Document:

exv4w1

 

Exhibit 4.1

 

RIGHTS AGREEMENT

THE MANAGEMENT NETWORK GROUP, INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.

as Rights Agent

Dated as
of March 27, 2008

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	Section 1. Certain Definitions
	 	 	1	 
	Section 2. Appointment of Rights Agent
	 	 	8	 
	Section 3. Issue of Rights Certificates
	 	 	8	 
	Section 4. Form of Rights Certificates
	 	 	10	 
	Section 5. Countersignature and Registration
	 	 	11	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	11	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	12	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	15	 
	Section 9. Reservation and Availability of Capital Stock
	 	 	15	 
	Section 10. Securities Record Date
	 	 	17	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights
	 	 	17	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	25	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	25	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	29	 
	Section 15. Rights of Action
	 	 	30	 
	Section 16. Agreement of Rights Holders
	 	 	31	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	31	 
	Section 18. Concerning the Rights Agent
	 	 	32	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	32	 
	Section 20. Duties of Rights Agent
	 	 	33	 
	Section 21. Change of Rights Agent
	 	 	35	 
	Section 22. Issuance of New Rights Certificates
	 	 	36	 
	Section 23. Redemption and Termination; Three-Year Independent Director Evaluation
	 	 	36	 
	Section 24. Exchange
	 	 	37	 
	Section 25. Notice of Certain Events
	 	 	39	 
	Section 26. Notices
	 	 	39	 
	Section 27. Supplements and Amendments
	 	 	40	 
	Section 28. Successors
	 	 	41	 
	Section 29. Determinations and Actions by the Board of Directors, Etc
	 	 	41	 
	Section 30. Benefits of this Agreement
	 	 	41	 
	Section 31. Severability
	 	 	41	 
	Section 32. Governing Law
	 	 	42	 
	Section 33. Counterparts
	 	 	42	 
	Section 34. Descriptive Headings
	 	 	42	 
	Section 35. Force Majeure
	 	 	42	 

EXHIBIT A — Form of Certificate of Designation, Preferences and Rights

EXHIBIT B — Form of Rights Certificate

EXHIBIT C — Form of Summary of Rights

 i

 

 

RIGHTS AGREEMENT

     RIGHTS
AGREEMENT, dated as of March 27, 2008 (the “Agreement”), between The Management
Network Group, Inc., a Delaware corporation (the “Company”), and Computershare Trust
Company, N.A., as Rights Agent (the “Rights Agent”).

     WHEREAS,
effective March 27, 2008 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized the issuance of, and declared a dividend payable in, one right
for each share of Common Stock of the Company outstanding at the close of business on April 7, 2008
(the “Record Date”), each such right initially representing the right to purchase one
one-thousandth of a share of Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designations attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth (individually, a
“Right” and collectively, the “Rights”); and

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

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

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

     (a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 5.0% or more of
the shares of Common Stock then outstanding (other than as a result of a Permitted Offer),
whether or not such Person together with all Affiliates or Associates of such Person
continues to be the Beneficial Owner of 5.0% or more of the then outstanding Common Stock.
Notwithstanding the foregoing,

     (i) the term “Acquiring Person” shall not include (A) the Company, (B) any
Subsidiary of the Company, (C) any employee benefit plan of the Company or of any
Subsidiary of the Company, or (D) any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan (including,
without limitation, any trust or other entity organized, appointed, established or
holding common stock for or pursuant to the terms of any such plan) (each of
(i) through (iv), an “Exempted Person”);

     (ii) no Person shall become an “Acquiring Person” as a result of an acquisition
of Common Stock by the Company which, by reducing the number of such shares then
outstanding, increases the proportionate number of shares beneficially owned by such
Person together with all Affiliates and Associates of such Person to 5.0% or more of
the outstanding Common Stock, so long as such

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Person together with all Affiliates and Associates of such Person does not
thereafter become the Beneficial Owner of additional shares of Common Stock
constituting 0.5% or more of the then outstanding shares of Common Stock, other than
pursuant to (A) a stock dividend by the Company, (B) a Permitted Offer or (C) any
employee or director benefit plan or agreement of the Company or any Subsidiary of
the Company;

     (iii) no Person who or which together with all Affiliates and Associates of
such Person is, as of the date of this Agreement, the Beneficial Owner of 5.0% or
more of the shares of Common Stock then outstanding shall be an “Acquiring Person”,
so long as such Person together with all Affiliates and Associates of such Person
does not thereafter become the Beneficial Owner of additional shares of Common Stock
constituting 0.5% or more of the then outstanding shares of Common Stock, other than
pursuant to (A) a stock dividend by the Company, (B) a Permitted Offer or (C) any
employee or director benefit plan or agreement of the Company or any Subsidiary of
the Company;

     (iv) no Person who or which together with all Affiliates and Associates of such Person shall
be the Beneficial Owner of 5.0% or more of the shares of Common Stock then outstanding as a result
of a transfer of shares of Common Stock from a Current Beneficial Owner, which transferee together
with all Affiliates and Associates was the Beneficial Owner of less than 0.5% of the outstanding
shares of Common Stock immediately prior to such transfer and is the Beneficial Owner of less than
15% of the outstanding shares of Common Stock immediately after such transfer, shall be an
“Acquiring Person”, so long as such Person together with all Affiliates and Associates of such
Person does not thereafter become the Beneficial Owner of additional shares of Common Stock
constituting 0.5% or more of the then outstanding shares of Common Stock, other than pursuant to
(A) a stock dividend by the Company, (B) a Permitted Offer or (C) any employee or director benefit
plan or agreement of the Company or any Subsidiary of the Company;

     (v) a Person shall not be deemed to be an “Acquiring Person” if the Board of
Directors of the Company determines in good faith that such Person, together with
all Affiliates and Associates of such Person, who would otherwise be an “Acquiring
Person” has become such inadvertently, and the Board of Directors in its sole
discretion approves the beneficial ownership interest held by such Person or such
Person, together with all Affiliates and Associates of such Person, divests as
promptly as practicable (as determined in good faith by the Board of Directors) a
sufficient number of shares of Common Stock so that such Person, together with all
Affiliates and Associates of such Person, would no longer be an Acquiring Person;

provided,
however, that any Person subject to clause (ii), (iii) or
(iv) at any time shall cease to be
subject to such clause at such time, if any, as such Person together with all Affiliates and
Associates of such Person ceases to be the Beneficial Owner of 5.0% or more of the shares of Common
Stock then outstanding. Notwithstanding the foregoing, the Board of Directors may, in its sole
discretion, with the approval of a majority of directors who are not Affiliates, Associates,
nominees or representatives of such Person, determine that any Person shall not be deemed an
“Acquiring Person” for purposes of this Agreement, subject to such terms and conditions, if any, as
may be established by the Board of Directors.

     (b) “Act” shall mean the Securities Act of 1933, as amended and in effect on
the date hereof.

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

     (d) “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement, and to the extent not included within the
foregoing clause of this Section 1(d), shall also include, with respect to any Person, any

2

 

other Person (whether or not an Exempted Person) whose shares of Common Stock would be
deemed constructively owned by such first Person, owned by a single “entity” as defined in
Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares owned
by such first Person pursuant to the provisions of Section 382 of the Internal Revenue Code
of 1986, as amended (the “Code”), or any successor provision or replacement
provision, and the Treasury Regulations thereunder, provided, however, that
a Person shall not be deemed to be the Affiliate or Associate of another Person solely
because either or both Persons are or were directors or officers of the Company.

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

     (i) which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right or obligation to acquire (whether such right
or obligation is exercisable immediately or only after the passage of time or the
fulfillment of a condition or any or all of the foregoing) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, other rights, warrants or options,
or otherwise; provided, however, that a Person shall not be deemed
the “Beneficial Owner” of, or to beneficially own,” (A) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event;

     (ii) which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as amended and in effect on the date hereof),
including pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of
the rules and regulations under the Exchange Act as amended and as in effect on the
date hereof, and (B) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report, other than by
reference to a proxy or consent solicitation being conducted by such Person); or

     (iii) which are beneficially owned, directly or indirectly, by any other Person
(or any Affiliate or Associate thereof) with which such Person (or any of such
Person’s Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy or consent as described in the

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     proviso to subparagraph (ii) of this paragraph (f)) or disposing of any voting
securities of the Company;

provided, however, that nothing in this paragraph (f) shall cause a person
engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to
“beneficially own,” any securities acquired through such person’s participation in good
faith in a bona fide firm commitment underwriting under the Act until the expiration of
forty days after the date of such acquisition, and provided further that a Person who, prior
to the Distribution Date, is a member of the Board of Directors or an officer of the Company
or who is an Affiliate or Associate of a member of the Board of Directors or officer of the
Company shall not be deemed the Beneficial Owner of, or to “beneficially own”, shares of
Common Stock held by another member of the Board of Directors or officer of the Company or
Affiliate or Associate of a member of the Board of Directors or officer of the Company
solely by reason of any agreement, arrangement or understanding, written or otherwise,
entered into in opposition to any transaction or in support of a Permitted Offer.
Notwithstanding anything herein to the contrary, to the extent not within the foregoing
provisions of this Section 1(e), a Person shall be deemed the “Beneficial Owner” of and
shall be deemed to “beneficially own” or have “beneficial ownership” of, securities which
such Person would be deemed to constructively own or which otherwise would be aggregated
with shares owned by such Person pursuant to Section 382 of the Code and provisions
incorporated therein by reference, or any successor provision or replacement provision and
the Treasury Regulations thereunder.

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

          (g) “Book Entry” shall mean an uncertificated book entry for the Common Stock.

          (h) “Business Day” shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the state in which the principal office of the Rights Agent is
located are authorized or obligated by law or executive order to close.

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

          (j) “Code” shall have the meaning set forth in Section 1(d) of this Agreement..

          (k) “Common Stock” shall mean the common stock, par value $.001 per share, of
the Company (or in the event of a subdivision, combination or reclassification with respect
to such shares of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or reclassification), except, subject to the proviso in Section 13(b) of this
Agreement, that “Common Stock” when used with reference to any Person other than the Company
(A) which shall be organized in corporate form, shall mean the capital stock or other equity
security or equity interest with the greatest voting

4

 

power to control the management of such Person or, if such other Person is a Subsidiary
of another Person, the Person or Persons which ultimately control such first-mentioned
Person, or (B) which shall not be organized in corporate form, shall mean units of
beneficial interest which shall represent the right to participate in profits, losses,
deductions and credits of such Person and which shall be entitled to exercise the greatest
voting power to direct the management of such Person, or if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control such
first-mentioned Person.

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

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

     (n) “Current Beneficial Owner” shall mean any Person who or which together with all
Affiliates and Associates of such Person is, as of the date of this Agreement, the Beneficial Owner
of 5.0% or more of the shares of Common Stock then outstanding, other than any Person who is an
officer of the Company as of the date of this Agreement.

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

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

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

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

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

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

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

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

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

     (x) “Permitted Offer” shall mean an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer for all outstanding shares of Common Stock
at a price and on terms determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) fair to stockholders (taking into account all factors
which such members of the Board deem relevant including, without limitation, prices which
could reasonably be achieved if the Company or its assets were sold on an

5

 

orderly basis designed to realize maximum value) and (b)otherwise in the best interests
of the Company and its stockholders.

     (y) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, trust or other entity, group (as such term is used in Rule 13d-5
promulgated under the Exchange Act as in effect on the date hereof), group of persons making
a “coordinated acquisition” of stock or otherwise treated as an entity within the meaning of
Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and shall include any
successor (by merger or otherwise) thereof or thereto.

     (z) “Preferred Stock” shall mean shares of Series A Junior Participating
Preferred Stock, par value $.001 per share, of the Company (or in the event of a
subdivision, combination or reclassification with respect to such shares of Preferred Stock,
the shares of Preferred Stock resulting from such subdivision, combination or
reclassification), and, to the extent that there is not a sufficient number of shares of
Series A Junior Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company designated for such purpose
containing terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock.

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

     (bb) “Purchase Price” shall have the meaning set forth in 7(b) hereof, except
as otherwise provided in Section 11(a)(ii) and Section 13(a) hereof.

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

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

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

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

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

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

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

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

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

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

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

     (nn) “Stock Acquisition Date” shall mean the earlier of the date of (i) the
first public announcement (which, for purposes of this definition, shall include, without
limitation, a report filed under the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such or (ii) the first public disclosure of facts by the
Company or an Acquiring Person indicating that an Acquiring Person has become an Acquiring
Person, which date may occur prior to the Record Date; provided however,
that if such Person is determined not to have become an Acquiring Person by the Board of
Directors in accordance with Section 1(a) hereof, then no Stock Acquisition Date shall be
deemed to have occurred..

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

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

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

     (rr) “Treasury Regulations” shall mean final, temporary and proposed income tax
regulations promulgated under the Code, including any amendments thereto.

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

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

     (uu) “Voting Power” shall mean, with respect to any entity as at any date, the
aggregate number of votes with respect to the election of directors, managers or other
members of such entity’s governing body outstanding as at such date in respect of such
entity.

7

 

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

     Section 3. Issue of Rights Certificates.

     (a) Until the earlier of (i) the close of business on the tenth Business Day after the
Stock Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the close of business on the Record Date), or (ii) the close
of business on the tenth Business Day (or such later date as the Board of Directors shall
determine) after the date of the earlier of commencement by any Person (other than an
Exempted Person) of, or the first public announcement of the intention of any Person (other
than an Exempted Person) to commence, a tender or exchange offer (other than a Permitted
Offer) the consummation of which would result in any Person becoming an Acquiring Person
(including any such date which is on or after the date of this Agreement and prior to the
issuance of the Rights) (the earlier of (i) and (ii) being herein referred to as the
“Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) of this Agreement) by the certificates or Book Entries for the Common Stock
registered in the names of the record holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for Rights) and not by separate
certificates or Book Entries, and the record holders of the Common Stock represented by such
certificates or Book Entries shall be the record holders of Rights represented thereby, and
(y) the Rights will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company); provided,
however, that if a tender or exchange offer is terminated prior to the occurrence of
a Distribution Date, then no Distribution Date shall occur as a result of such tender or
exchange offer. The Board of Directors may defer the date set forth in clause (ii) of the
preceding sentence (with prompt written notice thereof to the Rights Agent) to a specified
later date or to an unspecified later date, each to be determined by action of the Board of
Directors. As soon as practicable after the Distribution Date, the Company shall prepare
and execute, the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested and provided with all necessary information,
send) by first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of such holder
shown on the registry books for the Common Stock of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the “Rights
Certificates”), evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to Section 11(q) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are

8

 

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

     (b) Commencing as promptly as practicable following the Record Date, the Company will
make available a copy of a Summary of Rights, 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 certificates or Book
Entries for the Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates or Book Entries for the Common Stock and
the record holders of the Common Stock shall also be the record holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date, transfer on the
Company’s direct registration system of any Common Stock represented by a Book Entry or the
surrender for transfer of any certificate for Common Stock shall constitute the surrender
for transfer of the Rights associated with the Common Stock evidenced thereby, whether or
not accompanied by a copy of the Summary of Rights.

     (c) Subject to Section 7(e), Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company’s treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration Date, and,
in certain circumstances provided in Section 22 of this Agreement, after the Distribution
Date. Rights issued prior to the Distribution Date will be evidenced by certificates or
Book Entries for the Common Stock. Certificates for Common Stock and confirmations
evidencing Book Entries which become outstanding after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration Date shall
bear the following legend (with appropriate modifications in the case of confirmations):

This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between The Management Network
Group, Inc. (the “Company”) and Computershare Trust Company, N.A. (the
“Rights Agent”), dated as of March 27, 2008, as it may be amended from time
to time (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal offices
of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge, promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or Beneficially Owned or held by, any Person
who is, was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently Beneficially Owned

9

 

or held by or on behalf of such Person or by any subsequent holder, may
become null and void and may not thereafter be exercised or transferred.

