Document:

exv4w1

Exhibit 4.1

Execution Version

ENCORE ACQUISITION COMPANY

and

MELLON INVESTOR SERVICES LLC,

Rights Agent

 

Rights Agreement

Dated as of October 28, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section 1. Certain Definitions
	 	 	1	 
	Section 2. Appointment of Rights Agent
	 	 	7	 
	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
	 	 	12	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	14	 
	Section 9. Reservation and Availability of Capital Stock
	 	 	15	 
	Section 10. Preferred Stock Record Date
	 	 	16	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	16	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	24	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power
	 	 	24	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	27	 
	Section 15. Rights of Action
	 	 	28	 
	Section 16. Agreement of Rights Holders
	 	 	28	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	29	 
	Section 18. Concerning the Rights Agent
	 	 	29	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	Section 20. Duties of Rights Agent
	 	 	31	 
	Section 21. Change of Rights Agent
	 	 	33	 
	Section 22. Issuance of New Rights Certificates
	 	 	34	 
	Section 23. Redemption and Termination
	 	 	34	 
	Section 24. Exchange
	 	 	35	 
	Section 25. Notice of Certain Events
	 	 	36	 
	Section 26. Notices
	 	 	37	 
	Section 27. Supplements and Amendments
	 	 	38	 
	Section 28. Successors
	 	 	38	 
	Section 29. Determinations and Actions by the Board of Directors, etc.
	 	 	38	 

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	Section 30. Benefits of this Agreement
	 	 	39	 
	Section 31. Severability
	 	 	39	 
	Section 32. Governing Law
	 	 	40	 
	Section 33. Counterparts
	 	 	40	 
	Section 34. Descriptive Headings
	 	 	40	 
	 
	Exhibit A —  Form of Certificate of Designations of Series A Junior Participating Preferred Stock
	 	 	 	 
	Exhibit B —  Form of Rights Certificate
	 	 	 	 
	Exhibit C —  Summary of Rights
	 	 	 	 

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RIGHTS AGREEMENT

          This Rights Agreement, dated as of October 28, 2008 (the “Agreement”), between Encore
Acquisition Company, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a
New Jersey limited liability company (the “Rights Agent”),

W I T N E S S E T H:

          WHEREAS, on October 28, 2008 (the “Rights Dividend Declaration Date”), the Board of Directors
of the Company authorized and declared a dividend of one Right for each share of common stock, par
value $0.01 per share, of the Company (the “Common Stock”) outstanding at the Close of Business on
November 7, 2008 (the “Record Date”), and has authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued (whether originally issued or delivered from the Company’s
treasury) between the Record Date and the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined), and, in certain circumstances provided for in
Section 22 hereof, after the Distribution Date, each Right initially representing the right to
purchase one Fractional Share (as hereinafter defined) of Series A Junior Participating Preferred
Stock of the Company, upon the terms and subject to the conditions hereinafter set forth (the
“Rights”);

          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 shall have the
meanings indicated:

          “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 10% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person; provided, however, that a Person
shall not be or become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 10% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding
due to the repurchase of Common Stock by the Company, unless and until such time as such Person
together with its Affiliates and Associates shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock or any other Person (or Persons) who is (or collectively are) the Beneficial Owner of
shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock shall
become an Affiliate or Associate of such Person, unless, in either such case, such Person, together
with all Affiliates and Associates of such Person, is not then the Beneficial Owner of 10% or more
of the shares of Common Stock then outstanding; and provided, further, that if the Board of
Directors, with the concurrence of a majority of the members of the Board of Directors who are not,
and are not representatives, nominees, Affiliates or Associates of, such Person or an Acquiring
Person, determines in good faith that a Person that would otherwise be an “Acquiring Person” has
become such inadvertently (including, without limitation, because (i) such Person was unaware that
it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an “Acquiring

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Person”
or (ii) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without
any intention of changing control of the Company, and if such Person as promptly as practicable
divested or divests itself of Beneficial Ownership of a sufficient number of shares of Common Stock
so that such Person would no longer be an “Acquiring Person,” then such Person shall not be deemed
to be or to have become an “Acquiring Person” for any purposes of this Agreement.

          Notwithstanding anything in this definition of “Acquiring Person” to the contrary, if, as of
the date hereof, any Person, together with all Affiliates or Associates of such Person, is the
Beneficial Owner of a number of shares of Common Stock that would otherwise cause such Person to be
an Acquiring Person, such Person shall not be or become an Acquiring Person unless and until such
time as such Person or any Affiliate or Associate of such Person shall purchase or otherwise become
the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of shares of Common Stock constituting 1% or more of the then outstanding
shares of Common Stock shall become an Affiliate or Associate of such Person unless, in either such
case, such Person, together with all Affiliates and Associates of such Person, is not then the
Beneficial Owner of a number of shares that would otherwise cause such Person to be an Acquiring
Person.

