record date for determining holders of
the Preferred Stock for purposes of such action, and in the case of any such other action, at least
ten days prior to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Stock and/or the Preferred Stock, whichever shall be the
earlier. In case the event set forth in Section 11(a)(ii) shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right, in accordance with
Section 26, a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii).

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

Osteotech, Inc.

51 James Way

Eatontown, NJ 07724

Attention: Corporate Secretary

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

33

 

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

Attention: Account Executive

     Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
overnight delivery service or first class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company.

     Section 27. Supplements and Amendments. Except as otherwise provided in this
Section 27, and prior to the Distribution Date, the Company may, from time to time in its
sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of any holders of
certificates representing shares of Common Stock. From and after the Distribution Date, except as
otherwise provided in this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to (a) cure any ambiguity, (b) correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein, (c) shorten or
lengthen any time period hereunder or (d) change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable and which would not adversely affect the
interests of the holders of Right Certificates as such (other than any holder who is an Acquiring
Person, or an Affiliate or Associate of any Acquiring Person), but may not cause this
Agreement to become amendable other than in accordance with this Section 27 or cause the
Rights to again become redeemable. Upon the delivery of a certificate from an appropriate officer
of the Company that states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or amendment;
provided that, any supplement or amendment that does not amend Section 18, Section
19, Section 20, Section 21 or this Section 27 in a manner adverse to
the Rights Agent shall become effective immediately upon execution by the Company, whether or not
also executed by the Rights Agent.

     Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may,
but shall not be obligated to, enter into any supplement or amendment that affects the Rights
Agent’s own rights, duties, obligations or immunities under this Agreement.

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

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

34

 

     Section 30. Determinations and Actions by the Board of Directors of the Company. The
Board of Directors of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise the rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (a) interpret the provisions of
this Agreement and (b) make all determinations deemed necessary or advisable for the administration
of this Agreement (including, without limitation, a determination to redeem or not redeem the
Rights, to exchange or not exchange the Rights, or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by the Board of Directors of the
Company in good faith, shall (x) 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 of
Directors of the Company, or any of the directors serving on the Board of Directors, to any
liability to the holders of the Rights or any other Person.

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

     Section 31. Periodic Review by Independent Directors. A committee of Independent
Directors (the “Committee”), which shall be the Nominating and Corporate Governance
Committee of the Board of Directors of the Company (or any successor committee) as long as the
members of such committee meet the applicable Independent Director requirements, shall review and
evaluate this Agreement at least every five years in order to consider whether the maintenance of
this Agreement continues to be in the best interests of the Company and the stockholders of the
Company. Following each such review, the Committee shall communicate its conclusions to the full
Board of Directors of the Company, including any recommendation in light thereof as to whether this
Agreement should be modified or the Rights should be redeemed. The Committee, when considering
whether this Agreement should be modified or the Rights should be redeemed, shall have the power
and authority (a) to set their own agenda, (b) to retain, at the expense of the Company, its choice
of legal counsel, investment bankers and other advisors and (c) to review all information of the
Company and to consider any and all factors it
deems relevant to an evaluation of whether this Agreement should be modified or the Rights
should be redeemed.

     Section 32. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors determines in its good faith
judgment that severing the invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated

35

 

and shall not expire until the close of business on the tenth Business Day following
the date of such determination by the Board of Directors. Without limiting the foregoing, if any
provision requiring a specific group of directors to act is held to by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such determination shall then
be made by the Board of Directors in accordance with applicable law and the Company’s Restated
Certificate of Incorporation and Bylaws.

     Section 33. Governing Law. This 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 and performed entirely within such state.

     Section 34. Descriptive Headings; References. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof. Except as otherwise specifically
provided, any reference to any section or exhibit will be deemed to refer to such section of or
exhibit to this Agreement.

     Section 35. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.

     Section 36. 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.

[Remainder of Page Left Intentionally Blank]

36

 

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

	 	 	 	 	 
	 	OSTEOTECH, INC.

 	 
	 	By:  	 /s/ Mark H. Burroughs	 
	 	 	Name:  	Mark H. Burroughs 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	REGISTRAR AND TRANSFER COMPANY

 	 
	 	By:  	 /s/ Nick Giancaspro	 
	 	 	Name:  	 Nick Giancaspro	 
	 	 	Title:  	 Vice President	 
	 

37

 

EXHIBIT A

Form of Certificate of Designations for Series E Junior Participating Preferred Stock

CERTIFICATE OF DESIGNATIONS

OF

SERIES E JUNIOR PARTICIPATING PREFERRED STOCK

OF

OSTEOTECH, INC.