Until the Distribution Date, the Rights associated with the Common Stock shall be evidenced
by such certificates or Book Entries alone and registered holders of Common Stock shall also
be the registered holders of the associated Rights, and the transfer of shares of Common
Stock shall also constitute the transfer of the Rights associated with such shares of Common
Stock. In the event that the Company purchases or otherwise 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 canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the shares of Common Stock which are
no longer outstanding. Notwithstanding this paragraph (d), 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 Rights Certificates.

     (a) The Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall each be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant thereto, or with
any rule or regulation of any stock exchange or inter-dealer quotation system on which or
with whom the Rights may from time to time be listed or quoted, or to conform to usage or
otherwise. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall entitle the record holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set forth
therein at the Purchase Price set forth therein, but the amount and the type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.

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

10

 

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

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

     Section 5. Countersignature and Registration.

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

     (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at
its principal office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the Rights Certificates. The
Company and Rights Agent may deem and treat the person in whose name any Rights Certificate
(or prior to the Distribution Date, the associated Common Stock Certificate) is recorded on
the books for the registration and transfer of Rights (or, the Common Stock) as the absolute
owner thereof, for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.

11

 

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

     (a) Subject to the provisions of Section 4(b), Section 7(e), Section 7(f), Section 11,
Section 14, Section 23 and Section 24 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates (other than Rights Certificates representing Rights that
have become null and void pursuant to Section 7(e) or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the record holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following a Triggering Event, Common
Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any record holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights Certificate or
Rights Certificates until the record holder shall have (i) properly completed and signed the
certificate contained in the form of assignment on the reverse side of such Rights
Certificate or Rights Certificates, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request. Thereupon, the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 7(f), Section 11, Section 14,
Section 23 and Section 24 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company
or the Rights Agent may require payment by the record holder of a Rights Certificate of a
sum sufficient to cover any applicable tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights Certificates, and
neither the Company nor the Rights Agent shall have any duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or governmental charges
have been paid.

     (b) Subject to the provisions of Section 4(b), Section 7(e), Section 7(f), Section 11,
Section 14, Section 23 and Section 24 hereof, upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security to the Rights Agent and the Company satisfactory to the Rights Agent and the
Company and reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate, if mutilated, the Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the record holder in
lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

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

     (a) Subject to Section 7(e), Section 7(f) and Section 14 hereof, the record holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on exercisability set forth
in Section 9(c), Section 11(a)(iii), Section 23(a) and Section 24(b) hereof) in whole or in
part at any time after the Distribution Date upon surrender of the Rights Certificate, with
the form of election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total number of
one one-thousandths of a share of Preferred Stock (or, following the occurrence of a
Triggering Event, Common Stock or other securities, cash or other assets, as the case may
be) as to which such surrendered Rights are then exercisable, at or prior to the earlier of
(i) the close of business on March 27, 2018 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption
Date”), (iii) the time at which such Rights are exchanged as provided in Section 24
hereof, or (iv) the consummation of a transaction contemplated by Section 13(d) hereof (the
earliest of (i), (ii), (iii) and (iv) being herein referred to as the “Expiration
Date”).

     (b) The Purchase Price for each one one-thousandth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be $8.00, and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below (the “Purchase Price”).

     (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly executed and properly completed,
accompanied by payment, with respect to each Right so exercised, of the Purchase Price per
one one-thousandth of a share of Preferred Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an amount equal to any
tax or charge required to be paid by the holder of such Rights Certificate in accordance
with Section 9 hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares) certificates for
the total number of one one-thousandths of a share of Preferred Stock to be purchased, and
the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance
with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the record holder of such
Rights Certificate, registered in such name or names as may be designated by such holder,
and (iv) when appropriate, after receipt thereof, promptly deliver such cash, if any, to or
upon the order of the record holder of such

13

 

Rights Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or
bank draft payable to the order of the Company, in each case in lawful money of the United
States of America. In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the Rights Agent,
if and when necessary to comply with this Agreement. The Company reserves the right to
require, prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock would be issued.

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

     (e) Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or understanding
which has the purpose or effect the avoidance of this Section 7(e), shall become null and
void without any further action, and any record holder of such Rights shall have no rights
whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the Rights Agent
nor the Company shall have any liability to any record holder of Rights Certificates or any
other Person as a result of the Company’s failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder. The Company or
the Rights Agent may require (or cause any transfer agent of the Company to require) any
Person who submits a Rights Certificate (or a certificate representing shares of Common
Stock that evidences, or but for the provisions of this Section 7(e) would evidence, Rights)
for transfer on the registry books or to exercise the Rights represented thereby to
establish to the satisfaction of the Company in its sole discretion that such Rights have
not become null and void pursuant to the provisions of this Section 7(e).

14

 

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

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

     Section 9. Reservation and Availability of Capital Stock.

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

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

     (c) If then required by applicable law, the Company shall use its best efforts to (i)
file, as soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof, a
registration statement under the Act with respect to the securities purchasable upon

15

 

exercise of the Rights on an appropriate form, (ii) cause such registration statement
to become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Expiration Date. If then required by
applicable law, the Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or “blue sky” laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective or to comply
with such blue sky laws. Upon any such suspension, the Company shall make 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. In
addition, if the Company shall determine that a registration statement is required following
the Distribution Date, the Company may temporarily suspend the exercisability of the Rights
until such time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.

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

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

16

 

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

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

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

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

17

 

     (ii) Subject to Section 24 hereof, in the event any Person, alone or together with its
Affiliates and Associates, shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person (such an event being referred to herein as a “Section 11(a)(ii)
Event”), then, promptly following the occurrence of such Section 11(a)(ii) Event, proper
provision shall be made by the Company so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement,
in lieu of fractional interests in shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable (or, if the Distribution Date shall not have
occurred prior to the date of such Section 11(a)(ii) Event, the number of shares of Common
Stock for which a Right would have been exercisable if the Distribution Date had occurred on
the Business Day immediately preceding the date of such Section 11(a)(ii) Event) immediately
prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as the
“Purchase Price” for each Right and for all purposes of this Agreement) by 50% of
the Current Market Price (determined pursuant to Section 11(d) hereof) per share of Common
Stock on the date of such first occurrence (such number of shares being referred to as the
“Adjustment Shares”).

     (iii) Subject to such limitations existing as of the date hereof as are necessary to
prevent a default under any agreement to which the Company is a party, in the event that the
number of shares of Common Stock which are authorized by the Company’s certificate of
incorporation but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company, acting
by resolution of its Board of Directors shall (A) determine the excess of (x) the value of
the Adjustment Shares issuable upon the exercise of a Right determined as set forth below
(the “Current Value”), over (y) the Purchase Price (such excess, the “Spread”), and
(B) with respect to each Right (subject to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock
or other equity securities of the Company (including, without limitation, shares or units of
shares of preferred stock, such as the Preferred Stock, which the Board of Directors has
deemed to have essentially the same value or economic rights as shares of Common Stock (such
shares of preferred stock or other equity securities being referred to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current Value (less the
amount of any reduction in the Purchase Price), where such aggregate value has been
determined by the Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors; provided,
however, that if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (such date being referred to
herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right

18

 

and without requiring payment of the Purchase Price (other than an amount equal to the
par value of the shares of Common Stock to be issued), shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors determines in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization
of such additional shares (such thirty (30) day period, as it may be extended, is herein
called the “Substitution Period”). To the extent that action is to be taken
pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (1)
shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such stockholder approval for such
authorization of additional shares and/or to decide the appropriate form of distribution to
be made pursuant to such first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall make a public announcement 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 Current Value of each Adjustment Share shall be the Current Market
Price per share of the Common Stock on the Section 11(a)(ii) Trigger Date, and the per share
or per unit value of any Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date.

     (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all record holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences as the shares
of Preferred Stock (“equivalent preferred stock”)) or securities convertible into
Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per
share of equivalent preferred stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less than the Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred Stock and
equivalent preferred stock outstanding on such record date, plus the number of shares of
Preferred Stock and equivalent preferred stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Preferred Stock and equivalent preferred stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other than cash,
the value of such consideration

19

 

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

     (c) In case the Company shall fix a record date for a distribution to all record
holders of Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction, the numerator
of which shall be the Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to a share of Preferred
Stock and the denominator of which shall be such Current Market Price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.

     (d) (i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share of
Common Stock on any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the thirty (30) consecutive Trading Days immediately prior to
but not including such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following but not including such date;
provided, however, that in the event that the Current Market Price per share
of the Common Stock is determined during a period following the announcement by the issuer
of such Common Stock of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or reclassification of such
Common Stock, and the ex-dividend or ex-distribution date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification shall not have
occurred prior to the

20

 

commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day period,
as set forth above, then, and in each such case, the Current Market Price shall be properly
adjusted to reflect the current market price per share equivalent of Common Stock. The
closing price for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock Exchange or, if
the shares of Common Stock 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
shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the last sale
price, regular way, or, if such last sale price is not reported, the average of the high bid
and low asked prices in the over-the-counter market, as reported by NASDAQ Global Market or
such other system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock selected by the
Board of Directors. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith by the Board
of Directors shall be used. The term “Trading Day” shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange, a Business
Day. If the Common Stock is not publicly held or not so listed or traded, Current Market
Price per share shall mean the fair value per share as determined in good faith by the Board
of Directors, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

          (ii) For the purpose of any computation hereunder, the Current Market Price per share
of Preferred Stock shall be determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the
Current Market Price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of this
Agreement) multiplied by the Current Market Price per share of the Common Stock. If neither
the Common Stock nor the Preferred Stock is publicly held or so listed or traded, Current
Market Price per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all purposes. For
all purposes of this Agreement, the Current Market Price of one one-thousandth of a share of
Preferred Stock shall be equal to the Current Market Price of one share of Preferred Stock
divided by 1,000.

21

 

     (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-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 (i) three (3) years
from the date of the transaction which mandates such adjustment, or (ii) the Expiration
Date.

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

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

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

     (i) The Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of record prior
to such adjustment of the number of Rights shall become that number of Rights (calculated to
the nearest one-millionth) obtained by dividing the Purchase Price

22

 

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

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

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

     (l) In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event, the issuance to the record holder of any
Right exercised after such record date the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the number of one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment;

23

 

provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder’s right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.

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

     (n) The Company covenants and agrees that it shall not, at any time after the
Distribution Date and so long as the Rights have not been redeemed pursuant to Section 23
hereof or exchanged pursuant to Section 24 hereof, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(p)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(p) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(p) hereof), if (x) at the time of or immediately after such
consolidation, merger or sale there are any certificate of incorporation or bylaw provisions
or any rights, warrants or other instruments or securities outstanding or agreements in
effect or other actions taken which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates, and (z) the form or nature of organization of the Principal Party
would preclude or limit the exercise of Rights or otherwise diminish or substantially limit
the benefits intended to be afforded by the Rights.

     (o) The Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such other person shall have executed and delivered to
the Rights Agent a supplemental agreement evidencing compliance with this Section 11(n).

     (p) The Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23, Section 24 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is

24

 

reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.

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

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

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

          (a) In the event that, following the Stock Acquisition Date (which for purposes of this
Section 13(a) only shall also include the date of the first public announcement or public
disclosure (including, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) that any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or pursuant to the terms of
any such plan), together with any of such Person’s Affiliates and Associates, has become the
Beneficial Owner of 5.0% or more of the shares of Common Stock then outstanding pursuant to
a Permitted Offer), directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(p) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(p) hereof) shall

25

 

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

26

 

     (b) “Principal Party” shall mean

     (i) in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a): (A) the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or
consolidation, or if there is more than one such issuer, the issuer of the shares of
Common Stock which has the greatest aggregate market value of shares outstanding, or
(B) if no securities are so issued, (1) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is more than one such
Person, the Person the shares of Common Stock of which has the greatest aggregate
market value of shares outstanding or (2) if the Person that is the other party to
the merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (3) the Person resulting from the
consolidation; and

     (ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction or
transactions or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred or if the
Person receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of the shares of Common Stock
having the greatest aggregate market value of shares outstanding;

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

     (c) The Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock or out of its authorized
and issued shares held in its treasury, the number of shares of its Common Stock that will
be sufficient to permit the exercise in full of all outstanding Rights under this Section 13
and unless prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement

27

 

confirming that the requirements set forth in paragraphs (a) and (b) of this Section 13
shall be promptly performed in accordance with their terms and further providing that, as
soon as practicable after executing such agreement pursuant to this Section 13, the
Principal Party will at its own expense:

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

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

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

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

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable in the manner described
in Section 13(a). If, for any reason, the Rights cannot be exercised for Common Stock of
the Company or such Principal Party, then a holder of Rights will have the right to exchange
such Rights for cash from the Company or such Principal Party in an amount equal to the
number of shares of such Common Stock such holder would otherwise be entitled to purchase
times 50% of the then Current Market Price, as determined pursuant to Section 11(d)(i)
hereof, of such stock of such Principal Party or the Company. If, for any reason, including,
without limitation, if such Principal Party is an individual, private partnership or private
company, the foregoing formulation cannot be applied to determine the cash amount into which
the Rights are exchangeable, then the Board of Directors, based upon advice from one or more
nationally recognized investment banking firms, shall determine such amount reasonably and
with utmost good faith to the holders of Rights. Any such determination shall be binding and
final.

28

 

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

     Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(q) hereof, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to
the record holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For purposes of this Section 14(a), the current market value
of a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the 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 sale price or, if such last sale price
is not reported, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the NASDAQ Global Market or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors shall be used.

     (b) The Company shall not be required to issue fractions of shares of Preferred Stock
(other than, except as provided in Section 7(c), fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of Preferred Stock).
Fractions of shares of Preferred Stock in integral multiples of one one-thousandth of a
share of Preferred Stock may, at the election of the Company, be

29

 

evidenced by depositary receipts, pursuant to an appropriate agreement between the
Company and a depositary selected by it; provided, however, that such
agreement shall provide that the holders of such depositary receipts shall have the rights,
privileges and preferences to which they are entitled as beneficial owners of the shares of
Preferred Stock represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the record holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of Preferred Stock.
For purposes of this Section 14(b), the current market value of one one-thousandth of a
share of Preferred Stock shall be one one-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.

     (c) Following the occurrence of a Triggering Event, the Company shall not be required
to issue fractions of shares of Common Stock or distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock the Company
may pay to the record holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current market value
of one share of Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be determined in a manner set forth in Section 11(d)(i)
hereof for the Trading Day immediately prior to the date of such exercise.

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

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

30

 

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

     (a) prior to the Distribution Date, the Rights shall be evidenced by Book Entries
representing, or the certificates for, Common Stock registered in the name of the holders of
Common Stock, which Book Entries representing, or certificates for Common Stock, shall also
constitute certificates for Rights, and not by separate Rights Certificates, and each Right
shall be transferable only simultaneously and together with the transfer of shares of Common
Stock;

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

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

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

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

     Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of one one-thousandths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to

31

 

receive notice of meetings or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the
provisions hereof.

     Section 18. Concerning the Rights Agent.

     (a) The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in the premises
(including reasonable counsel fees and expenses). The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the Company.

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

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

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

32

 

such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

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

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

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

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

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

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

     (e) The Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any breach

33

 

by the Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock, Preferred Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common
Stock, Preferred Stock or other securities, will when so issued, be validly authorized and
issued, fully paid and nonassessable.

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

     (g) The Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman of the
Board, any Vice Chairman, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it 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.