          At any time that the Rights are redeemable, the Board of Directors may, generally or with
respect to any specified Person or Persons, determine to increase to a specified percentage or
amount greater than that set forth herein or decrease to a specified percentage or amount lower
than that set forth herein or determine a number of shares to be (but in no event less than or
equal to the percentage or number of shares of Common Stock then beneficially owned by such
Person), the level of Beneficial Ownership of Common Stock at which a Person or such Person or
Persons becomes an Acquiring Person.

          “Adjustment Fraction” shall have the meaning set forth in Section 11(p) hereof.

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

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

          “Associate” shall mean, with reference to any Person, (1) any corporation, firm, partnership,
limited liability company, association, unincorporated organization or other entity (other than the
Company or a Subsidiary of the Company) of which such Person is an officer or general partner (or
officer or general partner of a general partner) or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities, (2) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity and (3) any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person.

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

     (i) that such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, is the “beneficial owner” of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of this
Agreement) or otherwise has the right to vote or dispose of, 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 (i) 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 (i.e., not
including a solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement) proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor report) and
(C) does not constitute a trust, proxy, power of attorney or other device with the purpose
or effect of allowing two or more persons, acting in concert, to avoid being deemed
“beneficial owners” of such security or otherwise avoid the status of “Acquiring Person”
under the terms of this Agreement or as part of a plan or scheme to evade the reporting
requirements under Schedule 13D or Sections 13(d) or 13(g) of the Exchange Act;

     (ii) that 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 or effective immediately or only after the passage of time or the occurrence of
an event) 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 such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or any of such
Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a)
or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i) or (p) hereof in
connection with an adjustment made with respect to any Original Rights; or

     (iii) that are beneficially owned, directly or indirectly, by (A) 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 proviso to subparagraph (i) of this definition) or disposing
of any voting securities of the Company or (B) any group (as that term is used

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in Rule 13d-5(b) of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement) of which such Person is a member;

provided, however, that nothing in this definition shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such Person’s participation in good faith in a firm commitment underwriting
(including, without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under the Exchange Act, or
to cover overallotments created in connection with a public offering) until the expiration of forty
days after the date of such acquisition. For purposes of this Agreement, “voting” a security shall
include voting, granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a stockholder meeting), entering into a
voting trust or voting agreement or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act, as in effect on the date of this Agreement) in respect of such
security.

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

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

          “Closing Price” of a security for any day shall mean the last sales price, regular way, on
such day or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, in either case as reported in the principal transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange, or,
if such security is not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities exchange but sales
price information is reported for such security, as reported by such self-regulatory organization
or registered securities information processor (as such terms are used under the Exchange Act) that
then reports information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the over-the-counter market on such
day, as reported by such other entity, or, if on such day such security is not quoted by any such
entity, the average of the closing bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of Directors of the Company. If on such day
no market maker is making a market in such security, the fair value of such security on such day as
determined in good faith by the Board of Directors of the Company shall be used.

          “Common Stock” shall mean the common stock, par value $0.01 per share, of the Company, except
that “Common Stock” when used with reference to equity interests issued by any Person other than
the Company shall mean the capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the management, of
such Person.

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

          “Company” shall mean the Person named as the “Company” in the preamble of this Agreement until
a successor Person shall have become such or until a Principal Party shall assume, and thereafter
be liable for, all obligations and duties of the Company hereunder, pursuant to the applicable
provisions of this Agreement, and thereafter “Company” shall mean such successor Person or
Principal Party.

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

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

          “Distribution Date” shall mean the earlier of (i) the Close of Business on the tenth day (or,
if such Stock Acquisition Date results from the consummation of a Permitted Offer, such later date
as may be determined by the Company’s Board of Directors as set forth below before the Distribution
Date occurs) after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by the Company’s Board
of Directors as set forth below before the Distribution Date occurs) after the date that a tender
offer or exchange offer by any Person (other than any Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act as then in effect, if upon consummation thereof, such Person would be an Acquiring Person,
other than a tender or exchange offer that is determined before the Distribution Date occurs to be
a Permitted Offer. The Board of Directors of the Company may, to the extent set forth in the
preceding sentence, defer the date set forth in clause (i) or (ii) of the preceding sentence to a
specified later date or to an unspecified later date to be determined by a subsequent action or
event (but in no event to a date later than the Close of Business on the tenth day after the first
occurrence of a Triggering Event).