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

     The undersigned, Mark H. Burroughs, Executive Vice President of Osteotech, Inc., a Delaware
corporation (the “Corporation”) DOES HEREBY CERTIFY that:

     (A) the Restated Certificate of Incorporation of the Corporation, as amended, authorizes the
Corporation to issue seventy million (70,000,000) shares of common stock of par value $0.01 per
share (the “Common Stock”) and five million (5,000,000) shares of Preferred Stock of par
value $0.01 per share; and

     (B) the Board of Directors of the Corporation adopted the following resolution on January 22,
2010, at a special meeting of the Board of Directors of the Corporation, and such resolution has
not been rescinded or amended and is in full force and effect as of the date hereof:

     RESOLVED, that pursuant to the authority conferred upon the Board of Directors (the
“Board”) of Osteotech, Inc., a Delaware corporation (the “Corporation”), by
the provisions of the Restated Certificate of Incorporation of the Corporation (as amended
from time to time, the “Certificate of Incorporation”), there hereby is created, out
of the five million (5,000,000) shares of Preferred Stock, $0.01 par value (the
“Preferred Stock”), authorized in Article III of the Certificate of Incorporation, a
series of Preferred Stock of the Corporation consisting of Two Hundred Fifty Thousand
(250,000) shares, having the following designations, preferences, relative, participating,
optional and other special rights, voting powers, qualifications, limitations and
restrictions:

A-1

 

SERIES E JUNIOR PARTICIPATING PREFERRED STOCK

	 	I.	 	Designation and Amount. The shares of such series shall be designated as
“Series E Junior Participating Preferred Stock” (the “Series E Preferred
Stock”) and the number of shares constituting such series shall be Two Hundred
Fifty Thousand (250,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors, provided that no decrease shall reduce the number
of shares of Series E Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into Series E Preferred Stock.

	 	II.	 	Dividends and Distributions.

	 	(A)	 	Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series E Preferred Stock, the holders of shares of Series E Preferred
Stock, in preference to the holders of Common Stock, par value $0.01 per share
(or as such par value may be changed from time to time), of the Corporation
(the “Common Stock”) and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on or
about the last day of each of January, April, July and October in each year
(each such date being referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series E Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of
(i) $0.10 or (ii) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series E Preferred Stock. If the Corporation shall at
any time on or after February 2, 2010 (the “Record Date”) declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series E
Preferred Stock were entitled immediately prior to such event under clause (ii)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which

A-2

 

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

	 	(B)	 	The Corporation shall declare a dividend or distribution on the
Series E Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $0.10 per share
on the Series E Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
	 
	 	(C)	 	Dividends shall begin to accrue and be cumulative on
outstanding shares of Series E Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series E
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 E
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 E 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 E Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.

	 	III.	 	Voting Rights. The holders of shares of Series E Preferred Stock shall have
the following voting rights:

	 	(A)	 	Subject to the provision for adjustment hereinafter set forth,
each share of Series E Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. If the Corporation shall at any time on or after the Record Date
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser 

A-3

 

	 	 	 	number of shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series E Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

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

	 	(C)	(i)	If at any time dividends on any Series E Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (herein
called a “default period”) which shall extend until such time when all
accrued and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series E Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of all series of voting
Preferred Stock (collectively, the “Voting Preferred Stock”) (including
holders of the Series E Preferred Stock) with dividends in arrears in an amount
equal to six (6) quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect one (1) Director.

	 	(ii)	 	During any default period, such voting right of
the holders of Series E Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this
Section III(c) or at any annual meeting of the stockholders,
and thereafter at annual meetings of stockholders, provided that such
voting right shall not be exercised unless the holders of twenty-five
percent (25%) in number of shares of Voting Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the holders of
Voting Preferred Stock of such voting right. At any meeting at which
the holders of Voting Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right,
voting as a class, to elect a Director to fill such vacancy, if any, in
the Board of Directors as may then exist up to one (1) Director or, if
such right is exercised at an annual meeting, to elect one (1)
Director. If the number which my be so elected at any special meeting
does not amount to 

A-4

 

	 	 	 	the required number, the holders of Voting Preferred Stock shall
have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required
number. After the holders of the Voting Preferred Stock shall have
exercised their right to elect a Director in any default period and
during the continuance of such period, the number of Directors shall
not be increased or decreased except by vote of the holders of Voting
Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series E
Preferred Stock.