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

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

     (j) No provision of this Agreement shall require the Rights Agent to expend or risk its
own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder (other than internal costs incurred by the Rights Agent in providing services to
the Company in the ordinary course of its business as Rights Agent)

34

 

or in the exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably assured to it.

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

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing, mailed to the Company and shall provide notice thereof to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail and to the holders of the Rights
Certificates in accordance with Section 26 hereof, or if prior to the Distribution Date, to the
holders of Rights through any filing made by the Company pursuant to the Exchange Act. In the event
the transfer agency relationship in effect between the Company and the Rights Agent terminates, the
Rights Agent will be deemed to have resigned automatically and be discharged from its duties under
this Agreement as of the effective date of such termination, and the Company shall be responsible
for sending any required notice. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and shall provide notice thereof to each transfer agent of the Common
Stock and Preferred Stock, by registered or certified mail, and to the holders of the Rights
Certificates in accordance with Section 26 hereof, or, if prior to the Distribution Date, to the
holders of Rights through any filing made by the Company pursuant to the Exchange Act. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the record holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any record holder of any Rights Certificate
or the resigning or removed Rights Agent may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) an entity organized and doing business under the laws of the United
States or of the State of Kansas or the State of New York (or of any other state of the United
States so long as such entity is authorized to do business as a banking institution in the State of
Kansas or the State of New York), in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000 or (b) an Affiliate of such an entity. After
appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock and the Preferred Stock,

35

 

and mail a notice thereof in writing to the registered holders of the Rights Certificates in
accordance with Section 26 hereof, or, if prior to the Distribution Date, give notice to the
holders of Rights through any filing made by the Company pursuant to the Exchange Act. Failure to
give any notice provided for in this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

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

     Section 23. Redemption and Termination; Annual Independent Director Evaluation.

     (a) The Board of Directors may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth Business Day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the close
of business on the tenth Business Day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the “Redemption Price”).
Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as
the Company’s right of redemption hereunder has expired. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price
of the Common Stock at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights may be made effective
at such time, on such basis and with such conditions as the Board of Directors in its sole
discretion may establish.

36

 

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

     (c) The Stockholder Rights Plan Committee of the Company’s Board of Directors shall
review this Agreement in order to consider whether the maintenance of this Agreement
continues to be in the best interests of the Company and its stockholders. Such committee
shall conduct such review periodically when, as and in such manner as the committee deems
appropriate, after giving due regard to all relevant circumstances; provided, however, that
the committee shall take such action at least annually. Following each such review, such
committee will report its conclusions to the full Board of Directors of the Company,
including any recommendation in light thereof as to whether this Agreement should be
modified or the Rights should be redeemed. Such committee shall be comprised only of
directors of the Company who shall have been determined by the Company’s Board of Directors
to be independent and disinterested (who are neither an Acquiring Person or a Person on
whose behalf a tender offer or exchange offer for Common Stock is being made nor an
Affiliate, Associate, nominee or representative of an Acquiring Person or a Person on whose
behalf a tender offer or exchange for Common Stock is being made). Such committee shall be
appointed by the Board of Directors of the Company and is authorized to retain such legal
counsel, financial advisors and other advisors as the committee deems appropriate in order
to assist the committee in carrying out its responsibilities under this Agreement.

     Section 24. Exchange.

     (a) The Board of Directors may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become null and void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter
referred to as the “Exchange Ratio”), provided that the shares of Common Stock so exchanged
shall be of the same class or series which the holders of such Rights would have been
entitled to receive upon the exercise thereof. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any Person (other
than an Exempted Person), together

37

 

with all Affiliates and Associates of such Person, becomes the Beneficial Owner of
voting securities of the Company then outstanding representing 50% or more of the Voting
Power of the Company.

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

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

     (d) The Company shall not be required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of Common Stock. In lieu of
such fractional shares of Common Stock, the Company shall pay to the registered holders of
the Rights Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the same fraction of the Current Market
Price per share of the applicable class or series of Common Stock

38

 

as of the Trading Day immediately prior to the record date of exchange pursuant to this
Section 24.

     Section 25. Notice of Certain Events.

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

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

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

39

 

The Management Network Group, Inc.

7300 College Boulevard, Suite 302

Overland Park, Kansas 66210

Attention: Chief Executive Officer and General Counsel

Facsimile No: (913) 451-1845

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

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Client Services

Facsimile No: (816) 442-8043

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

     Section 27. Supplements and Amendments. Subject to the provisions of this Section 27,
for so long as the Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, but subject to the provisions of this Section 27, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable; provided that no such supplement or amendment adversely affects the interests of the
holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person) and no such amendment may cause the Rights again to become redeemable or cause
the Agreement again to become amendable other than in accordance with this sentence. Upon the
delivery of a certificate from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment; provided, however, that the Rights Agent may,
but shall not be obligated to, enter into any such supplement or amendment which adversely affects
the Rights Agent’s own rights, duties, obligations or immunities under this Agreement and the
Rights Agent shall not be bound by supplements or amendments not executed by it. Notwithstanding
anything contained in this

40

 

Agreement to the contrary, no supplement or amendment shall be made which changes the
Redemption Price. Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.

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

     Section 29. Determinations and Actions by the Board of Directors, Etc. For all
purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at
any particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with, as applicable, the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as amended and in effect on the date hereof or the provisions of
Section 382 of the Code, or any successor provision or replacement provision, and the Treasury
Regulations thereunder. The Board of Directors, except as otherwise specifically provided for
herein, shall have the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the Board of Directors in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights Certificates (and, prior to the Distribution Date, record holders of the Common Stock)
and all other parties, and (y) not subject the Board of Directors to any liability to the holders
of the Rights.

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

     Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the close of business on the tenth Business Day (or such
longer period of time as permitted pursuant to Section 27 of this Agreement) following the

41

 

date of such determination by the Board of Directors. Without limiting the foregoing, if any
provision requiring that a determination be made by less than the entire Board of Directors (or at
a time or with the concurrence of a group of directors consisting of less than the entire Board of
Directors) is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board of Directors in accordance with
applicable law and the Company’s Certificate of Incorporation and Bylaws.

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

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

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

     Section 35. 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.

42

 

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

	 	 	 	 	 
	 	 	THE MANAGEMENT NETWORK GROUP, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Donald E. Klumb 
	 

	 	 	 	 
	 

	 	 	 	Name: Donald E. Klumb
	 

	 	 	 	Title: Vice President and Chief Financial
Officer
	 
	 	 	 	 
	 	 	COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Dennis V. Moccia 
	 

	 	 	 	 
	 

	 	 	 	Name: Dennis V. Moccia
	 

	 	 	 	Title: Managing Director

43

 

EXHIBIT A

CERTIFICATE OF DESIGNATIONS

OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

THE MANAGEMENT NETWORK GROUP, INC.

Pursuant to Sections 151 and 103 of the Delaware General Corporation Law:

     The Management Network Group, Inc., a Delaware corporation (the “Corporation”), in accordance
with the provisions of Sections 151 and 103 the Delaware General Corporation Law, DOES HEREBY
CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the Certificate of
Incorporation, as amended, of the Corporation, the Board of Directors
on March 26, 2008, adopted
the following resolution creating a series of One Hundred Thousand (100,000) shares of Preferred
Stock, par value $.001 per share, designated as the Series A Junior Participating Preferred Stock:

Designation of Preferred Stock

     RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation
in accordance with the provisions of its Certificate of Incorporation, as amended (the “Certificate
of Incorporation”), a series of Preferred Stock, par value $.001 per share, of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations and restrictions thereof are as follows:

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

     Section 2. Dividends and Distributions.

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

A-1

 

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

     (B) As used herein, the “Series A Multiple” shall initially be
1,000. In the event the Corporation shall at any time after March
27, 2008 (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Series A Multiple shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.

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

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

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

A-2

 

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

     (B) The holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.

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

     Section 4. Certain Restrictions.

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

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

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

     (iii) redeem or purchase or otherwise acquire
for consideration shares of any Parity Stock,
provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any

A-3

 

such Parity Stock in exchange for shares of any
Junior Stock; or

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

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

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

     Section 6. Liquidation, Dissolution or Winding Up.

     (A)  In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the
shares of the Series A Preferred Stock shall be entitled to receive,
in preference to the holders of Junior Stock, the greater of (a)
$1,000 per share, plus accrued dividends to the date of
distribution, whether or not earned or declared, or (b) an amount
per share equal to the product of the Series A Multiple then in
effect times the aggregate amount to be distributed per share to
holders of Common Stock. No distribution upon liquidation,
dissolution or winding up shall be made to holders of shares of
Junior Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up until all holders of shares
of Series A Preferred Stock shall have received the amounts to which
such holders are entitled under this Section.

A-4

 

     (B) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of Parity
Stock shall not receive any distributions except for distributions
made ratably on the Series A Preferred Stock and all other such
Parity Stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution
or winding up.

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

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

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

     Section 10. Fractional Shares. Series A Preferred Stock may be issued in fractions of
a share which shall entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock.

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

A-5

 

     IN
WITNESS WHEREOF, this Certificate is executed on behalf of the
Corporation as of this 27th
day of March, 2008.

	 	 	 	 	 
	 
	 

	 	 

Donald E. Klumb,
	 	 
	 

	 	Vice President and Chief Financial Officer	 	 

A-6

 

EXHIBIT B

FORM OF RIGHTS CERTIFICATE

			
	Certificate No. R-
	 	                     Rights

NOT
EXERCISABLE AFTER MARCH 27, 2018 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME, OR MAY ALREADY HAVE BECOME, NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*

RIGHTS CERTIFICATE

THE MANAGEMENT NETWORK GROUP, 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 March 27, 2008, as it may
from time to time be supplemented or amended (the “Rights Agreement”), between The Management
Network Group, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A.,
the Rights Agent (the “Rights Agent”), to purchase from the Company at any time prior to 5:00 P.M.
(New York City time) on March 27, 2018 (the “Final Expiration Date”) at the office of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one one-thousandth of a fully
paid, nonassessable share of Series A Junior Participating Preferred Stock (the “Preferred Stock”)
of the Company, at a purchase price of $8.00 per one one-thousandth of a share (the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with the Form of Election to
Purchase and related Certificate duly executed and properly completed. The number of Rights
evidenced by this Rights Certificate (and the number of one one-thousandth of a share which may be

 

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

B-1

 

purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of March 27, 2008, based on the Preferred Stock as
constituted at such date. The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued. As provided in the Rights
Agreement, the Purchase Price, the number and kind of shares of Preferred Stock or other securities
of the Company or any other Person (as such term is defined in the Rights Agreement) or other
property, which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate, and the timing of permitted exercise, are subject to modification and adjustment upon
the happening of certain events including a Triggering Event (as such term is defined in the Rights
Agreement).

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

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

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

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $.001 per Right at any time
prior to the earlier of the close of business on (i) the tenth Business Day (as such term is
defined in the Rights Agreement) following the Stock Acquisition Date (as such term is defined in
the Rights Agreement), and (ii) the Final Expiration Date. In addition, subject

B-2

 

to the provisions of the Rights Agreement, each Right evidenced by this Certificate may be
exchanged by the Company at its option for one share of Common Stock of the Company (subject to
adjustment for any stock split, stock dividend or similar transaction) following the Stock
Acquisition Date and prior to the time any Person (other than an Exempted Person), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of voting securities of
the Company then outstanding representing 50% or more of the Voting Power of the Company (as such
terms are defined in the Rights Agreement).

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

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

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

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

	 	 	 	 	 
	Dated as of                      20___. 	THE MANAGEMENT NETWORK GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

ATTEST:

	 	 	 
	 

Name:

	 	 
	Title:
	 	 

Countersigned:

Computershare
Trust Company, N.A.,

as Rights Agent

B-3

 

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

B-4

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)

     FOR VALUE RECEIVED                                                             
                                                                               
hereby sells, assigns and transfers unto                                                                                                                                                                                                              

	 
	 

	(Please print name and address of transferee)

	 

 

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

Dated:                                         , ____

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Certificate

          The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                                         , ____

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

B-5

 

NOTICE

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

B-6

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise Rights represented by the Rights Certificate.)

To: THE MANAGEMENT NETWORK GROUP, INC.:

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

Please insert social security

or taxpayer identification number                                                                      
               
                                                       

 

(Please print name and address)

 

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

Please insert social security

or taxpayer identification number                                                                      
                                                                      

 

(Please print name and address)

 

Dated:                                         , ____

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

B-7

 

Certificate

          The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:                                         , ____

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

NOTICE

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

B-8

 

EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

          Effective
March 27, 2008, the Board of Directors of The Management Network Group, Inc. (the
“Company”) declared a dividend distribution of one right (a “Right”) for each outstanding share of
the Company’s common stock, par value $.001 per share (the “Common Stock”), payable to stockholders
of record at the close of business on April 7, 2008 (the “Record Date”). The description and terms
of the Rights are set forth in a Rights Agreement, dated as of
March 27, 2008, between the Company
and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agreement”).

          The Board of Directors of the Company adopted the Rights Agreement in an effort to protect
stockholder value, by attempting to (1) protect against the triggering of limitations on the
Company’s ability to utilize net operating loss carryforwards to offset future taxable income of
the Company and (2) insure, to the extent possible, that all stockholders receive fair and equal
treatment in the event of a proposed takeover of the Company. The Company has experienced
substantial operating losses, and under the Internal Revenue Code and rules promulgated by the
Internal Revenue Service, the Company may “carry forward” these losses in certain circumstances to
offset current taxable income and reduce federal income tax liability, subject to certain
requirements and restrictions. If the Company experiences an “ownership change” as defined in
Section 382 of the Internal Revenue Code, the Company’s ability to use the net operating losses
could be substantially diminished. In addition to attempting to preserve net operating loss
carryforwards, the Board of Directors adopted the Rights Agreement to preserve for the Company’s
stockholders the long-term value of the Company in the event of a proposed takeover and to provide
a framework in which any appropriate takeover bids for the Company can be considered in a
deliberate, proper and fully informed manner.

          As further described below with respect to the definition of “Acquiring Person”, the Rights
Agreement is intended to deter any Person (as defined in the Rights Agreement) and certain related
parties from acquiring beneficial ownership of 5.0% or more of the Company’s outstanding Common
Stock without the approval of the Company’s Board of Directors. The Rights Agreement is also
intended to deter any Person which together with certain related parties currently beneficially
owns 5.0% or more of the Company’s outstanding Common Stock from becoming the beneficial owner of
additional shares of Common Stock constituting 0.5% or more of the then outstanding shares of
Common Stock (other than pursuant to a stock dividend by the Company, a Permitted Offer or any
employee or director benefit plan or agreement of the Company or any
subsidiary of the Company). The Rights Agreement permits certain
transferees of current beneficial owners of 5.0% or more of
the outstanding Common Stock (other than officers of the Company) to exceed the 5.0% limit under
certain circumstances as described below.

          Initially, the Rights will be evidenced by the certificates representing shares of Common
Stock then outstanding or, with respect to any of the shares of Common Stock held in uncertificated
book-entry form (each, a “Book-Entry”), by such Book-Entry, and no separate certificates evidencing
the Rights (“Rights Certificates”) will be distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier of (i) ten business days following public
announcement that a Person (as defined in the Rights Agreement) has become an “Acquiring Person”
(defined below) or public disclosure by the Company or an

C-1

 

Acquiring Person of facts indicating that such Person has become an Acquiring Person, or (ii)
ten business days (or such later date as the Board of Directors shall determine) following the
commencement of, or the first public announcement of an intention to commence, a tender or exchange
offer that would result in a Person becoming an “Acquiring Person.”

          Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates
or Book-Entries, (ii) new Common Stock certificates and confirmations for Book-Entries issued after
the Record Date will contain a notation incorporating the Rights Agreement by reference, and (iii)
transfer on the Company’s direct registration system of any Common Stock represented by a
Book-Entry or transfer of any certificate for Common Stock, in each case, with or without a copy of
this Summary of Rights, will also constitute the transfer of the Rights associated with the Common
Stock represented by such Book-Entry or certificate.

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

          The Rights are not exercisable until after the Distribution Date and until the Rights are no
longer redeemable. Except as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Company a unit consisting initially of one one-thousandth of
a share (a “Unit”) of Series A Junior Participating Preferred Stock, par value $.001 per share (the
“Preferred Stock”), of the Company, at a purchase price of
$8.00 per Unit, subject to adjustment
(the “Purchase Price”). Pursuant to the Rights Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering Event (defined below) that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be
issued. The Rights will expire at the close of business on
March 27, 2018, unless extended or
earlier redeemed by the Company as described below.

          In the event that a Person becomes an Acquiring Person, each holder of a Right will have the
right to receive, upon exercise of the Right, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times the Purchase Price
of the Right. The Rights will not be exercisable following the occurrence of such an event until
such time as the Rights are no longer redeemable by the Company as set forth below. Following the
occurrence of such an event all Rights that are beneficially owned by any Acquiring Person (or any
Affiliate or Associate (as such terms are defined in the Rights Agreement) of an Acquiring Person
and certain transferees) will be null and void and may not thereafter be exercised or transferred.

          For
example, at the initial Purchase Price of $8.00 per Right, each Right not owned by an
Acquiring Person or an Affiliate or Associate of the Acquiring Person or any subsequent holder,
following an event set forth in the preceding paragraph would entitle
its holder to purchase $16.00 worth of Common Stock (or other
consideration, as noted above) for $8.00.
Assuming that the Common Stock had a per share

C-2

 

value of
$2.00 at such time, the holder of each valid Right would be entitled
to purchase eight shares of Common Stock for $8.00.

          In the event that, at any time following the date on which there has been public announcement
that a Person has become an Acquiring Person or public disclosure of facts indicating that such
Person has become an Acquiring Person (the “Stock Acquisition Date”) (which, for purposes of this
paragraph also includes the date on which there has been a public announcement that any Person has
acquired 5.0% or more of the outstanding shares of Common Stock pursuant to a Permitted Offer), (i)
the Company merges or consolidates with another corporation or association, and the Company is not
the surviving corporation or all or part of the outstanding shares of Common Stock are changed into
or exchanged for stock or other securities of any other Person or cash or any other property, or
(ii) more than 50% of the Company’s assets or earning power is sold or transferred, then each
holder of a Right (except Rights which previously have been voided as set forth above), shall
thereafter have the right to receive upon exercise of the Right, common stock of the acquiring
company having a value equal to two times the Purchase Price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred to as the “Triggering Events.”

          At any time after any Person becomes an Acquiring Person and prior to the acquisition by such
Person of 50% or more of the outstanding Common Stock, the Company may exchange, in whole or in
part, one share of Common Stock (or substitute securities or assets) for each Right of each holder
(other than the Acquiring Person and the Acquiring Person’s Affiliates and Associates and certain
transferees), subject to adjustment for any stock split, stock dividend or similar transaction
occurring after March 27, 2008.

          Under the Rights Agreement, an “Acquiring Person” is any Person who or which, together with
all Affiliates and Associates of such Person, is or becomes the beneficial owner of 5.0% or more of
the shares of Common Stock then outstanding (other than as a result of a Permitted Offer). The term
“Acquiring Person” excludes (i) the Company, (ii) any subsidiary of the Company, (iii) any employee
benefit plan of the Company or any subsidiary of the Company, or (iv) any Person organized,
appointed or established by the Company for or pursuant to the terms of any such plan. In addition,
a Person shall not be an “Acquiring Person” if:

          (i) the proportionate number of shares beneficially owned by such Person,
together with all Affiliates and Associates of such Person, increases to 5.0% or
more of the shares of Common Stock then outstanding solely as the result of an
acquisition of Common Stock by the Company, so long as the Person, together with all
Affiliates and Associates of such Person, does not thereafter become the beneficial
owner of additional shares of Common Stock constituting 0.5% or more of the then
outstanding shares of Common Stock (other than pursuant to a stock dividend by the
Company, a Permitted Offer or any employee or director benefit plan or agreement of
the Company or any subsidiary of the Company);

          (ii) such Person, together with all Affiliates and Associates of such Person,
was the beneficial owner on March 27, 2008 of 5.0% or more of the shares of Common
Stock then outstanding, so long as the Person, together with all

C-3

 

Affiliates and Associates of such Person, does not thereafter become the
beneficial owner of additional shares of Common Stock constituting 0.5% or more of
the then outstanding shares of Common Stock (other than pursuant to a stock dividend
by the Company, a Permitted Offer or any employee or director benefit plan or
agreement of the Company or any subsidiary of the Company); or

          (iii) such Person, together with all Affiliates and Associates of such Person, became the
beneficial owner of 5.0% or more of the shares of Common Stock then outstanding as a result of a
transfer of shares of Common Stock from a stockholder who was a 5.0%
beneficial owner on March 27,
2008 (other than an officer of the Company on such date), which transferee together with all
Affiliates and Associates was the beneficial owner of less than 0.5% of the outstanding shares of
Common Stock immediately prior to such transfer and is the beneficial owner of less than 15% of the
outstanding shares of Common Stock immediately after such transfer, so long as such Person together
with all Affiliates and Associates of such Person does not thereafter become the beneficial owner
of additional shares of Common Stock constituting 0.5% or more of the then outstanding shares of
Common Stock, other than pursuant to a stock dividend by the Company, a Permitted Offer or any
employee or director benefit plan or agreement of the Company or any Subsidiary of the Company; or

          (iv) the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an “Acquiring Person” has become such inadvertently,
and the Board of Directors in its sole discretion approves the beneficial ownership
interest held by such Person, or such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no longer be
an Acquiring Person.

In addition, the Board of Directors of the Company may, in its sole discretion, by vote of a
majority of directors who are not Affiliates, Associates, nominees or representatives of such
Person, determine that any Person shall not be deemed an “Acquiring Person.”

          Under the Rights Agreement, a “Permitted Offer” is an offer for all outstanding shares of
Common Stock which a majority of the independent directors (i.e., directors who are not also
officers of the Company and who are not representatives, nominees, Affiliates or Associates of an
Acquiring Person) determine, after receiving advice from one or more investment banking firms, to
be fair to the stockholders and otherwise in the best interests of the Company and its
stockholders.

          The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for or purchase Preferred Stock at a price, or convertible
into Preferred Stock with a conversion price, less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price.

          The number of outstanding Rights attached to each share of Common Stock is also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions or combinations of the shares of Common
Stock, if such split, dividend, subdivision or combination occurs prior to the Distribution Date.

          Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable.
Preferred Stock will only be entitled to receive dividends when concurrently declared with the
Common Stock and then at a rate equal to 1,000 times the amount per share to be received by holders
of Common Stock. In the event of liquidation, the holders of shares of Preferred Stock will be
entitled to receive the greater of (i) $1,000 per share, plus declared but unpaid dividends to the
date of distribution; or (ii) an amount per share equal to the product of

C-4

 

1,000 times the aggregate amount to be distributed per share to holders of Common Stock. Each
share of Preferred Stock will have 1,000 votes, voting together with the shares of Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged for or changed into other stock, securities, cash and/or other property, each
share of Preferred Stock will be entitled to receive 1,000 times the amount received per share of
Common Stock. These rights are protected by customary antidilution provisions. Because of the
nature of the Preferred Stock’s dividend, liquidation and voting rights, the value of a Unit of
Preferred Stock should approximate the value of one share of Common Stock.

          At any time until the close of business on the tenth business day following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price (the
“Redemption Price”) of $.001 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors), subject to adjustment for any stock split, stock dividend
or similar transaction. Immediately upon such action of the Board of Directors ordering redemption
of the Rights, the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.

          The Rights Agreement provides that the Board of Directors’ Stockholder Rights Plan Committee
composed of independent and disinterested directors will review the Rights Agreement at least
annually in order to consider whether the maintenance of the Rights Agreement continues to be in
the best interests of the Company and its stockholders. This committee will communicate its
conclusions to the full Board of Directors after each review, including any recommendation as to
whether the Rights Agreement should be modified or the Rights should be redeemed.

          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. While
the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income upon the Distribution Date.

          Any of the provisions of the Rights Agreement may be amended by resolution of the Company’s
Board of Directors for so long as the Rights are redeemable, except that the Redemption Price
cannot be changed. After the Rights cease to be redeemable, the provisions of the Rights
Agreement, may be amended from time to time by resolution of the Company’s Board of Directors in
order to cure any ambiguity, to make changes which do not adversely affect the interests of holders
of Rights (excluding the interests of any Acquiring Person or its Affiliates or Associates), or to
shorten or lengthen any time period under the Rights Agreement, provided that no amendment may
cause the Rights again to become redeemable or to be amendable more broadly than contemplated by
this sentence.

          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
Exhibit 4.1 to a Current Report on Form 8-K, dated March 27, 2008. A copy of the Rights Agreement
is available free of charge from the Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which
is incorporated herein by reference.

C-5EX-4.9 Form of Senior Indenture

 

Exhibit 4.9

 

FREESEAS INC.

INDENTURE

Dated as of ___, 20___

[Name of Trustee]

Trustee

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Other Definitions
	 	 	5	 
	Section 1.3 Incorporation by Reference of Trust Indenture Act
	 	 	6	 
	Section 1.4 Rules of Construction.
	 	 	6	 
	 
	ARTICLE II. THE SECURITIES
	 	 	7	 
	Section 2.1 Issuable in Series
	 	 	7	 
	Section 2.2 Establishment of Terms of Series of Securities
	 	 	7	 
	Section 2.3 Execution and Authentication
	 	 	9	 
	Section 2.4 Registrar and Paying Agent
	 	 	10	 
	Section 2.5 Paying Agent to Hold Money in Trust
	 	 	10	 
	Section 2.6 Securityholder Lists
	 	 	11	 
	Section 2.7 Transfer and Exchange
	 	 	11	 
	Section 2.8 Mutilated, Destroyed, Lost and Stolen Securities
	 	 	11	 
	Section 2.9 Outstanding Securities
	 	 	12	 
	Section 2.10 Treasury Securities
	 	 	13	 
	Section 2.11 Temporary Securities
	 	 	13	 
	Section 2.12 Cancellation
	 	 	13	 
	Section 2.13 Defaulted Interest
	 	 	13	 
	Section 2.14 Global Securities
	 	 	14	 
	Section 2.15 CUSIP Numbers
	 	 	15	 
	 
	ARTICLE III. REDEMPTION
	 	 	15	 
	Section 3.1 Notice to Trustee
	 	 	15	 
	Section 3.2 Selection of Securities to be Redeemed
	 	 	15	 
	Section 3.3 Notice of Redemption
	 	 	16	 
	Section 3.4 Effect of Notice of Redemption
	 	 	16	 
	Section 3.5 Deposit of Redemption Price
	 	 	16	 
	Section 3.6 Securities Redeemed in Part
	 	 	17	 
	 
	ARTICLE IV. COVENANTS
	 	 	17	 

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 4.1 Payment of Principal and Interest
	 	 	17	 
	Section 4.2 SEC Reports
	 	 	17	 
	Section 4.3 Compliance Certificate
	 	 	17	 
	Section 4.4 Stay, Extension and Usury Laws
	 	 	17	 
	Section 4.5 Corporate Existence
	 	 	18	 
	Section 4.6 Taxes
	 	 	18	 
	 
	ARTICLE V. SUCCESSORS
	 	 	18	 
	Section 5.1 When Company May Merge, Etc.
	 	 	18	 
	Section 5.2 Successor Corporation Substituted
	 	 	19	 
	 
	ARTICLE VI. DEFAULTS AND REMEDIES
	 	 	19	 
	Section 6.1 Events of Default
	 	 	19	 
	Section 6.2 Acceleration of Maturity; Rescission and Annulment
	 	 	20	 
	Section 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee
	 	 	21	 
	Section 6.4 Trustee May File Proofs of Claim
	 	 	21	 
	Section 6.5 Trustee May Enforce Claims Without Possession of Securities
	 	 	22	 
	Section 6.6 Application of Money Collected
	 	 	22	 
	Section 6.7 Limitation on Suits
	 	 	22	 
	Section 6.8 Unconditional Right of Holders to Receive Principal and Interest
	 	 	23	 
	Section 6.9 Restoration of Rights and Remedies
	 	 	23	 
	Section 6.10 Rights and Remedies Cumulative
	 	 	23	 
	Section 6.11 Delay or Omission Not Waiver
	 	 	24	 
	Section 6.12 Control by Holders
	 	 	24	 
	Section 6.13 Waiver of Past Defaults
	 	 	24	 
	Section 6.14 Undertaking for Costs
	 	 	24	 
	 
	ARTICLE VII. TRUSTEE
	 	 	25	 
	Section 7.1 Duties of Trustee
	 	 	25	 
	Section 7.2 Rights of Trustee
	 	 	26	 
	Section 7.3 Individual Rights of Trustee
	 	 	27	 
	Section 7.4 Trustee’s Disclaimer
	 	 	27	 

-ii-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 7.5 Notice of Defaults
	 	 	27	 
	Section 7.6 Reports by Trustee to Holders
	 	 	28	 
	Section 7.7 Compensation and Indemnity
	 	 	28	 
	Section 7.8 Replacement of Trustee
	 	 	28	 
	Section 7.9 Successor Trustee by Merger, etc.
	 	 	30	 
	Section 7.10 Eligibility; Disqualification
	 	 	30	 
	Section 7.11 Preferential Collection of Claims Against Company
	 	 	30	 
	 
	ARTICLE
VIII. SATISFACTION AND DISCHARGE; DEFEASANCE
	 	 	30	 
	Section 8.1 Satisfaction and Discharge of Indenture
	 	 	30	 
	Section 8.2 Application of Trust Funds; Indemnification
	 	 	31	 
	Section 8.3 Legal Defeasance of Securities of any Series
	 	 	32	 
	Section 8.4 Covenant Defeasance
	 	 	33	 
	Section 8.5 Repayment to Company
	 	 	34	 
	 
	ARTICLE IX. AMENDMENTS AND WAIVERS
	 	 	35	 
	Section 9.1 Without Consent of Holders
	 	 	35	 
	Section 9.2 With Consent of Holders
	 	 	35	 
	Section 9.3 Limitations
	 	 	36	 
	Section 9.4 Compliance with Trust Indenture Act
	 	 	37	 
	Section 9.5 Revocation and Effect of Consents
	 	 	37	 
	Section 9.6 Notation on or Exchange of Securities
	 	 	37	 
	Section 9.7 Trustee Protected
	 	 	37	 
	 
	ARTICLE X. MISCELLANEOUS
	 	 	37	 
	Section 10.1 Trust Indenture Act Controls
	 	 	37	 
	Section 10.2 Notices
	 	 	38	 
	Section 10.3 Communication by Holders with Other Holders
	 	 	38	 
	Section 10.4 Certificate and opinion as to Conditions Precedent
	 	 	38	 
	Section 10.5 Statements Required in Certificate or opinion
	 	 	39	 
	Section 10.6 Rules by Trustee and Agents
	 	 	39	 
	Section 10.7 Legal Holidays
	 	 	39	 
	Section 10.8
No Recourse Against Others
	 	 	39	 

-iii-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 10.9 Counterparts
	 	 	39	 
	Section 10.10 Governing Laws
	 	 	40	 
	Section 10.11 No Adverse Interpretation of Other Agreements
	 	 	40	 
	Section 10.12 Successors
	 	 	40	 
	Section 10.13 Severability
	 	 	40	 
	Section 10.14 Table of Contents, Headings, Etc.
	 	 	40	 
	Section 10.15 Securities in a Foreign Currency or in ECU
	 	 	40	 
	Section 10.16 Judgment Currency
	 	 	41	 
	 
	ARTICLE XI. SINKING FUNDS
	 	 	42	 
	Section 11.1 Applicability of Article
	 	 	42	 
	Section 11.2 Satisfaction of Sinking Fund Payments with Securities
	 	 	42	 
	Section 11.3 Redemption of Securities for Sinking Fund
	 	 	43	 

-iv-

 

     Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of
                                        , 20___.