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

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

          “Exchange Ratio” shall have the meaning set forth in Section 24 hereof.

          “Exempt Person” shall mean the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, and any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.

          “Expiration Date” shall mean the earliest of (i) the Final Expiration Date, (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof, (iii) the time at which the Rights
expire pursuant to Section 13(d) hereof and (iv) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.

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          “Final Expiration Date” shall mean the Close of Business on October 28, 2011.

          “Flip-In Event” shall mean an event described in Section 11(a)(ii) hereof.

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

          “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a)
hereof, but excluding any transaction described in Section 13(d) hereof that causes the Rights to
expire.

          “Fractional Share” with respect to the Preferred Stock shall mean one one-hundredth of a share
of Preferred Stock.

          “Original Rights” shall have the meaning set forth in the definition of “Beneficial Owner.”

          “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined, prior to the time the Person making the offer or
any Affiliate or Associate thereof is an Acquiring Person, by at least a majority of the members of
the Board of Directors who are not, and are not representatives, nominees, Affiliates or Associates
of, an Acquiring Person or the person making the offer, after receiving advice from one or more
investment banking firms, to be (a) at a price and on terms that are fair to stockholders (taking
into account all factors that such members of the Board deem relevant including, without
limitation, prices that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in the best interests of the
Company and its stockholders.

          “Person” shall mean any individual, firm, corporation, partnership, limited liability company,
association, trust, unincorporated organization or other entity or any group of Persons acting in
concert, and shall include any successor (by merger or otherwise) thereof or thereto.

          “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock, par
value $0.01 per share, of the Company having the rights, powers and preferences set forth in the
form of Certificate of Designations attached hereto as Exhibit A 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, par value $0.01 per
share, of the Company designated for such purpose containing terms substantially similar to the
terms of the Series A Junior Participating Preferred Stock.

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

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

          “Record Date” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.

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

          “Rights” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.

          “Rights Agent” shall mean the Person named as the “Rights Agent” in the preamble of this
Agreement until a successor Rights Agent shall have become such pursuant to the applicable
provisions hereof, and thereafter “Rights Agent” shall mean such successor Rights Agent. If at any
time there is more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, “Rights Agent” shall mean and include each such Person.

          “Rights Certificates” shall mean the certificates evidencing the Rights.

          “Rights Dividend Declaration Date” shall have the meaning set forth in the recitals clause at
the beginning of this Agreement.

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

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

          “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes
of this definition and Section 23, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.

          “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
other persons performing similar functions is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.

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

          “Summary of Rights” shall mean the Summary of Rights sent pursuant to Section 3(b) hereof.

          “Trading Day” with respect to a security shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is open for the
transaction of business, or, if such security is not listed or admitted to trading on any national
securities exchange but is quoted by a self-regulatory organization or registered securities
information processor (as such terms are used under the Exchange Act), a day on which such entity
reports trades, or, if such security is not so quoted, a Business Day.

          “Triggering Event” shall mean any Flip-In Event or any Flip-Over Event.

          Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to

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time appoint such co-Rights Agents as it may deem necessary or desirable. The
Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or
omissions of any such co-Rights Agent. In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights Agent shall be as the Company
shall determine and the Company shall provide written notice thereof to the Rights Agent.

          Section 3. Issue of Rights Certificates.

          (a) Until the Distribution Date, (x) the Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates for Common Stock registered in the names of
the holders of the Common Stock or, for Common Stock held in book-entry accounts through the direct
registration service of the Company’s transfer agent, by such book-entry accounts (together with a
direct registration transaction advice with respect to such shares) and not by separate
certificates, and (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights Agent will, if
requested and provided with all necessary information, (i) 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 (other than any Person referred to in the first sentence of Section 7(e)), at the
address of such holder shown on the records of the Company, one or more Rights Certificates,
evidencing one Right for each share of Common Stock so held, subject to adjustment as provided
herein, or (ii) credit the book-entry account of such holder with such Rights and send a direct
registration transaction advice with respect to such Rights to such holder. In the event that an
adjustment in the number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates or such credits to the
book-entry accounts, the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers
of Rights are distributed, or only whole numbers of Rights are credited to book-entry accounts, 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 or such book-entry credits and related direct
registration transaction advices. In the event the Company elects to distribute any Rights by
crediting book-entry accounts, the provisions in this Agreement that reference Rights Certificates
shall be interpreted to reflect that the Rights are credits to the book-entry accounts, that
separate Rights Certificates are not issued with respect to some or all of the Rights, and that any
legend required on a Rights Certificate may be placed on the direct registration transaction advice
with respect to certain Rights. The Company shall promptly notify the Rights Agent in writing upon
the occurrence of the Distribution Date and, if such notification is given orally, the Company
shall confirm same in writing on or prior to the Business Day next following. Until such notice is
received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the
Distribution Date has not occurred.