	 	(iii)	 	Unless the holders of Voting Preferred Stock
shall, during an existing default period, have previously exercised
their right to elect a Director, the Board of Directors may order, or
any stockholder or stockholders owning in the aggregate not less than
twenty-five percent (25%) of the total number of shares of Voting
Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock,
which meeting shall thereupon be called by the President, a Vice
President or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Voting Preferred Stock
are entitled to vote pursuant to this paragraph (c)(iii), shall be
given to each holder of record of Voting Preferred Stock by mailing a
copy of such notice to such holder at the last address as the same
appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after
such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the
aggregate not less than twenty-five percent (25%) of the total number
of shares of Voting Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (c)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
	 
	 	(iv)	 	In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of Directors
until the holders of Voting Preferred Stock shall have exercised their
right to elect one (1) Director voting as a class, after the exercise
of which right (A) the Director so elected by such holders of Voting
Preferred Stock shall continue in office until his or her successor
shall have been elected by such holders or until the expiration of the
default period, and (B) any vacancy of the Board of Directors may
(except as provided in paragraph (c)(ii) of this Section III)
be filled by vote of a majority of the remaining Directors theretofore
elected by the

A-5

 

	 	 	 	holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (c) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as
provided in clause (B) of the preceding sentence.

	 	(v)	 	Immediately upon the expiration of a default
period, (A) the right of the holders of Voting Preferred Stock as a
class to elect a Director shall cease, (B) the term of any Director
elected by the holders of Voting Preferred Stock as a class shall
terminate, and (C) the number of Directors shall be such number as may
be provided for in the Certificate of Incorporation or the Bylaws of
the Corporation irrespective of any increase made pursuant to the
provisions of paragraph (c)(ii) of this Section III (such
number being subject, however, to change thereafter in any manner
provided by law or in this Certificate of Incorporation or the Bylaws
of the Corporation). Any vacancies in the Board of Directors effected
by the provisions of clauses (B) and (C) in the preceding sentence may
be filled by a majority of the remaining Directors.

	 	(D)	 	Except as set forth herein, holders of Series E 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.

	 	IV.	 	Certain Restrictions.

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

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

A-6

 

	 	(iii)	 	redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
E Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series E Preferred Stock; or
	 
	 	(iv)	 	redeem or purchase or otherwise acquire for
consideration any shares of Series E Preferred Stock, or any shares of
stock ranking on a parity with the Series E Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.

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

	 	V.	 	Reacquired Shares. Any shares of Series E Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation, or in
any other Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
	 
	 	VI.	 	Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or
winding up of the Corporation, no distribution shall be made:

	 	(A)	 	Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series E Preferred Stock unless, prior
thereto, the holders of shares of Series E Preferred Stock shall have received
$1,000.00 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the “Series E Liquidation Preference”). Following the payment of the
full amount of the Series E Liquidation Preference, no

A-7

 

	 	 	 	additional distributions shall be made to the holders of shares of
Series E Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the Series
E Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set
forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the “Adjustment Number”). Following
the payment of the full amount of the Series E Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series E Preferred Stock and Common Stock, respectively, holders of
Series E Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.

	 	(B)	 	If, however, there are not sufficient assets available to
permit payment in full of the Series E Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series E Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. If, however, there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
	 
	 	(C)	 	If the Corporation shall at any time after the Record 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 small number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment 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.

	 	VII.	 	Consolidation, Merger, etc. If 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 E 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 Record
Date declare or pay any dividend on Common Stock

A-8

 

	 	 	 	payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series E 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.

	 	VIII.	 	No Redemption. The shares of Series E Preferred Stock shall not be
redeemable.
	 
	 	IX.	 	Rank. The Series E Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all other series of the
Preferred Stock, whether designated or issued before or after the date of this
Certificate of Designations, unless the terms of any such series shall provide
otherwise.
	 
	 	X.	 	Fractional Shares. The Series E Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and have the benefit of all other rights of holders of the Series
E Preferred Stock.
	 
	 	XI.	 	Amendment. The Certificate of Incorporation shall not be amended in any manner
that would materially alter or change the powers, preferences or special rights of the
Series E Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds of the outstanding shares of Series E
Preferred Stock, voting together as a single series.

[Remainder of Page Left Intentionally Blank]

A-9

 

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations of Series
E Junior Participating Preferred Stock of Osteotech, Inc. to be signed by its Executive Vice
President on this 22nd day of January, 2010.