	 	 	 	 	 
	Section 310(a)(1)
	 	 	7.10	 
	(a)(2)
	 	 	7.10	 
	(a)(3)
	 	Not Applicable	 
	(a)(4)
	 	Not Applicable	 
	(a)(5)
	 	 	7.10	 
	(b)
	 	 	7.10	 
	Section 311(a)
	 	 	7.11	 
	(b)
	 	 	7.11	 
	(c)
	 	Not Applicable
	Section 312(a)
	 	 	2.6	 
	(b)
	 	 	10.3	 
	(c)
	 	 	10.3	 
	Section 313(a)
	 	 	7.6	 
	(b)(1)
	 	 	7.6	 
	(b)(2)
	 	 	7.6	 
	(c)(1)
	 	 	7.6	 
	(d)
	 	 	7.6	 
	Section 314(a)
	 	 	4.2, 10.5	 
	(b)
	 	Not Applicable
	(c)(1)
	 	 	10.4	 
	(c)(2)
	 	 	10.4	 
	(c)(3)
	 	Not Applicable
	(d)
	 	Not Applicable
	(e)
	 	 	10.5	 
	(f)
	 	Not Applicable
	Section 315(a)
	 	 	7.1	 
	(b)
	 	 	7.5	 
	(c)
	 	 	7.1	 
	(d)
	 	 	7.1	 
	(e)
	 	 	6.14	 
	Section 316(a)
	 	 	2.10	 
	(a)(1)(A)
	 	 	6.12	 
	(a)(1)(B)
	 	 	6.12	 
	(b) 
	 	 	6.13	 
	Section 317(a)(1)
	 	 	6..8	 
	(a)(2)
	 	 	6.4	 
	(b) 
	 	 	2.5	 
	Section 318(a)
	 	 	10.&1	 

Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of the
Indenture.

v

 

     Indenture
dated as of
                    , 20___ between FreeSeas Inc., a company organized under the laws
of the Marshall Islands (the “Company”) and

     [Name of Trustee], a                                          (the “Trustee”).

     Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Securities issued under this Indenture.

ARTICLE I.

DEFINITIONS AND INCORPORATION BY REFERENCE

     Section 1.1 Definitions.

     “Additional Amounts” means any additional amounts which are required hereby or by any
Security, under circumstances specified herein or therein, to be paid by the Company in respect of
certain taxes imposed on Holders specified therein and which are owing to such Holders.

     “Affiliate” of any specified person means any other person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified person. For the
purposes of this definition, “control” (including, with correlative meanings, the terms “controlled
by” and “under common control with”), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ownership of voting securities or by agreement or
otherwise.

     “Agent” means any Registrar, Paying Agent or Service Agent.

     “Authorized Newspaper” means a newspaper in an official language of the country of publication
customarily published at least once a day for at least five days in each calendar week and of
general circulation in the place in connection with which the term is used. If it shall be
impractical in the opinion of the Trustee to make any publication of any notice required hereby in
an Authorized Newspaper, any publication or other notice in lieu thereof that is made or given by
the Trustee shall constitute a sufficient publication of such notice.

     “Bearer” means anyone in possession from time to time of a Bearer Security.

     “Bearer Security” means any Security, including any interest coupon appertaining thereto, that
does not provide for the identification of the Holder thereof.

     “Board of Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.

     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been adopted by the Board of Directors or pursuant

1

 

to authorization by the Board of Directors and to be in full force and effect on the date of the
certificate and delivered to the Trustee.

     “Business Day” means a day (other than Saturday or Sunday) on which the Depository and banks
in the City of New York, and banks in the city in which the Corporate Trust Office of the Trustee
is located, is open for business.

     “Certificated Securities” means Securities in the form of physical, certificated Securities in
registered form.

     “Company” means the party named as such above until a successor replaces it and thereafter
means the successor.

     “Company Order” means a written order signed in the name of the Company by two Officers, one
of whom must be the Company’s principal executive officer, principal financial officer or principal
accounting officer.

     “Company Request” means a written request signed in the name of the Company by its Chairman of
the Board, a President or a Vice President, and by its Chief Financial Officer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.

     “Corporate Trust Office” means the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered.

     “Debt” of any person as of any date means, without duplication, all indebtedness of such
person in respect of borrowed money, including all interest, fees and expenses owed in respect
thereto (whether or not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments.

     “Default” means any event which is, or after notice or passage of time would be, an Event of
Default.

     “Depository” means, with respect to the Securities of any Series issuable or issued in whole
or in part in the form of one or more Global Securities, the person designated as Depository for
such Series by the Company, which Depository shall be a clearing agency registered under the
Exchange Act; and if at any time there is more than one such person, “Depository” as used with
respect to the Securities of any Series shall mean the Depository with respect to the Securities of
such Series.

     “Discount Security” means any Security that provides for an amount less than the stated
principal amount thereof to be due and payable upon declaration of acceleration of the maturity
thereof pursuant to Section 6.2.

     “Dollars” means the currency of the United States of America.

     “ECU” means the European Currency Unit as determined by the Commission of the European Union.

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     “Event of Default” see Section 6.1.

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

     “Foreign Currency” means any currency or currency unit issued by a government other than the
government of the United States of America.

     “Foreign Government Obligations” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government that issued or caused
to be issued such currency for the payment of which obligations its full faith and credit is
pledged or (ii) obligations of a person controlled or supervised by or acting as an agency or
instrumentality of such government the timely payment of which is unconditionally guaranteed as a
full faith and credit obligation by such government, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer thereof.

     “Global Security” or “Global Securities” means a Security or Securities, as the case may be,
in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities,
issued to the Depository for such Series or its nominee, and registered in the name of such
Depository or nominee.

     “Holder” or “Securityholder” means a person in whose name a Security is registered or the
holder of a Bearer Security.

     “Indenture” means this Indenture as amended from time to time and shall include the form and
terms of particular Series of Securities established as contemplated hereunder.

     “Interest” with respect to any Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.

     “Maturity,” when used with respect to any Security or installment of principal thereof, means
the date on which the principal of such Security or such installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, notice of option to elect repayment or otherwise.

     “Officer” means the Chairman of the Board, the President, any Vice-President, the Treasurer,
the Secretary, any Assistant Treasurer or any Assistant Secretary of the Company.

     “Officers’ Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal accounting officer.

     “Opinion of Counsel” means a written opinion of legal counsel who is reasonably acceptable to
the Trustee. Such legal counsel may be an employee of or counsel to the Company.

     “Participants” means those Persons designated as participants by the Depositary.

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     “Person” means any individual, corporation, partnership, joint venture, association, limited
liability company, joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

     “Principal” of a Security means the principal of the Security plus, when appropriate, the
premium, if any, on, and any Additional Amounts in respect of, the Security.

     “Responsible Officer” means any officer of the Trustee in its Corporate Trust office and also
means, with respect to a particular corporate trust matter, any other officer to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity with a particular
subject.

     “SEC” means the Securities and Exchange Commission.

     “Security” or “Securities” means the debentures, notes or other debt instruments of the
Company of any Series authenticated and delivered under this Indenture.

     “Series” or “Series of Securities” means each series of debentures, notes or other debt
instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.

     “Significant Subsidiary” means (i) any direct or indirect Subsidiary of the Company that would
be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on the date
hereof, or (ii) any group of direct or indirect Subsidiaries of the Company that, taken together as
a group, would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on
the date hereof.

     “Stated Maturity” when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the fixed date on which
the principal of such Security or such installment of principal or interest is due and payable.

     “Subordinated Indebtedness” means any indebtedness which is expressly subordinated to the
indebtedness evidenced by Securities.

     “Subsidiary” of any specified person means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the election of directors
of such corporation (irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by such person, or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries.

     “TIA” means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect
on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939
is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust
Indenture Act as so amended.

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     “Trustee” means the person named as the “Trustee” in the first paragraph of this instrument
until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Trustee” shall mean or include each person who is then a Trustee
hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to
the Securities of any Series shall mean the Trustee with respect to Securities of that Series.

     “U.S. Government Obligations” means securities which are (i) direct obligations of The United
States of America for the payment of which its full faith and credit is pledged or (ii) obligations
of a person controlled or supervised by and acting as an agency or instrumentality of The United
States of America the payment of which is unconditionally guaranteed as a full faith and credit
obligation by The United States of America, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government Obligation held by
such custodian for the account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation evidenced by such depository receipt.

     “Vessels” means the shipping vessels owned by and registered (or to be owned by and
registered) in the name of the Company or any of its Subsidiaries or operated by the Company or any
of its Subsidiaries pursuant to a lease or other operating agreement constituting a capital lease
obligation, in each case together with all related equipment and any additions or improvements.

     “Wholly Owned Restricted Subsidiary” means a Restricted Subsidiary all of the Equity Interests
of which (other than Equity Interests constituting directors’ qualifying shares or shares required
to be held by foreign nations, in each case to the extent mandated by applicable law) is owned by
the Company or one or more Wholly Owned Restricted Subsidiaries or by the Company and one or more
Wholly Owned Restricted Subsidiaries.

     Section 1.2 Other Definitions.

	 	 	 	 	 
	DEFINED IN TERM	 	SECTION
	“Bankruptcy Law”
	 	 	6.1	 
	“Custodian”
	 	 	6.1	 
	“Event of Default”
	 	 	6.1	 
	“Journal”
	 	 	10.15	 
	“Judgment Currency”
	 	 	10.16	 
	“Legal Holiday”
	 	 	10.7	 
	“mandatory sinking fund payment”
	 	 	11.1	 
	“Market Exchange Rate”
	 	 	10.15	 

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	DEFINED IN TERM	 	SECTION
	“New York Banking Day”
	 	 	10.16	 
	“optional sinking fund payment”
	 	 	11.1	 
	“Paying Agent”
	 	 	2.4	 
	“Registrar”
	 	 	2.4	 
	“Required Currency”
	 	 	10.16	 
	“Service Agent”
	 	 	2.4	 
	“successor person”
	 	 	5.1	 

     Section 1.3 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:

     “Commission” means the SEC.

     “indenture securities” means the Securities.

     “indenture security holder” means a Securityholder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means the Company and any successor obligor upon the
Securities.

     All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used
herein as so defined.

     Section 1.4 Rules of Construction.

     Unless the context otherwise requires:

	 	(a)	 	a term has the meaning assigned to it;
	 
	 	(b)	 	an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
	 
	 	(c)	 	references to “generally accepted accounting principles” shall mean generally
accepted accounting principles in effect as of the time when and for the period as to
which such accounting principles are to be applied;
	 
	 	(d)	 	“or” is not exclusive;

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	 	(e)	 	words in the singular include the plural, and in the plural include the
singular; and
	 
	 	(f)	 	provisions apply to successive events and transactions.

ARTICLE II.

THE SECURITIES

     Section 2.1 Issuable in Series.

     The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued in one or more Series. All Securities of
a Series shall be identical except as may be set forth in a Board Resolution, a supplemental
indenture or an Officers’ Certificate detailing the adoption of the terms thereof pursuant to the
authority granted under a Board Resolution. In the case of Securities of a Series to be issued from
time to time, the Board Resolution, Officers’ Certificate or supplemental indenture may provide for
the method by which specified terms (such as interest rate, maturity date, record date or date from
which interest shall accrue) are to be determined. Securities may differ between Series in respect
of any matters, provided that all Series of Securities shall be equally and ratably entitled to the
benefits of the Indenture.

     Section 2.2 Establishment of Terms of Series of Securities.

     At or prior to the issuance of any Securities within a Series, the following shall be
established (as to the Series generally, in the case of Subsection 2.2.1 and either as to such
Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through
2.2.20) by a Board Resolution, a supplemental indenture or an Officers’ Certificate pursuant to
authority granted under a Board Resolution:

          2.2.1 the title, designation, aggregate principal amount and authorized denominations of the
Securities of the Series;

          2.2.2 the price or prices, (expressed as a percentage of the aggregate principal amount
thereof) at which the Securities of the Series will be issued;

          2.2.3 the date or dates on which the principal of the Securities of the Series is payable;

          2.2.4 the rate or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to, any commodity,
commodity index, stock exchange index or financial index) at which the Securities of the Series
shall bear interest, if any, the date or dates from which such interest, if any, shall commence and
be payable and any regular record date for the interest payable on any interest payment date;

          2.2.5 any optional or mandatory sinking fund provisions or conversion or exchangeability
provisions upon which Securities of the Series shall be redeemed or purchased;

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          2.2.6 the date, if any, after which and the price or prices at which the Securities of the
Series may be optionally redeemed or must be mandatorily redeemed and any other terms and
provisions of optional or mandatory provisions;

          2.2.7 if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be issuable;

          2.2.8 if other than the full principal amount, the portion of the principal amount of the
Securities of the Series that shall be payable upon declaration of acceleration pursuant to Section
6.2 or provable in bankruptcy;

          2.2.9 any addition to or change in the Events of Default which applies to any Securities of
the Series and any change in the right of the Trustee or the requisite Holders of such Securities
to declare the principal amount thereof due and payable pursuant to Section 6.2;

          2.2.10 the currency or currencies, including composite currencies, in which payments of
principal of, premium or interest, if any, on the Securities of the Series will be payable, if
other than the currency of the United States of America;

          2.2.11 if payments of principal of, premium or interest, if any, on the Securities of the
Series will be payable, at the Company’s election or at the election of any Holder, in a currency
other than that in which the Securities of the Series are stated to be payable, the period or
periods within which, and the terms and conditions upon which, the election may be made;

          2.2.12 if payments of interest, if any, on the Securities of the Series will be payable, at
the Company’s election or at the election of any Holder, in cash or additional securities, and the
terms and conditions upon which the election may be made;

          2.2.13 if denominated in a currency or currencies other than the currency of the United States
of America, the equivalent price of the Securities of the Series in the currency of the United
States of America for purposes of determining the voting rights of Holders of the Securities of the
Series;

          2.2.14 if the amount of payments of principal, premium or interest may be determined with
reference to an index, formula or other method based on a coin or currency other than that in which
the Securities of the Series are stated to be payable, the manner in which the amounts will be
determined;

          2.2.15 any restrictive covenants or other material terms relating to the Securities of the
Series, which may not be inconsistent with the Indenture;

          2.2.16 whether the Securities of the Series will be issued in the form of global securities or
certificates in registered or bearer form;

          2.2.17 any terms with respect to subordination;

          2.2.18 any listing on any securities exchange or quotation system;

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          2.2.19 additional provisions, if any, related to defeasance and discharge of the offered debt
securities; and

          2.2.20 the applicability of any guarantees.

     All Securities of any one Series need not be issued at the same time and may be issued from
time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the
Board Resolution, supplemental indenture or Officers’ Certificate referred to above, and the
authorized principal amount of any Series may not be increased to provide for issuance of
additional Securities of such Series, unless otherwise provided in such Board Resolution,
supplemental Indenture or Officers’ Certificate.

     Section 2.3 Execution and Authentication.