          (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C, by first-class, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company. With respect to Common Stock
outstanding as of the Record Date, until the Distribution Date or the earlier surrender for
transfer thereof or the Expiration Date, the Rights

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associated with (i) the shares of Common Stock
represented by certificates shall be evidenced by such certificates for Common Stock together with
the Summary of Rights, and (ii) the shares of Common Stock held in book-entry accounts shall be
held in book-entry accounts and evidenced by the related transaction advice together with the
Summary of Rights, and in either case the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any of the shares of Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with such Common Stock.

          (c) Rights shall be issued in respect of all shares of Common Stock that are issued (whether
originally issued or delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date or, in certain circumstances provided in
Section 22 hereof, after the Distribution Date. Certificates issued representing such shares of
Common Stock that shall so become outstanding or shall be transferred or exchanged after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date shall also be deemed
to be certificates for Rights, and the Company shall cause such certificates to bear a legend in
substantially the following form:

     This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Encore Acquisition Company (the
“Company”) and Mellon Investor Services LLC (the “Rights Agent”) dated as of October
28, 2008 as it may from time to time be supplemented or amended (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 may be redeemed,
may be exchanged, may expire or may 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 beneficially owned
by or transferred to any Person who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement),
and certain transferees thereof, will become null and void and will no longer be
transferable.

Each book-entry account for such shares of Common Stock that shall so become outstanding or shall
be transferred or exchanged after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date shall also be deemed to include the associated Rights, and the direct
registration transaction advice with respect to such shares shall bear a legend in substantially
the following form:

     Each security covered by this Advice entitles the holder thereof to certain
Rights as set forth in the Rights Agreement between Encore Acquisition Company (the
“Company”) and Mellon Investor Services LLC (the “Rights Agent”) dated as of October
28, 2008 as it may from time to time be

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supplemented or amended (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 may be redeemed,
may be exchanged, may expire or may be evidenced by separate certificates or be
covered by separate book-entry credits and will no longer be covered by this Advice
or be evidenced by a certificate representing a security covered by this Advice.
The Company will mail to the holder of the security covered by this Advice 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 beneficially owned by or transferred to any Person
who is, was or becomes an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), and certain transferees thereof,
will become null and void and will no longer be transferable.

With respect to such shares of Common Stock described in this Section 3(c), until the earlier of
the Distribution Date or the Expiration Date, the Rights associated with the Common Stock
represented by such certificates or held in such book-entry accounts shall be evidenced by such
certificates or such book-entry accounts (together with the direct registration transaction advice
with respect to such shares) alone, and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any shares of Common Stock,
whether by transfer of physical certificates or book-entry transfer, shall also constitute the
transfer of the Rights associated with the Common Stock.

          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), when, as and if issued, shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, immunities, duties or responsibilities of the Rights Agent) and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or quotation system on which the Rights may from time to time be listed or
quoted, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever issued, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of
Fractional Shares of Preferred Stock as shall be set forth therein at the price set forth
therein (such exercise price per Fractional Share (or, as set forth in this Agreement, for other
securities), the “Purchase Price”), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided
herein.

          (b) The Company shall cause any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by a Person described in the first sentence of
Section 7(e), and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any such

-10-

 

Rights, to contain (to the extent
feasible) a legend in substantially the following form, modified as applicable to apply to such
Person:

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 [will] [have] become null
and void in the circumstances and with the effect 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 on any such Rights Certificate. The Company shall give notice to the Rights
Agent promptly after it becomes aware of the existence of any Acquiring Person or any Associate or
Affiliate thereof.

          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 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; and any Rights Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

          (b) Following the Distribution Date, receipt by the Rights Agent of notice to that effect and
all other relevant information referred to in Section 3(a), the Rights Agent will
keep or cause to be kept, at its office designated 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 certificate number and the date of each of the Rights Certificates.