	 	 	 	 	 
	 	OSTEOTECH, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	Mark H. Burroughs 	 
	 	 	Title:  	Executive Vice President 	 
	 

A-10

 

EXHIBIT B

Form of Right Certificate

			
	 	 	 
	Certificate
No. R-                    
	 	      
               Rights

NOT EXERCISABLE AFTER JANUARY 22, 2020 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT, AT THE OPTION OF THE COMPANY, TO REDEMPTION AT $0.001 PER RIGHT OR TO EXCHANGE, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN SECTION 1 OF THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

Right Certificate

OSTEOTECH, 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 January 22, 2010 (the “Rights
Agreement”) between Osteotech, Inc., a Delaware corporation (the “Company”), and
Registrar and Transfer Company, as Rights Agent (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 the close of business (as such term is defined in the Rights Agreement) on January 22,
2020 at the office of the Rights Agent, or its successors as Rights Agent, designated for such
purposes, one one-thousandth of one fully paid and non-assessable share of the Series E Junior
Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price
of $___.00 per one one-thousandth of one share (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a
share of Preferred Stock that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as of                     ,
20___, based on the shares of the Preferred Stock of the Company as constituted at such date.

     As provided in the Rights Agreement, the Purchase Price and the number and kind or class of
shares of stock of the Company that may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the happening of certain
events.

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

B-1

 

Agreement are on file at the principal executive offices of the Company and the office of
the Rights Agent.

     This Right Certificate, with or without other Right Certificates, upon surrender at the office
of the Rights Agent designated for such purposes, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares (or fractions of a share) of the Preferred Stock as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled such holder to
purchase.

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

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may, but are not required to, be redeemed by the Company at its option at a redemption price of
$.001 per Right at any time prior to the earlier of (i) the close of business on the Distribution
Date (as such time period may be extended pursuant to the Rights Agreement), and (ii) the close of
business on the Expiration Date. In addition, under certain circumstances following the Shares
Acquisition Date, the Rights may be exchanged, in whole or in part, for shares of Common Stock, or
shares of preferred stock of the Company having essentially the same value or economic rights as
such shares. Immediately upon the action of the Board of Directors authorizing any such exchange,
and without any further action or any notice, the Rights (other than Rights which are not subject
to such exchange) will terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange.

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

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

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

B-2

 

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

Dated as of                     , 20___.

	 	 	 	 	 
	 	OSTEOTECH, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Countersigned:

REGISTRAR AND TRANSFER COMPANY

 	 
	 	By:  	 	 
	 	 	Authorized Signature 	 
	 	 	 	 

B-3

 

	 	 	 	 	 

[Form of Reverse Side of Right Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Right Certificate)

     FOR VALUE RECEIVED
                                         hereby sells, assigns and transfers unto

 
(Please print name and address of transferee)

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

Dated:                     , 20___

          
                               
                    
                   
Signature

(Signature must conform in all respects to the name of holder as written upon the face

of this Right Certificate, without alteration or enlargement or any change whatsoever.)

Signature Medallion Guaranteed:

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

 
(to be completed if applicable)

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

                                    
                         
                   
Signature

B-4

 

FORM OF ELECTION TO PURCHASE

(To be executed by the registered holder if such holder desires to exercise the Right Certificate)

TO: OSTEOTECH, INC.

     The undersigned hereby irrevocably elects to exercise                      Rights represented by
this Right Certificate to purchase the shares of the Preferred Stock issuable upon the exercise of
such Rights and requests that certificates for such shares be issued in the name of:

[Please insert social security or other identifying number]
             
                  
                    
                   
                    

 

(Please print name and address)

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

[Please insert social security or other identifying number]
             
                  
                    
                   
                    

 
(Please print name and address)

Dated:                     , 20___

                   
                                  
       
Signature

(Signature must conform in all respects to the name of holder as written upon the face

of this Right Certificate, without alteration or enlargement or any change whatsoever.)

Signature Medallion Guaranteed:

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

 
(to be completed if applicable)

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

                 
                                
           
Signature

B-5

 

EXHIBIT C

OSTEOTECH, INC.

SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

     On January 22, 2010, the Board of Directors of Osteotech, Inc. (the “Company”) declared a
dividend of one preferred share purchase right (a “Right”) for each outstanding share of the
Company’s common stock, par value $0.01 per share (the “Common Stock”), and authorized the issuance
of one Right for each share of Common Stock which shall become outstanding between the Record Date
(as hereinafter defined) and the earliest to occur of the Distribution Date (as hereinafter
defined), the redemption or exchange of the Rights, or the expiration of the Rights. The dividend
is payable at the close of business on February 2, 2010 (the “Record Date”) to the stockholders of
record on that date. Each Right entitles the registered holder to purchase from the Company one
one-thousandth (1/1000th) of a share of Series E Junior Participating Preferred Stock, $0.01 par
value (the “Preferred Stock”), of the Company at a price of $23.00 (the “Purchase Price”), subject
to adjustment. The description and terms of the Rights are set forth in a Rights Agreement dated
January 22, 2010 (the “Rights Agreement”), between the Company and Registrar and Transfer Company,
as Rights Agent (the “Rights Agent”).

     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A dated January 22, 2010. Copies of the Rights
Agreement are available free of charge from the Rights Agent, Registrar and Transfer Company. The
following summary description of the Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.

     Until the close of business on the Distribution Date, the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate and this Summary of Rights, and no separate certificates evidencing the rights
(“Right Certificates”) will be issued. The Rights will separate from the Common Stock, Right
Certificates will be issued and the Rights will become exercisable on the tenth day (the
“Distribution Date”) after the earlier of (i) the public announcement (including pursuant to a
report filed or amended pursuant to Section 13(d) of the Exchange Act) that, or (ii) a
determination by a majority of the Company’s Board of Directors that, a person or group has become
an Acquiring Person (as defined below) (the “Shares Acquisition Date”). An “Acquiring Person” is a
person or group that, together with its affiliates and associates, is the beneficial owner of 15%
or more of the outstanding Common Stock. Certain persons, including the Company, any subsidiary of
the Company, and Company benefit plan related holders, are excluded from the definition of
Acquiring Person. Moreover, a person or group of affiliated or associated persons, who (i)
beneficially owns 15% or more of the Common Stock outstanding on the date of the Rights Agreement
(provided such person or group does not accumulate additional shares of Common Stock equal to 1% or
more of the shares of Common Stock then outstanding) or (ii) acquires the beneficial ownership of
15% or more of the Common Stock then outstanding either (a) by reason of share purchases by the
Company reducing the number of shares of Common Stock outstanding (provided such person or group
does not acquire additional shares of Common Stock), or (b) inadvertently, if the Company’s Board
of Directors determines such 15%

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beneficial ownership was acquired inadvertently and as promptly as practicable such person or
group divests itself of enough shares of Common Stock or derivative securities so as to no longer
have the beneficial ownership of 15% of the outstanding Common Stock, will not be an Acquiring
Person.

     For purposes of the Rights Agreement, “beneficial ownership” includes not only the right to
vote or dispose of the Company’s Common Stock, but also rights related to derivative transactions
or derivative securities which grant to the holder thereof the economic equivalent of ownership of
an amount of Company Common Stock (whether or not such derivative (i) conveys voting rights in the
Company Common Stock or (ii) may be settled through delivery of Company Common Stock, and whether
or not the economic effect of such derivative has been hedged).

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

     The Rights are not exercisable until the Distribution Date. The Rights will expire at 5:00
p.m. (Eastern time) on January 22, 2020 (the “Expiration Date”), unless the Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as
described below.

     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, options or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than the then 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 regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The number of interests in Preferred Stock or other
securities or property issuable upon exercise of the Rights is also subject to adjustment from time
to time to prevent dilution in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock.

     With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-

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thousandth of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) will be issued, and in lieu thereof, an adjustment in cash will
be made based on the market price of the Preferred Stock on the last trading day prior to the date
of exercise.

     Preferred Stock will not be redeemable and will be, in ranking as to dividend and liquidation
preferences, senior to the Common Stock. Each share of Preferred Stock will be entitled to a
minimum preferential quarterly dividend payment of the greater of (i) $0.10 per share, or (ii)
1,000 times the aggregate per share amount of all cash dividends and 1,000 times the aggregate per
share amount of all non-cash dividends and other distributions (other than dividends payable in
Common Stock) declared per share of Common Stock. In the event of liquidation, the holders of the
interests in Preferred Stock will receive a preferential liquidation payment of $1,000 per share,
plus accrued and unpaid dividends, provided that such holders will be entitled to receive an
aggregate liquidation payment equal to 1,000 times the payment made on one share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with the Common Stock. If
dividends on any Preferred Stock are in arrears in an amount equal to six quarterly dividends
thereon, all holders of Preferred Stock with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, have the right to elect one director. The term of
such director will terminate automatically upon the expiration of the default period. The rights of
the Preferred Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions as more fully described in the
Rights Agreement. Because of the nature of the Preferred Stock dividend, liquidation and voting
rights, the value of the one one-thousandth interest in a share of Preferred Stock purchasable upon
exercise of each Right (subject to adjustment) should approximate the value of one share of Common
Stock.