     Two Officers shall sign the Securities for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be valid.

     A Security shall not be valid until authenticated by the manual signature of the Trustee or an
authenticating agent. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.

     The Trustee shall at any time, and from time to time, authenticate Securities for original
issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or
Officers’ Certificate, upon receipt by the Trustee of a Company Order. Such Company Order may
authorize authentication and delivery pursuant to oral or electronic instructions from the Company
or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in
writing. Each Security shall be dated the date of its authentication unless otherwise provided by a
Board Resolution, a supplemental indenture hereto or an Officers’ Certificate.

     The aggregate principal amount of Securities of any Series outstanding at any time may not
exceed any limit upon the maximum principal amount for such Series set forth in the Board
Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section
2.2, except as provided in Section 2.8.

     Prior to the issuance of Securities of any Series, the Trustee shall have received and
(subject to Section 7.2) shall be fully protected in relying on: (a) the Board Resolution,
supplemental indenture hereto or Officers, Certificate establishing the form of the Securities of
that Series or of Securities within that Series and the terms of the Securities of that Series or
of Securities within that Series, (b) an Officers’ Certificate complying with Section 10.4, and (c)
an Opinion of Counsel complying with Section 10.4.

     The Trustee shall have the right to decline to authenticate and deliver any Securities of such
Series: (a) if the Trustee, being advised by counsel, determines that such action may not lawfully
be taken; or (b) if the Trustee in good faith by its board of directors or trustees, executive
committee or a trust committee of directors and/or vice-presidents shall determine that

9

 

such action would expose the Trustee to personal liability to Holders of any then outstanding
Series of Securities.

     The Trustee may appoint an authenticating agent acceptable to the Company to authenticate
Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the Company or an
Affiliate.

     Section 2.4 Registrar and Paying Agent.

     The Company shall maintain, with respect to each Series of Securities, at the place or places
specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities
of such Series may be presented or surrendered for payment (“Paying Agent”), where Securities of
such Series may be surrendered for registration of transfer or exchange (“Registrar”) and where
notices and demands to or upon the Company in respect of the Securities of such Series and this
Indenture may be served (“Service Agent”). The Registrar shall keep a register with respect to each
Series of Securities and to their transfer and exchange. The Company will give prompt written
notice to the Trustee of the name and address, and any change in the name or address, of each
Registrar, Paying Agent or Service Agent. If at any time the Company shall fail to maintain any
such required Registrar, Paying Agent or Service Agent or shall fail to furnish the Trustee with
the name and address thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and demands.

     The Company may also from time to time designate one or more co-registrars, additional paying
agents or additional service agents and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the Company of its
obligations to maintain a Registrar, Paying Agent and Service Agent in each place so specified
pursuant to Section 2.2 for Securities of any Series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and of any change in the
name or address of any such co-registrar, additional paying agent or additional service agent. The
term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying
agent; and the term “Service Agent” includes any additional service agent.

     The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Service Agent
for each Series unless another Registrar, Paying Agent or Service Agent, as the case may be, is
appointed prior to the time Securities of that Series are first issued.

     Section 2.5 Paying Agent to Hold Money in Trust.

     The Company shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent will hold in trust, for the benefit of Securityholders of any Series of
Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or
interest on the Series of Securities, and will notify the Trustee of any default by the Company in

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making any such payment. While any such default continues, the Trustee may require a Paying Agent
to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund
for the benefit of Securityholders of any Series of Securities all money held by it as Paying
Agent.

     Section 2.6 Securityholder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders of each Series of Securities and
shall otherwise comply with TTA Section 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least ten days before each interest payment date and at such other
times as the Trustee may request in writing a list, in such form and as of such date as the Trustee
may reasonably require, of the names and addresses of Securityholders of each Series of Securities.

     Section 2.7 Transfer and Exchange.

     Where Securities of a Series are presented to the Registrar or a co-registrar with a request
to register a transfer or to exchange them for an equal principal amount of Securities of the same
Series, the Registrar shall register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the Trustee shall
authenticate Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6).

     Neither the Company nor the Registrar shall be required (a) to issue, register the transfer
of, or exchange Securities of any Series for the period beginning at the opening of business
fifteen days immediately preceding the mailing of a notice of redemption of Securities of that
Series selected for redemption and ending at the close of business on the day of such mailing, or
(b) to register the transfer of or exchange Securities of any Series selected, called or being
called for redemption as a whole or the portion being redeemed of any such Securities selected,
called or being called for redemption in part.

     Section 2.8 Mutilated, Destroyed, Lost and Stolen Securities.

     If any mutilated Security is surrendered to the Trustee, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of the same Series and
of like tenor and principal amount and bearing a number not contemporaneously outstanding.

     If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security and (ii) such security or indemnity as

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may be required by them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of
the same Series and of like tenor and principal amount and bearing a number not contemporaneously
outstanding.

     In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a new Security, pay
such Security.

     Upon the issuance of any new Security under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.

     Every new Security of any series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that Series duly issued hereunder.

     The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities.

     Section 2.9 Outstanding Securities.

     The Securities outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those reductions in the
interest on a Global Security effected by the Trustee in accordance with the provisions hereof and
those described in this Section as not outstanding.

     If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the
Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide
purchaser.

     If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof)
holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on
that date, then on and after that date such Securities of the Series cease to be outstanding and
interest on them ceases to accrue.

     A Security does not cease to be outstanding because the Company or an Affiliate holds the
Security.

     In determining whether the Holders of the requisite principal amount of outstanding Securities
have given any request, demand, authorization, direction, notice, consent or waiver

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hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for
such purposes shall be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.2.

     Section 2.10 Treasury Securities.

     In determining whether the Holders of the required principal amount of Securities of a Series
have concurred in any request, demand, authorization, direction, notice, consent or waiver
Securities of a Series owned by the Company or an Affiliate shall be disregarded, except that for
the purposes of determining whether the Trustee shall be protected in relying on any such request,
demand, authorization, direction, notice, consent or waiver only Securities of a Series that the
Trustee knows are so owned shall be so disregarded.

     Section 2.11 Temporary Securities.

     Until definitive Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary securities upon a Company Order. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. without unreasonable delay, the Company shall
prepare and the Trustee upon request shall authenticate definitive Securities of the same Series
and date of maturity in exchange for temporary Securities. Until so exchanged, temporary securities
shall have the same rights under this Indenture as the definitive Securities.

     Section 2.12 Cancellation.

     The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee shall cancel all Securities surrendered
for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled
Securities (subject to the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise directs. The Company
may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for
cancellation.

     Section 2.13 Defaulted Interest.

     If the Company defaults in a payment of interest on a Series of Securities, it shall pay the
defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted
interest, to the persons who are Securityholders of the Series on a subsequent special record date.
The Company shall fix the record date and payment date. At least 30 days before the record date,
the Company shall mail to the Trustee and to each Securityholder of the Series a notice that states
the record date, the payment date and the amount of interest to be paid. The Company may pay
defaulted interest in any other lawful manner.

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     Section 2.14 Global Securities.

          2.14.1 Terms of Securities. A Board Resolution, a supplemental indenture hereto or an
officers’ Certificate shall establish whether the Securities of a Series shall be issued in whole
or in part in the form of one or more Global Securities and the Depository for such Global Security
or Securities.

          2.14.2 Transfer and Exchange. Notwithstanding any provisions to the contrary contained
in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable
pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other
than the Depository for such Security or its nominee only if (i) such Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global Security or if at
any time such Depository ceases to be a clearing agency registered under the Exchange Act, and, in
either case, the Company fails to appoint a successor Depository within 90 days of such event, (ii)
the Company executes and delivers to the Trustee an Officers’ Certificate to the effect that such
Global Security shall be so exchangeable or (iii) an Event of Default with respect to the
Securities represented by such Global Security shall have happened and be continuing. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for
Securities registered in such names as the Depository shall direct in writing in an aggregate
principal amount equal to the principal amount of the Global Security with like tenor and terms.

     Except as provided in this Section 2.14.2, a Global Security may not be transferred except as
a whole by the Depository with respect to such Global Security to a nominee of such Depository, by
a nominee of such Depository to such Depository or another nominee of such Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such a successor
Depository.

          2.14.3 Legend. Any Global Security issued hereunder shall bear a legend in
substantially the following form:

“This Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depository or a nominee of the
Depository. This Security is exchangeable for Securities registered in the name of a
person other than the Depository or its nominee only in the limited circumstances
described in the Indenture, and may not be transferred except as a whole by the
Depository to a nominee of the Depository, by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such a successor Depository.”

          2.14.4 Acts of Holders. The Depository, as a Holder, may appoint agents and otherwise
authorize participants to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action which a Holder is entitled to give or take under the Indenture.

          2.14.5 Payments. Notwithstanding the other provisions of this Indenture, unless
otherwise specified as contemplated by Section 2.2, payment of the principal of and

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interest, if any, on any Global Security shall be made to the Holder thereof at their
registered office.

          2.14.6 Consents, Declaration and Directions. Except as provided in Section 2.14.5,
the Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount
of outstanding Securities of such Series represented by a Global Security as shall be specified in
a written statement of the Depositary with respect to such Global Security, for purposes of
obtaining any consents, declarations, waivers or directions required to be given by the Holders
pursuant to this Indenture.

     Section 2.15 CUSIP Numbers.

     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and,
if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other elements of identification printed on the Securities,
and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE III.

REDEMPTION

     Section 3.1 Notice to Trustee.

     The Company may, with respect to any series of Securities, reserve the right to redeem and pay
the Series of Securities or may covenant to redeem and pay the Series of Securities or any part
thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such
Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem
prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms
of such Securities, it shall notify the Trustee of the redemption date and the principal amount of
Series of Securities to be redeemed. The Company shall give the notice at least 45 days before the
redemption date (or such shorter notice as may be acceptable to the Trustee).

     Section 3.2 Selection of Securities to be Redeemed.

     Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental
indenture or an Officers’ Certificate, if less than all the Securities of a Series are to be
redeemed, the Trustee shall select the Securities of the Series to be redeemed in any manner that
the Trustee deems fair and appropriate. The Trustee shall make the selection from Securities of the
Series outstanding not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities of the Series that have denominations larger than $1,000.
Securities of the Series and portions of them it selects shall be in amounts of $1,000 or whole
multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.7, the minimum principal denomination for each Series and integral

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multiples thereof. Provisions of this Indenture that apply to Securities of a Series called for
redemption also apply to portions of Securities of that Series called for redemption.

     Section 3.3 Notice of Redemption.

     Unless otherwise indicated for a particular Series by Board Resolution, a supplemental
indenture hereto or an officers’ Certificate, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed and if any Bearer Securities are outstanding, publish on one
occasion a notice in an Authorized Newspaper.

     The notice shall identify the Securities of the Series to be redeemed and shall state:

	 	(a)	 	the redemption date;
	 
	 	(b)	 	the redemption price;
	 
	 	(c)	 	the name and address of the Paying Agent;
	 
	 	(d)	 	that Securities of the Series called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
	 
	 	(e)	 	that interest on Securities of the Series called for redemption ceases to
accrue on and after the redemption date; and
	 
	 	(f)	 	any other information as may be required by the terms of the particular Series
or the Securities of a Series being redeemed.

     At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at its expense.

     Section 3.4 Effect of Notice of Redemption.

     Once notice of redemption is mailed or published as provided in Section 3.3, Securities of a
Series called for redemption become due and payable on the redemption date and at the redemption
price. A notice of redemption may not be conditional. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price plus accrued interest to the redemption date.

     Section 3.5 Deposit of Redemption Price.

     On or before the redemption date, the Company shall deposit with the Paying Agent money
sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be
redeemed on that date.

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     Section 3.6 Securities Redeemed in Part.

     Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the
Holder a new Security of the same Series and the same maturity equal in principal amount to the
unredeemed portion of the Security surrendered.

ARTICLE IV.

COVENANTS

     Section 4.1 Payment of Principal and Interest.

     The Company covenants and agrees for the benefit of the Holders of each Series of Securities
that it will duly and punctually pay the principal of and interest, if any, on the Securities of
that Series in accordance with the terms of such Securities and this Indenture.

     Section 4.2 SEC Reports.

     The Company shall deliver to the Trustee within 15 days after it files them with the SEC
copies of the annual reports and of the information, documents, and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company also shall comply with the other provisions of TIA Section 314(a).

     Section 4.3 Compliance Certificate.

     The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of
the Company, an officers certificate signed by two of the Company’s officers stating that a review
of the activities of the Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining whether the Company
has kept, observed, performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of his knowledge the
Company has kept, observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the terms, provisions
and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all
such Defaults or Events of Default of which he may have knowledge).

     The Company will, so long as any of the Securities are outstanding, deliver to the Trustee,
forthwith upon becoming aware of any Default or Event of Default, an Officers’ Certificate
specifying such Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.

     Section 4.4 Stay, Extension and Usury Laws.

     The Company covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture or the Securities; and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or advantage

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of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law has been enacted.

     Section 4.5 Corporate Existence.

     Subject to Article V, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate, partnership or other
existence of each Significant Subsidiary in accordance with the respective organizational documents
of each Significant Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Significant Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate, partnership or other
existence of any Significant Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to
the Holders.

     Section 4.6 Taxes.

     The company shall, and shall cause each of its Significant Subsidiaries to, pay prior to
delinquency all taxes, assessments and governmental levies, except as contested in good faith and
by appropriate proceedings.

ARTICLE V.

SUCCESSORS

     Section 5.1 When Company May Merge, Etc.

     The Company shall not consolidate with or merge into any other person in a transaction in
which we are not the surviving entity, or convey, transfer or lease all or substantially all of its
properties and assets to any person (a “successor person”), unless:

	 	(a)	 	the successor person (if any) is a corporation, partnership, trust or other
entity organized and validly existing under the laws of the Marshall Islands or any
U.S. domestic jurisdiction and expressly assumes the Company’s obligations on the
Securities and under this Indenture and
	 
	 	(b)	 	immediately after giving effect to the transaction, no Default or Event of
Default, shall have occurred and be continuing.

     The Company shall deliver to the Trustee prior to the consummation of the proposed transaction
an Officers’ Certificate to the foregoing effect and an opinion of Counsel stating that the
proposed transaction and such supplemental indenture comply with this Indenture.

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     Section 5.2 Successor Corporation Substituted.

     Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company in accordance with Section 5.1, the successor
corporation formed by such consolidation or into or with which the Company is merged or to which
such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with the same effect as
if such successor person has been named as the Company herein; provided, however, that the
predecessor company in the case of a sale, lease, conveyance or other disposition shall not be
released from the obligation to pay the principal of and interest, if any, on the Securities.

ARTICLE VI.

DEFAULTS AND REMEDIES

     Section 6.1 Events of Default.