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

          (a) Subject to the provisions of Section 4(b), Section 7(e), Section 13(d), Section 14 and
Section 24 hereof, at any time after the Close of Business on the Distribution

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Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number of Fractional Shares
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 Rights Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at
the office of the Rights Agent designated for such purpose. The Rights Certificates are
transferable only on the books of the Rights Agent. Neither the Rights Agent nor the Company shall
be obligated to take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have properly completed and duly signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof or of the Affiliates or Associates thereof and of the Rights evidenced
thereby as the Company or the Rights Agent shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e), Section 13(d), Section 14 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, registered in such name or names as may be designated by the
surrendering registered holder. The Company may require payment by the holder of a sum sufficient
to cover any tax or charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Rights Certificates. The Rights Agent shall have no duty or obligation
with respect to a particular Rights holder under any Section of this Agreement which requires the
payment by such Rights holder of applicable taxes and charges unless and until it is satisfied that
such taxes or charges have been paid.

          (b) Upon receipt by the Company and the Rights Agent of evidence 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 satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company will, subject to Section
4(b), Section 7(e), Section 13(d), Section 14 and Section 24, execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.

          Section 7. Exercise of Rights; Purchase Price.

          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a) 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 properly completed and 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 Fractional Shares of Preferred Stock (or other

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securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or
prior to the Expiration Date.

          (b) The Purchase Price for each Fractional Share of Preferred Stock pursuant to the exercise
of a Right shall initially be $120.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c)
below.

          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per Fractional Share of
Preferred Stock (or other securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable tax or charge, 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 Fractional Shares 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, in its sole discretion, shall have elected to deposit the shares
of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing interests in such number of
Fractional Shares 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) requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be designated by such holder
and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified check, cashier’s
or official bank check or bank draft payable to the order of the Company or the Rights Agent. 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) or Section 13(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 exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be issued.

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

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          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by or transferred to (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person other than any such Person
that became such pursuant to a Permitted Offer and the Board of Directors in good faith determines
was not involved in and did not cause or facilitate, directly or indirectly, such Triggering Event,
(ii) a direct or indirect transferee of such Rights from such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after such Triggering Event or (iii) a direct or
indirect transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Triggering Event and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from such Acquiring Person (or such
Affiliate or Associate) to holders of equity interests in such Acquiring Person (or such Affiliate
or Associate) or to any Person with whom such Acquiring Person (or such Affiliate or Associate) has
any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company determines is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise,
and such Rights shall not be transferable. 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
Company nor the Rights Agent shall have any liability to any holder of Rights Certificates or 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.

          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) properly completed and duly signed 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
canceled Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

-14-

 

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

          (b) So long as any 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 are listed on any national securities exchange or quoted on any trading system, the Company
shall use its best efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange, or quoted on such system, upon
official notice of issuance upon such exercise. Following the occurrence of a Triggering Event,
the Company will use its best efforts to list (or continue the listing of) the Rights and the
securities issuable and deliverable upon the exercise of the Rights on one or more national
securities exchanges or to cause the Rights and the securities purchasable upon exercise of the
Rights to be reported by such other transaction reporting system then in use.

          (c) The Company shall use its best efforts to (i) prepare and file, as soon as practicable
following the first occurrence of a Flip-In Event or, if applicable, as soon as practicable
following the earliest date after the first occurrence of a Flip-In Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii) hereof), a registration
statement on an appropriate form under the Securities Act with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective
upon filing or 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
Securities 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. 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 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. In addition, if
the Company shall determine that the Securities Act requires an effective registration statement
under the Securities Act following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as such a registration statement has been declared or
become effective. Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. The Company shall notify the
Rights Agent whenever it makes a public announcement pursuant to this Section 9(c) and give the
Rights Agent a copy of such announcement. 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

-15-

 

exercise thereof shall not be permitted under
applicable law or any required registration statement shall not have been declared or become
effective.

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

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

          Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for a number of
Fractional Shares 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 shares (fractional or otherwise) 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 holder of a Rights Certificate, as such,
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 or other securities subject

-16-

 

to purchase upon exercise
of 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 Rights Dividend
Declaration Date (A) declare a dividend on the outstanding shares of Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding shares of Preferred Stock,
(C) combine the outstanding shares of Preferred Stock into a smaller number of shares or (D)
otherwise reclassify the outstanding shares of 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 or other securities, as
the case may be, issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or
capital stock or other securities, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or reclassification. If an
event occurs that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.