     In the event any person becomes an Acquiring Person, then each holder of a Right, other than
Rights beneficially owned by the Acquiring Person and its affiliates and associates (which will
thereafter be null and void for all purposes of the Rights Agreement and the holder thereof shall
thereafter have no rights with respect to such Rights, whether under the Rights Agreement or
otherwise), will thereafter have the right to receive upon exercise, in lieu of Preferred Stock,
that number of shares of Common Stock having a market value of two times the Purchase Price. Under
some circumstances, upon payment of the Purchase Price, the Company may substitute other equity and
debt securities, property, cash or combinations thereof, including combinations with Common Stock,
of equal value to the number of shares of Common Stock for which the Right is exercisable.

     If, following the Shares Acquisition Date, (i) the Company is acquired in a merger or other
business combination transaction, (ii) the Company is the surviving corporation in a merger or
other business combination transaction and the shares of Common Stock are changed or exchanged or
(iii) 50% or more of its consolidated assets or earning power is sold, proper provision will be
made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person or
affiliates or associates thereof) will thereafter generally have the right to receive, upon the
exercise thereof at the then current Purchase Price, that number of shares of the senior voting
stock of the acquiring company that, at the time of such transaction, would have a market value of
two times the Purchase Price.

C-3

 

     At any time prior to the earlier of (i) 5:00 p.m., Eastern time, on the Distribution Date, or
(ii) 5:00 p.m., Eastern time, on the Expiration Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption
Price”), which may be paid in cash or with Common Stock or any other form of consideration deemed
appropriate by the Board of Directors of the Company. Immediately upon the action of the Board of
Directors of the Company to redeem or exchange the Rights, the Company shall make announcement
thereof, and upon such action, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price, or the shares of Common Stock or
Preferred Stock exchangeable for the Rights, as applicable.

     A committee of independent directors of the Company will review and evaluate the Rights
Agreement at least every five years in order to consider whether the maintenance of the Rights
Agreement continues to be in the best interests of the Company and its stockholders. Following each
such review, the committee shall communicate its conclusions to the full Board of Directors of the
Company, including any recommendation in light thereof as to whether the Rights Agreement should be
modified or the Rights should be redeemed.

     Under certain circumstances, after the Shares Acquisition Date but prior to the time the
Acquiring Person, together with all affiliates and associates of such Acquiring Person, becomes the
Beneficial Owner of 50% or more of the outstanding Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights that were or are beneficially owned by an
Acquiring Person or its affiliates and associates), in whole or in part, at an exchange ratio of
one share of Common Stock (or, if there is an insufficient number of issued but not outstanding or
authorized but unissued shares of Common Stock to permit such exchange, then one one-thousandth of
a share of Preferred Stock) per Right (subject to adjustment).

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

     Except as otherwise provided in the Rights Agreement, and prior to the Distribution Date, the
Company may, in its sole and absolute discretion, amend or supplement the Rights Agreement in any
respect without the consent of the holders of certificates representing Common Stock. At any time
after the Rights are no longer redeemable, the Company may supplement or amend the Rights Agreement
without the consent of the holders of the Right Certificates at any time to cure any ambiguity or
to correct or supplement any defective or inconsistent provisions, to shorten or lengthen any time
period hereunder, or to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and which would not adversely affect the interests of the
holders of Right Certificates (other than any holder who is an Acquiring Person or its affiliates
and associates) or to cause the Rights to again become redeemable. The foregoing notwithstanding,
no amendment may be made to the Rights Agreement at a time when the Rights are not redeemable,
except to cure any ambiguity or correct or supplement any provision contained in the Rights
Agreement which may be defective or inconsistent with any other provision therein.

     The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a
person or group that attempts to acquire the Company without conditioning the offer on the
redemption of the Rights by the Board of Directors of the Company. The Rights should not

C-4

 

interfere with any merger or other business combination that is in the best interests of the
Company and its stockholders because the Board of Directors may, at its option, at any time prior
to the Shares Acquisition Date, redeem all but not less than all the then outstanding Rights at the
Redemption Price.

C-5

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