     “Event of Default,” wherever used herein with respect to securities of any Series, means any
one of the following events, unless in the establishing Board Resolution, supplemental indenture or
Officers’ Certificate, it is provided that such Series shall not have the benefit of said Event of
Default:

	 	(a)	 	default in the payment of any interest on any Security of that Series when it
becomes due and payable, and continuance of such default for a period of 30 days
(unless the entire amount of such payment is deposited by the Company with the Trustee
or with a Paying Agent prior to the expiration of such period of 30 days); or
	 
	 	(b)	 	default in the payment of the principal of any Security of that Series at its
Maturity; or
	 
	 	(c)	 	default in the deposit of any sinking fund payment, when and as due in respect
of any Security of that Series; or
	 
	 	(d)	 	default in the performance or breach of any covenant of the Company in this
Indenture, which default continues uncured for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the outstanding
Securities of that Series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of Default”
hereunder; or
	 
	 	(e)	 	a default under any Debt of the Company (including a default with respect to
Securities of any Series other than that Series) or any Subsidiary, whether such Debt
now exists or shall hereafter be created, if (A) such default results from the failure
to pay any such Debt when it becomes due and (B) such Debt is not discharged or such
acceleration is not rescinded or annulled within 30 days after written notice to the
Company by the holder or holders of such Debt in the

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	 	 	 	manner provided for in the applicable debt instrument; provided, that if the default
with respect to such Debt is remedied or cured by the Company or waived by the
holders of such Debt before entry of judgment in favor of the relevant trustee, then
the Event of Default under this Indenture will be deemed likewise to have been
remedied, cured or waived; or
	 
	 	(f)	 	the Company pursuant to or within the meaning of any Bankruptcy Law:

	 	(i)	 	commences a voluntary case,
	 
	 	(ii)	 	consents to the entry of an order for relief against it in an
involuntary case,
	 
	 	(iii)	 	consents to the appointment of a Custodian of it or for all or
substantially all of its property,
	 
	 	(iv)	 	makes a general assignment for the benefit of its creditors, or
	 
	 	(v)	 	generally is unable to pay its debts as the same become due; or

	 	(g)	 	a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

	 	(i)	 	is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case,
	 
	 	(ii)	 	appoints a Custodian of the Company or any of its Significant
Subsidiaries or for all or substantially all of its property, or
	 
	 	(iii)	 	orders the liquidation of the Company or any of its
Significant Subsidiaries, and the order or decree remains unstayed and in
effect for 60 days; or

	 	(h)	 	any other Event of Default provided with respect to Securities of that Series,
which is specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate, in accordance with Section 2.2.18.

     No Event of Default with respect to a particular Series of Securities (except with respect to
subsections (f) and (g) above) necessarily constitutes an Event of Default with respect to any
other Series of Securities.

     The term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law for
the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

     Section 6.2 Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default with respect to Securities of any Series at the time outstanding occurs
and is continuing, then in every such case the Trustee or the Holders of not less than 25%

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in principal amount of the outstanding Securities of that Series may declare the principal amount
(or, if any Securities of that Series are Discount Securities, such portion of the principal amount
as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on
all of the Securities of that Series to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately due
and payable.

     The Holders of not less than a majority in principal amount of the outstanding Securities of
that Series, by written notice to the Trustee, may rescind any declaration of acceleration of such
Securities of that Series and its consequences if all existing Events of Default (other than the
nonpayment of principal of or interest on such Securities that shall have become due by such
declaration) shall have been cured or waived.

     Section 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

     If an Event of Default with respect to any Securities of any Series occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein,
or to enforce any other proper remedy.

     Section 6.4 Trustee May File Proofs of Claim.

     In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the
Company or any other obligor upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,

	 	(a)	 	to file and prove a claim for the whole amount of principal and interest owing
and unpaid in respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
	 
	 	(b)	 	to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same,

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such payments directly

21

 

to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7.

     Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

     Section 6.5 Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.

     Section 6.6 Application of Money Collected.

     Any money collected by the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:

and

	 	First: 	 	To the payment of all amounts due the Trustee under Section 7.7;
	 
	 	Second:  	 	To the payment of the amounts then due and unpaid for principal of
and interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and interest, respectively; and
	 
	 	Third: 	 	 To the Company.

     Section 6.7 Limitation on Suits.

     No Holder of any Security of any Series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless

	 	(a)	 	such Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities of that Series;

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	 	(b)	 	the Holders of not less than 25% in principal amount of the outstanding
Securities of that Series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee hereunder;
	 
	 	(c)	 	such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such request;
	 
	 	(d)	 	the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
	 
	 	(e)	 	no direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Holders of a majority in principal amount of
the outstanding Securities of that Series;

it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such Holders.

     Section 6.8 Unconditional Right of Holders to Receive Principal and Interest.

     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and Unconditional, to receive payment of the principal of and
interest, if any, on such Security on the Stated Maturity or Stated Maturities expressed in such
Security (or, in the case of redemption, on the redemption date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without the consent of such
Holder.

     Section 6.9 Restoration of Rights and Remedies.

     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted.

     Section 6.10 Rights and Remedies Cumulative.

     Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law or in equity

23

 

or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.

     Section 6.11 Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

     Section 6.12 Control by Holders.

     The Holders of a majority in principal amount of the outstanding Securities of any Series
shall have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such Series, provided that

	 	(a)	 	such direction shall not be in conflict with any rule of law or with this
Indenture,\
	 
	 	(b)	 	the Trustee may take any other action deemed proper b)o Trustee which is not
inconsistent with such direction, and
	 
	 	(c)	 	subject to the provisions of Section 6.1, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer of the Trustee, determine that the proceeding so directed would
involve the Trustee in personal liability.

     Section 6.13 Waiver of Past Defaults.

     The Holders of not less than a majority in principal amount of the outstanding Securities of
any Series may on behalf of the Holders of all the Securities of such Series waive any past Default
hereunder with respect to such Series and its consequences, except a Default in the payment of the
principal of or interest on any Security of such Series (provided, however, that the Holders of a
majority in principal amount of the outstanding Securities of any Series may rescind an
acceleration and its consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

     Section 6.14 Undertaking for Costs.

     All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against the Trustee

24

 

for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the
outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of or interest on any Security on or after the Stated Maturity or
Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption
date).

ARTICLE VII.

TRUSTEE

     Section 7.1 Duties of Trustee.

	 	(a)	 	If an Event of Default has occurred and is continuing, the Trustee shall
exercise the rights and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
	 
	 	(b)	 	Except during the continuance of an Event of Default:

	 	(i)	 	The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
	 
	 	(ii)	 	In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon officers’ Certificates or Opinions of Counsel
furnished to the Trustee and conforming to the requirements of this Indenture;
however, in the case of any such officers’ Certificates or opinions of Counsel
which by any provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such officers’ Certificates and opinions of
Counsel to determine whether or not they conform to the requirements of this
Indenture.

	 	(c)	 	The Trustee may not be relieved from liability for its own its own willful
negligent action, its own negligent failure to act or misconduct, except that:

	 	(i)	 	This paragraph does not limit the effect of paragraph (b) of
	 
	 	(ii)	 	The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.

25

 

	 	(iii)	 	The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it with respect to Securities of any
Series in good faith in accordance with the direction of the Holders of a
majority in principal amount of the outstanding Securities of such Series
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Securities of such
Series.

	 	(d)	 	Every provision of this Indenture that in any way relates to the Trustee is
subject to paragraph (a), (b) and (c) of this Section.
	 
	 	(e)	 	The Trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity satisfactory to it against any loss, liability or expense.
	 
	 	(f)	 	The Trustee shall not be liable for interest on any money received by it except
as the Trustee may agree in writing with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by law.
	 
	 	(g)	 	No provision of this Indenture shall require the Trustee to risk its own funds
or otherwise incur any financial liability in the performance of any of its duties, or
in the exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk is not
reasonably assured to it.
	 
	 	(h)	 	The Paying Agent, the Registrar and any authenticating agent shall be entitled
to the protections, immunities and standard of care as are set forth in paragraphs (a),
(b) and (c) of this Section with respect to the Trustee.

     Section 7.2 Rights of Trustee.

	 	(a)	 	The Trustee may rely on and shall be protected in acting or refraining from
acting as a result of its reasonable belief that any document was genuine and had been
signed or presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
	 
	 	(b)	 	Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers’ Certificate or
opinion of Counsel.
	 
	 	(c)	 	The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care; provided that such agent
agree as a condition to its engagement that it shall be responsible to the Company for
its own misconduct or negligence. No Depository shall be deemed

26

 

	 	 	 	an agent of the Trustee and the Trustee shall not be responsible for any act or
omission by any Depository.
	 
	 	(d)	 	The Trustee shall not be liable for any action it takes or omits to take in
good faith which it believes to be authorized or within its rights or powers.
	 
	 	(e)	 	The Trustee may consult with counsel and the advice of such counsel or any
opinion of Counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
	 
	 	(f)	 	The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the Holders
of Securities unless such Holders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction.

     Section 7.3 Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or pledgee of
securities and may otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights. The Trustee is also
subject to Sections 7.10 and 7.11.

     Section 7.4 Trustee’s Disclaimer.

     The Trustee makes no representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities,
and it shall not be responsible for any statement in the Securities other than its authentication.

     Section 7.5 Notice of Defaults.

     If a Default or Event of Default occurs and is continuing with respect to the Securities of
any Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to
each Securityholder of the Securities of that Series and, if any Bearer Securities are outstanding,
publish on one occasion in an Authorized Newspaper, notice of a Default or Event of Default within
90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of
such Default or Event of Default. Except in the case of a Default or Event of Default in payment of
principal of or interest on any Security of any Series, the Trustee may withhold the notice if and
so long as its corporate trust committee or a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Securityholders of that Series.

27

 

     Section 7.6 Reports by Trustee to Holders.

     Within 60 days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by the Registrar and, if
any Bearer Securities are outstanding, publish in an Authorized Newspaper, a brief report dated as
of such May 15, in accordance with, and to the extent required under, TIA Section 313.

     A copy of each report at the time of its mailing to Securityholders of any Series shall be
filed with the SEC and each stock exchange on which the Securities of that Series are listed. The
Company shall promptly notify the Trustee when Securities of any Series are listed on any stock
exchange.

     Section 7.7 Compensation and Indemnity.

     The Company shall pay to the Trustee from time to time reasonable compensation for its
services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee’s agents and counsel.

     The Company shall indemnify the Trustee (including the cost of defending itself) against any
loss, liability or expense incurred by it except as set forth in the next paragraph in the
performance of its duties under this Indenture as Trustee or Agent. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably withheld. This
indemnification shall apply to officers, directors, employees, shareholders and agents of the
Trustee.

     The Company need not reimburse any expense or indemnify against any loss liability incurred by
the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through
negligence or bad faith.

     To secure the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities of any Series on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on particular Securities of that Series.

     When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 6.1(f) or (g) occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.

     Section 7.8 Replacement of Trustee.

     A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

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     The Trustee may resign with respect to the Securities of one or more Series by so notifying
the Company. The Holders of a majority in principal amount of the Securities of any Series may
remove the Trustee with respect to that Series by so notifying the Trustee and the Company. The
Company may remove the Trustee with respect to Securities of one or more Series if:

	 	(a)	 	the Trustee fails to comply with Section 7.10;
	 
	 	(b)	 	the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

	 	(c)	 	a Custodian or public officer takes charge of the Trustee or its property; or
	 
	 	(d)	 	the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

     If a successor Trustee with respect to the Securities of any one or more Series does not take
office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the Securities of the applicable
Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

     If the Trustee with respect to the Securities of any one or more Series fails to comply with
Section 7.10, any Securityholder of the applicable Series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee subject to the lien provided for in Section
7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of
Securities for which it is acting as Trustee under this Indenture. A successor Trustee shall mail a
notice of its succession to each Securityholder of each such Series and, if any Bearer Securities
are outstanding, publish such notice on one occasion in an Authorized Newspaper. Notwithstanding
replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section
7.7 hereof shall continue for the benefit of the retiring trustee with respect to expenses and
liabilities incurred by it prior to such replacement.

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     Section 7.9 Successor Trustee by Merger, etc.

     If the Trustee consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee.

     Section 7.10 Eligibility; Disqualification.

     This Indenture shall always have a Trustee who satisfies the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall always have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b).

     Section 7.11 Preferential Collection of Claims Against Company.

     The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TTA Section
311(a) to the extent indicated.

ARTICLE VIII.

SATISFACTION AND DISCHARGE; DEFEASANCE

     Section 8.1 Satisfaction and Discharge of Indenture.

     This Indenture shall upon Company Order cease to be of further effect (except as hereinafter
provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

	 	(a)	 	either

	 	(i)	 	all Securities theretofore authenticated and delivered (other
than Securities that have been destroyed, lost or stolen and that have been
replaced or paid) have been delivered to the Trustee for cancellation; or
	 
	 	(ii)	 	all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable, or

	 	(1)	 	have become due and payable, or
	 
	 	(2)	 	will become due and payable at their Stated
Maturity within one year, or
	 
	 	(3)	 	are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the
Company, or
	 
	 	(4)	 	are deemed paid and discharged pursuant to
section 8.3, as applicable;

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	 	 	 	and the Company, in the case of (1), (2) or (3) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust an amount sufficient for the
purpose of paying and discharging the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and interest to
the date of such deposit (in the case of Securities which have become due and
payable on or prior to the date of such deposit) or to the Stated Maturity or
redemption date, as the case may be;
	 
	 	(b)	 	the Company has paid or caused to be paid all other sums payable hereunder by
the Company; and
	 
	 	(c)	 	the Company has delivered to the Trustee an Officers’ Certificate and an
opinion of Counsel, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been complied with.

     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 7.7, and, if money shall have been deposited with the Trustee
pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.1 8.2 and 8.5
shall survive.

     Section 8.2 Application of Trust Funds; Indemnification.

	 	(a)	 	Subject to the provisions of Section 8.5, all money deposited with the Trustee
pursuant to Section 8.1, all money and U.S. Government Obligations or Foreign
Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and
all money received by the Trustee in respect of U.S. Government Obligations or Foreign
Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4, shall
be held in trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may determine, to
the persons entitled thereto, of the principal and interest for whose payment such
money has been deposited with or received by the Trustee or to make mandatory sinking
fund payments or analogous payments as contemplated by Sections 8.3 or 8.4.
	 
	 	(b)	 	The Company shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against U.S. Government obligations or Foreign
Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and
principal received in respect of such obligations other than any payable by or on
behalf of Holders.
	 
	 	(c)	 	The Trustee shall deliver or pay to the Company from time to time upon Company
Request any U.S. Government obligations or Foreign Government obligations or money held
by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, are then in excess of the amount
thereof which then would have been required to

31

 

be deposited for the purpose for which such U.S. Government Obligations or Foreign
Government Obligations or money were deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations or Foreign
Government Obligations held under this Indenture.

     Section 8.3 Legal Defeasance of Securities of any Series.

     Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2-20, to be inapplicable
to Securities of any Series, the Company shall be deemed to have paid and discharged the entire
indebtedness on all the outstanding Securities of such Series on the 91st day after the date of the
deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates
to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at
the expense of the company, shall, at Company Request, execute proper instruments acknowledging the
same), except as to:

	 	(a)	 	the rights of Holders of Securities of such Series to receive, from the trust
funds described in subparagraph (d) hereof, (i) payment of the principal of and each
installment of principal of and interest on the outstanding Securities of such Series
on the Stated Maturity of such principal or installment of principal or interest and
(ii) the benefit of any mandatory sinking fund payments applicable to the Securities of
such Series on the day on which such payments are due and payable in accordance with
the terms of this Indenture and the Securities of such Series;
	 
	 	(b)	 	the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5;
	 
	 	(c)	 	the rights, powers, trust and immunities of the Trustee hereunder; provided
that, the following conditions shall have been satisfied;
	 
	 	(d)	 	the Company shall have deposited or caused to be deposited irrevocably with
the Trustee as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for and dedicated solely to the benefit of the Holders
of such Securities W in the case of Securities of such Series denominated in Dollars,
cash in Dollars (or such other money or currencies as shall then be legal tender in the
United States) and/or U.S. Government Obligations, or (ii) in the case of Securities of
such Series denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government obligations, which through the payment of interest and
principal in respect thereof, in accordance with their terms, will provide (and without
reinvestment and assuming no tax liability will be imposed on such Trustee), not later
than one day before the due date of any payment of money, an amount in cash,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the Trustee, to
pay and discharge each installment of principal (including mandatory sinking fund or
analogous payments) of and interest, if any, on all the Securities of such Series on
the dates such installments of interest or principal are due;

32

 

	 	(e)	 	such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
	 
	 	(f)	 	no Default or Event of Default with respect to the Securities of such Series
shall have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
	 
	 	(g)	 	the Company shall have delivered to the Trustee an officers’ Certificate and an
opinion of Counsel to the effect that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such opinion of Counsel
shall confirm that, the Holders of the Securities of such Series will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to Federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred;
	 
	 	(h)	 	the Company shall have delivered to the Trustee an Officers’ Certificate
stating that the deposit was not made by the Company with the intent of preferring the
Holders of the Securities of such Series over any other creditors of the company or
with the intent of defeating, hindering, delaying or defrauding any other creditors of
the Company;
	 
	 	(i)	 	such deposit shall not result in the trust arising from such deposit
constituting an investment company (as defined in the Investment Company Act of 1940,
as amended), or such trust shall be qualified under such Act or exempt from regulation
thereunder; and
	 
	 	(j)	 	the Company shall have delivered to the Trustee an officers’ Certificate and an
opinion of Counsel, each stating that all conditions precedent provided for relating to
the defeasance contemplated by this Section have been complied with.