     (ii) Subject to Sections 23 and 24 of this Agreement, in the event any Person shall, at
any time after the Rights Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of shares of Common Stock pursuant to a Permitted
Offer (provided that this clause (2) shall cease to apply if such Acquiring Person
thereafter becomes the Beneficial Owner of any additional shares of Common Stock other than
pursuant to such Permitted Offer or a transaction set forth in Section 13(a) or 13(d)
hereof), then (x) the Purchase Price shall be adjusted to be the Purchase Price immediately
prior to the first occurrence of a Flip-In Event multiplied by the number of Fractional
Shares of Preferred Stock for which a Right was exercisable immediately prior to such first
occurrence and (y) each holder of a Right (except as provided below in Section 11(a)(iii)
and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price in accordance with the terms of this
Agreement, in lieu of the shares of Preferred Stock otherwise purchasable thereunder, such
number of shares of Common Stock of the Company as shall equal the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per share of Common Stock on
the date of such first occurrence (such number of shares, the “Adjustment Shares”); provided
that the Purchase Price and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after the date of such first
occurrence.

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     (iii) In the event that the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company shall, to the extent permitted by applicable law and regulation, (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right
(computed using the Current Market Price used to determine the number of Adjustment Shares)
(the “Current Value”) over (2) the Purchase Price (such excess is herein referred to as the
“Spread”), and (B) with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon the exercise of the Rights 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 (including, without limitation, the Preferred Stock) that the Board of
Directors of the Company has determined to have the same value as shares of Common Stock
(such shares of preferred stock are herein 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, where such aggregate value
has been determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within 30 days following the later of (x) the first
occurrence of a Flip-In Event and (y) the date on which the Company’s right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the
“Flip-In Trigger Date”), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent necessary, but not more
than 90 days after the Flip-In Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period, as it may be
extended, the “Substitution Period”). To the extent that the Company or the Board of
Directors determines that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the appropriate form
of distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect (with prompt
written notice of each such announcement to the Rights Agent). For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Flip-In Trigger Date and the

-18-

 

value of any Common Stock Equivalent shall
be deemed to have the same value as the Common Stock on such date.

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

          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing 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 per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the

-19-

 

Purchase Price shall be adjusted to be
the Purchase Price that 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 of a Person on any
date shall be deemed to be the average of the daily Closing Prices per share of such Common Stock
for the 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 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 Common Stock is determined during a period following the announcement of (A) a dividend or
distribution on such Common Stock other than a regular quarterly cash dividend or the dividend of
the Rights, or (B) any subdivision, combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, shall not have occurred prior to the commencement of the requisite
30 Trading Day or 10 Trading Day period, as set forth above, then, and in each such case, the
Current Market Price shall be properly adjusted to take into account ex-dividend trading. 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 of the
Company, whose determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.

          (ii) For the purpose of any computation hereunder, the “Current Market Price” per share (or
Fractional Share) of Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the
Current Market Price per share (or Fractional 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 100 (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 of the Company, 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 a Fractional Share of Preferred Stock shall be equal to the Current Market
Price of one share of Preferred Stock divided by 100.

          (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 1% in the
Purchase Price; provided, however, that any adjustments that by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other share or to the nearest ten-

-20-

 

thousandth
of a Fractional Share of Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.

          (f) If as a result of an adjustment made pursuant to Section 11(a) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive in respect of such
Right 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), (f),
(g), (h), (i), (j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such other shares.

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

          (h) Unless the Company shall have exercised its election as provided in Section 11(i) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b)
and (c) hereof, 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
Fractional Shares of Preferred Stock (calculated to the nearest one ten-thousandth of a Fractional
Share) obtained by (i) multiplying (x) the number of Fractional Shares of Preferred Stock covered
by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase Price.

          (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in lieu of any adjustment in the number of Fractional Shares of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of Fractional Shares of
Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public announcement (with prompt
written notice to the Rights Agent) of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 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

-21-

 

record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued,
executed and delivered by the Company, and countersigned and delivered by the Rights Agent, in the
manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of 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 Fractional
Shares 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 Fractional Share
and the number of Fractional Shares that 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, or the stated capital of the number of Fractional Shares of Preferred
Stock or of the number of shares of Common Stock or other securities issuable upon exercise of a
Right, the Company shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and nonassessable such
number of Fractional Shares of Preferred Stock or such number of shares of Common Stock or other
securities at such adjusted Purchase Price.

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

          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
that 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

-22-

 

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

          (n) The Company covenants and agrees that it shall not, at any time that there is an Acquiring
Person, (i) consolidate with any other Person, (ii) merge with or into any other Person or (iii)
sell, lease or transfer (or permit one or more Subsidiaries to sell, lease or transfer), in one
transaction or a series of related transactions, assets, earning power or cash flow aggregating
more than 50% of the assets, earning power or cash flow of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger, sale, lease or transfer there are any rights, warrants or other instruments
or securities of the Company or any other Person outstanding or agreements, arrangements or
understandings in effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale, lease or transfer, the stockholders or other equity owners of the
Person who constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates, or (z) the identity, form or nature of organization of the Principal
Party (including, without limitation, the selection of the Person that will be the Principal Party
as a result of the Company’s entering into one or more consolidations, mergers, sales, leases or
transfers with more than one party) would preclude or limit the exercise of Rights or otherwise
diminish substantially or eliminate the benefits intended to be afforded by the Rights.

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

          (p) Notwithstanding Section 3(c) hereof or any other provision of this Agreement to the
contrary, in the event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding shares of Common Stock into a
smaller number of shares or (iv) otherwise reclassify the outstanding shares of Common Stock
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter with Rights, 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 “Adjustment 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. In lieu of such adjustment in the number of Rights associated with one
share of Common Stock, the Company may elect to adjust the number of Fractional Shares of Preferred
Stock purchasable, and the amount payable, upon the 

-23-

 

exercise of one Right. If the Company makes
such election, the number of Rights associated with one share of Common Stock shall remain
unchanged, and the number of Fractional Shares of Preferred Stock purchasable upon exercise of one
Right and the portion of the Purchase Price payable upon exercise of one Right shall be
proportionately adjusted so that (i) the number of Fractional Shares of Preferred Stock purchasable
upon exercise of a Right following such adjustment shall equal the product of the number of
Fractional Shares of Preferred Stock purchasable upon exercise of a Right immediately prior to such
adjustment multiplied by the Adjustment Fraction and (ii) the Purchase Price per Fractional Share
of Preferred Stock following such adjustment shall remain unchanged, with the effect that the
amount payable to exercise each Right will be changed to be equal the product of the Purchase Price
immediately prior to such adjustment multiplied by the Adjustment Fraction.

          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is
made or any event affecting the Rights or their exercisability (including without limitation an
event which causes Rights to become null and void) occurs as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment or
describing such event and a brief, reasonably detailed statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate and (c) mail a brief summary thereof to each
registered holder of a Rights Certificate (or, if prior to the Distribution Date, to each
registered holder of a certificate representing shares of Common Stock) in accordance with Section
26 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any
adjustment or statement therein contained and shall have no duty or liability with respect to, and
shall not be deemed to have knowledge of, any adjustment or any such event unless and until it
shall have received such certificate.

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

          (a) In the event that, from and after the time an Acquiring Person has become such, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, and the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such consolidation or merger,
and, in connection with such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities of the Company or any
other Person or cash or any other property, or (z) the Company shall sell, lease or otherwise
transfer (or one or more of its Subsidiaries shall sell, lease or otherwise transfer), in one
transaction or a series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons (other than the Company or any wholly owned Subsidiary of the
Company or any combination thereof in one or more transactions each of which complies (and all of
which together comply) with Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so that: (i) the Purchase
Price shall be adjusted to be the Purchase Price immediately prior to the first occurrence of a
Triggering Event multiplied by the number of Fractional Shares of Preferred Stock for which a Right
was exercisable immediately prior to such

-24-

 

first occurrence; (ii) on and after the Distribution
Date, 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 Purchase Price in accordance with the terms of
this Agreement, in lieu of shares of Preferred Stock or Common Stock of the Company, such number of
validly authorized and issued, fully paid, nonassessable 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 dividing the Purchase Price by 50% of the Current Market Price per share of the Common
Stock of such Principal Party on the date of consummation of such Flip-Over Event; 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 this Agreement to reflect any
events occurring after the date of such first occurrence of a Triggering Event or after the date of
such Flip-Over Event, as applicable; (iii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Flip-Over Event, all the obligations and duties of the Company
pursuant to this Agreement; (iv) 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 Flip-Over Event; (v) 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 (vi) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the occurrence of any Flip-Over Event.