     Section 8.4 Covenant Defeasance.

     Unless this Section 8.4 is otherwise specified pursuant to Section 2.2.20 to be inapplicable
to Securities of any Series, on and after the 91st day after the date of the deposit referred to in
subparagraph (a) hereof, the Company may omit to comply with any term, provision or condition set
forth under Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained
in a supplemental indenture hereto for a particular Series of Securities or a Board Resolution or
an Officers’ Certificate delivered pursuant to Section 2.2.20 (and the failure to comply with any
such covenants shall not constitute a Default or Event of Default under Section 6.1) and the
occurrence of any event described in clause (e) of Section 6.1 shall not constitute a Default or
Event of Default hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:

33

 

	 	(a)	 	With reference to this Section 8.4, the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities (i) in the case of Securities of such Series
denominated in Dollars, cash in Dollars (or such other money or currencies as shall
then be legal tender in the United States) and/or U.S. Government obligations, or (ii)
in the case of Securities of such Series denominated in a Foreign Currency (other than
a composite currency), money and/or Foreign Government obligations, which through the
payment of interest and principal in respect thereof, in accordance with their terms,
will provide (and without reinvestment and assuming no tax liability will be imposed on
such Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification thereof
delivered to the Trustee, to pay principal and interest, if any, on and any mandatory
sinking fund in respect of the Securities of such Series on the dates such installments
of interest or principal are due;
	 
	 	(b)	 	Such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
	 
	 	(c)	 	No Default or Event of Default with respect to the Securities of such Series
shall have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
	 
	 	(d)	 	the company shall have delivered to the Trustee an opinion of Counsel
confirming that Holders of the Securities of such Series will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such deposit and defeasance had not
occurred;
	 
	 	(e)	 	the Company shall have delivered to the Trustee an officers’ Certificate
stating the deposit was not made by the Company with the intent of preferring the
Holders of the Securities of such Series over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
	 
	 	(f)	 	The Company shall have delivered to the Trustee an officers’ Certificate and an
opinion of Counsel, each stating that all conditions precedent herein provided for
relating to the defeasance contemplated by this Section have been complied with.

     Section 8.5 Repayment to Company.

     The Trustee and the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal and interest that remains unclaimed for two years.

34

 

After that, Securityholders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another person.

ARTICLE IX.

AMENDMENTS AND WAIVERS

     Section 9.1 Without Consent of Holders.

     The Company and the Trustee may amend or supplement this Indenture or the Securities of one or
more Series without the consent of any Securityholder:

	 	(a)	 	to cure any ambiguity, defect or inconsistency;
	 
	 	(b)	 	to comply with Article V;
	 
	 	(c)	 	to provide for uncertificated Securities in addition to or in place of
certificated Securities;
	 
	 	(d)	 	to make any change that does not adversely affect the rights of any
Securityholder;
	 
	 	(e)	 	to provide for the issuance of and establish the form and terms and conditions
of Securities of any Series as permitted by this Indenture;
	 
	 	(f)	 	to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Securities of one or more Series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee; or
	 
	 	(g)	 	to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA.

     Section 9.2 With Consent of Holders.

     The Company and the Trustee may enter into a supplemental indenture with the written consent
of the Holders of at least a majority in principal amount of the outstanding Securities of all
Series affected by such supplemental indenture, taken together as one class (including consents
obtained in connection with a tender offer or exchange offer for the Securities of such Series),
for the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Securityholders of each such Series. Except as provided in Section 6.13, the Holders
of at least a majority in principal amount of the outstanding Securities of all Series affected by
such waiver by notice to the Trustee, taken together as one class (including consents obtained in
connection with a tender offer or exchange offer for the Securities of such Series)

35

 

may waive compliance by the Company with any provision of this Indenture or the Securities with
respect to such Series.

     It shall not be necessary for the consent of the Holders of Securities under this Section 9.2
to approve the particular form of any proposed supplemental indenture or waiver, but it shall be
sufficient if such consent approves the substance thereof. After a supplemental indenture or waiver
under this section becomes effective, the Company shall mail to the Holders of Securities affected
thereby and, if any Bearer Securities affected thereby are outstanding, publish on one occasion in
an Authorized Newspaper, a notice briefly describing the supplemental indenture or waiver. Any
failure by the Company to mail or publish such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture or waiver.

     Section 9.3 Limitations.

     Without the consent of each Securityholder affected, an amendment or waiver may not:

	 	(a)	 	change the amount of Securities whose Holders must consent to an amendment,
supplement or waiver;
	 
	 	(b)	 	reduce the rate of or change the interest payment time on any Security or alter
the redemption provisions with respect thereto (other than the provisions relating to
Sections 4.10 and 4.17, other than any alteration to any such Section which would not
materially adversely affect the legal rights of any Holder under this Indenture) or the
price at which the Company is required to offer to purchase the Securities;
	 
	 	(c)	 	reduce the principal or change the Stated Maturity of any Security or reduce
the amount of, or postpone the date fixed for, the payment of any sinking fund or
analogous obligation;
	 
	 	(d)	 	reduce the principal amount of Discount Securities payable upon acceleration of
the maturity thereof;
	 
	 	(e)	 	waive a Default or Event of Default in the payment of the principal of or
interest, if any, on any Security (except a rescission of acceleration of the
Securities of any Series by the Holders of at least a majority in principal amount of
the outstanding Securities of such Series and a waiver of the payment default that
resulted from such acceleration);
	 
	 	(f)	 	make the principal of or interest, if any, on any Security payable in any
currency other than that stated in the Security;
	 
	 	(g)	 	make any change in Sections 6.8, 6.13, 9.3 (this sentence), 10.15 or 10.16; or
	 
	 	(h)	 	waive a redemption payment with respect to any Security or change any of the
provisions with respect to the redemption of any Securities.

36

 

     Section 9.4 Compliance with Trust Indenture Act.

     Every amendment to this Indenture or the Securities of one or more Series shall be set forth
in a supplemental indenture hereto that complies with the TIA as then in effect.

     Section 9.5 Revocation and Effect of Consents.

     Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder’s Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.

     Any amendment or waiver once effective shall bind every Securityholder of each Series affected
by such amendment or waiver unless it is of the type described in any of clauses (a) through (g) of
Section 9.3. in that case, the amendment or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder’s Security.

     Section 9.6 Notation on or Exchange of Securities.

     The Trustee may place an appropriate notation about an amendment or waiver on any Security of
any Series thereafter authenticated. The Company in exchange for Securities of that Series may
issue and the Trustee shall authenticate upon request new Securities of that Series that reflect
the amendment or waiver.

     Section 9.7 Trustee Protected.

     In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee shall sign all supplemental indentures,
except that the Trustee need not sign any supplemental indenture that adversely affects its rights.

ARTICLE X.

MISCELLANEOUS

     Section 10.1 Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies, or conflicts with another provision
which is required or deemed to be included in this Indenture by the TIA, such required or deemed
provision shall control.

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     Section 10.2 Notices.

     Any notice or communication by the Company or the Trustee to the other is duly given if in
writing and delivered in person or mailed by first-class mail:

if to the Company:

FreeSeas Inc.

89 Akti Miaouli Street & 4 Mavrokordatou Street

Piraeus, Greece 185 38

if to the Trustee:

[Name of Trustee]

[Address]

Attention:

     The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

     Any notice or communication to a Securityholder shall be mailed by first-class mail to his
address shown on the register kept by the Registrar and, if any Bearer Securities are outstanding,
published in an Authorized Newspaper. Failure to mail a notice or communication to a Securityholder
of any Series or any defect in it shall not affect its sufficiency with respect to other
Securityholders of that or any other Series.

     If a notice or communication is mailed or published in the manner provided above, within the
time prescribed, it is duly given, whether or not the Securityholder receives it.

     If the company mails a notice or communication to Securityholders, it mail a copy to the
Trustee and each Agent at the same time.

     Section 10.3 Communication by Holders with Other Holders.

     Securityholders of any Series may communicate pursuant to TIA Section 312(b) with other
Securityholders of that Series or any other Series with respect to their rights under this
Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA Section 312(c).

     Section 10.4 Certificate and opinion as to Conditions Precedent.

     Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

	 	(a)	 	an Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
	 
	 	(b)	 	an opinion of Counsel stating that, in the opinion of counsel, all such
conditions precedent have been complied with.

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     Section 10.5 Statements Required in Certificate or opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall
comply with the provisions of TIA Section 314(e) and shall include:

	 	(a)	 	a statement that the person making such certificate or opinion has read such
covenant or condition;
	 
	 	(b)	 	a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such certificate or
opinion are based;
	 
	 	(c)	 	a statement that, in the opinion of such person, he has made such examination
or investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
	 
	 	(d)	 	a statement as to whether or not, in the opinion of such person, such condition
or covenant has been complied with.

     Section 10.6 Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or
more Series. Any Agent may make reasonable rules and set reasonable requirements for its functions.

     Section 10.7 Legal Holidays.

     Unless otherwise provided by Board Resolution, officers’ Certificate or supplemental indenture
for a particular Series, a “Legal Holiday” is any day that is not a Business Day. If a payment date
is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

     Section 10.8 No Recourse Against Others.

     A director, officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.

     Section 10.9 Counterparts.

     This Indenture may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

39

 

     Section 10.10 Governing Laws.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK EXCLUDING (TO THE GREATEST EXTENT POSSIBLE) ANY RULE OF LAW THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

     Section 10.11 No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret another indenture, loan or debt agreement of the
Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.

     Section 10.12 Successors.

     All agreements of the Company in this Indenture and the Securities shall bind its successor.
All agreements of the Trustee in this Indenture shall bind its successor.

     Section 10.13 Severability.

     In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

     Section 10.14 Table of Contents, Headings, Etc.

     The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

     Section 10.15 Securities in a Foreign Currency or in ECU.

     Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a
particular Series of Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of Securities of all Series or
all Series affected by a particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or currency other than Dollars
(including ECUs), then the principal amount of Securities of such Series which shall be deemed to
be outstanding for the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate at such time. For purposes of this Section
10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York City for cable
transfers of that currency as published by the Federal Reserve Bank of New York; provided, however,
in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the
Commission of the European Union (or any successor thereto) as published in the Official Journal of
the European union (such publication or any successor

40

 

publication, the “Journal”). If such Market Exchange Rate is not available for any reason with
respect to such currency, the Trustee shall use, in its sole discretion and without liability on
its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate
of exchange as published in the Journal, as of the most recent available date, or quotations or, in
the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the
country of issue of the currency in question or, in the case of ECUs, in Luxembourg or such other
quotations or, in the case of ECUs, rates of exchange as the Trustee, upon consultation with the
Company, shall deem appropriate. The provisions of this paragraph shall apply in determining the
equivalent principal amount in respect of Securities of a Series denominated in currency other than
Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this
Indenture.

     All decisions and determinations of the Trustee regarding the Market Exchange Rate or any
alternative determination provided for in the preceding paragraph shall be in its sole discretion
and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all
purposes and irrevocably binding upon the Company and all Holders.

     Section 10.16 Judgment Currency.

     The Company agrees, to the fullest extent that it may effectively do so under applicable law,
that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum
due in respect of the principal of or interest or other amount on the Securities of any Series (the
“Required Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required Currency with the
Judgment Currency on the day on which final unappealable judgment is entered, unless such day is
not a New York Banking Day, then, the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which
final unappealable judgment is entered and (b) its obligations under this Indenture to make
payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any
recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in
any currency other than the Required Currency, except to the extent that such tender or recovery
shall result in the actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required Currency the amount, if
any, by which such actual receipt shall fall short of the full amount of the Required Currency so
expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other
sum due under this Indenture. For purposes of the foregoing, “New York Banking Day” means any day
except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions
are authorized or required by law, regulation or executive order to close.

41

 

ARTICLE XI.

SINKING FUNDS

     Section 11.1 Applicability of Article.

     The provisions of this Article shall be applicable to any sinking fund for the retirement of
the Securities of a Series, except as otherwise permitted or required by any form of Security of
such Series issued pursuant to this Indenture.

     The minimum amount of any sinking fund payment provided for by the terms of the Securities of
any Series is herein referred to as a “mandatory sinking fund payment” and any other amount
provided for by the terms of Securities of such Series is herein referred to as an “optional
sinking fund payment.” If provided for by the terms of Securities of any Series, the cash amount of
any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund
payment shall be applied to the redemption of Securities of any Series as provided for by the terms
of the securities of such Series.

     Section 11.2 Satisfaction of Sinking Fund Payments with Securities.

     The Company may, in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver
outstanding Securities of such Series to which such sinking fund payment is applicable (other than
any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as
credit Securities of such Series to which such sinking fund payment is applicable and which have
been redeemed either at the election of the Company pursuant to the terms of such Series of
Securities (except pursuant to any mandatory sinking fund) or through the application of permitted
optional sinking fund payments or other optional redemptions pursuant to the terms of such
Securities, provided that such Securities have not been previously so credited. Such Securities
shall be received by the Trustee, together with an Officers’ Certificate with respect thereto, not
later than 15 days prior to the date on which the Trustee begins the process of selecting
Securities for redemption, and shall be credited for such purpose by the Trustee at the price
specified in such Securities for redemption through operation of the sinking fund and the amount of
such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of
Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of
Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be
less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon
receipt of a Company Order that such action be taken, and such cash payment shall be held by the
Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided,
however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company
Order pay over and deliver to the Company any cash payment so being held by the Trustee or such
Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by
the Company having an unpaid principal amount equal to the cash payment required to be released to
the Company.

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     Section 11.3 Redemption of Securities for Sinking Fund.

     Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental
indenture hereto or Officers’ Certificate in respect of a particular Series of Securities) prior to
each sinking fund payment date for any Series of Securities, the Company will deliver to the
Trustee an Officers’ Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is
to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by
delivering and crediting of Securities of that Series pursuant to Section 11.2., and the optional
amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the
Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days
(unless otherwise indicated in the Board Resolution, Officers’ Certificate or supplemental
indenture in respect of a particular Series of Securities) before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 3.2 and cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner provided in Section 3.3. Such notice having
been duly given, the redemption of such Securities shall stated in Sections 3.4, 3.5 and 3.6.

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

	 	 	 	 	 
	 	FreeSeas Inc.

 	 
	 	By:  	    /s/ [TBD]
 	 
	 	 	Name:  	[TBD] 	 
	 	 	Its:  [Chief Accounting Officer
and Company Secretary 
	 

	 	 	 	 	 
	 	[Name of Trustee]

 	 
	 	By:  	
 	 
	 	Name:  	
 	 
	 	Its:  	
 	 

43

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