          (b)
“Principal Party” shall mean:

     (i)
in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Stock of which has the greatest aggregate
market value, or (B) if no securities are so issued, (x) the Person that
survives such consolidation or is the other party to the merger and survives such
merger, or, if there is more than one such Person, the Person the Common Stock of which has
the greatest aggregate market value or (y) 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); 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,
cash flow 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, cash flow or earning power so transferred, or if the Person receiving the
greatest portion of the assets, cash flow or earning power cannot be determined, the Person
the Common Stock of which has the greatest aggregate market value;

provided, however, that in any such case, if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve-month period registered under

-25-

 

Section 12 of
the Exchange Act, and if (1) 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) such Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of all of which are and have been so registered, “Principal Party” shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market
value; and (3) 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 Flip-Over Event unless each Principal Party (or
Person that may become a Principal Party as a result of such Flip-Over Event) shall have a
sufficient number of authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after the date of such
Flip-Over Event, the Principal Party at its own expense will:

     (i) prepare and file a registration statement under the Securities Act with respect to
the Rights and the securities purchasable upon exercise of the Rights on an appropriate
form, 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 Securities Act) until the Expiration
Date;

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

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

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

The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Flip-Over Event shall occur at any time after the

-26-

 

occurrence of a Flip-In Event, the Rights that have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).

          (d) Notwithstanding anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons 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 holders of Common Stock whose shares were purchased pursuant to such Permitted
Offer, and (iii) the form of consideration being offered to the remaining 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(p) hereof, or to distribute Rights Certificates or
scrip evidencing fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the Closing Price of one
Right for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that are integral multiples of a
Fractional Share of Preferred Stock) upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Preferred Stock (other than, except as
provided in Section 7(c) hereof, fractions that are integral multiples of a Fractional Share
of Preferred Stock). Interests in fractions of shares of Preferred Stock in integral multiples of a
Fractional Share of Preferred Stock may, at the election of the Company in its sole discretion, be
evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of a
Fractional Share of Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of one one-hundredth of the Closing Price of a share of Preferred Stock for the
Trading Day immediately prior to the date of such exercise.

          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to

-27-

 

the same fraction of the Closing Price of
one share of Common Stock for the Trading Day immediately prior to the date of such exercise.

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

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

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

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

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

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

-28-

 

and with the form of
assignment set forth on the reverse side thereof and the certificate contained therein properly
completed and duly executed;

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

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

          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 Fractional Shares of Preferred Stock or any other securities of the Company that may
at any time be issuable upon the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the
provisions hereof.

          Section 18. Concerning the Rights Agent.

          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation, delivery, amendment,
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, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of legal counsel) incurred
without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which
gross negligence, bad faith, or willful misconduct must be determined by a final, non-appealable
judgment of a court of competent jurisdiction) for

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anything done or omitted by the Rights Agent in
connection with the acceptance, administration, exercise, and performance of its duties under this
Agreement, including the costs and expenses of defending against any claim of liability in the
premises. The costs and expenses incurred in enforcing this right of indemnification shall be paid
by the Company. The provisions of this Section 18 and Section 20 below shall survive the
termination of this Agreement, the exercise, termination or expiration of the Rights and the
resignation, replacement or removal of the Rights Agent.

          (b) The Rights Agent may conclusively rely upon and shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement and the exercise and
performance of its duties hereunder, in reliance upon any Rights Certificate or certificate for the
Preferred Stock or 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, guaranteed, verified or acknowledged, by the proper Person or
Persons. The Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and
shall incur no liability for failing to take action in connection therewith unless and until it has
received such notice in writing.

          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 shareholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties hereto; provided,
however, 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 or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

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

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

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

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “Current Market Price”) be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by
it in the absence of bad faith 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 (which gross negligence, bad faith, or
willful misconduct must be determined by a final, non-appealable judgment of a court of competent
jurisdiction). In no event shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action. Any liability of the Rights Agent under this Agreement will
be limited to the amount of annual fees paid by the Company to the Rights Agent.

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

          (e) The Rights Agent shall not have any liability for or be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights (including the
Rights becoming null and void) or any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such

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change or adjustment
or the ascertaining of the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after receipt of actual
knowledge 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 Preferred Stock
or Common Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or Common 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 the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions
in connection with its duties and such instructions shall be full authorization and protection to
the Rights Agent and the Rights Agent shall not be liable for or in respect of any action taken,
suffered or omitted to be taken by it in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions. The Rights Agent shall be fully
authorized and protected in relying upon the most recent instructions received by any such officer.
Any application by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to
be taken, suffered or omitted by the Rights Agent under this Agreement and the date on and/or
after which such action shall be taken or suffered or such omission shall be effective. The Rights
Agent shall not be liable for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have consented in writing
to an earlier date) unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.

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

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

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default, neglect or
misconduct absent gross negligence or bad faith in the selection and continued employment thereof
(which gross negligence or bad faith must be determined by a final, non-appealable judgment of a
court of competent jurisdiction).

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

          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been properly 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 30 days’ notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and the Preferred Stock, by registered or
certified mail, and to the registered holders, if any, of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent (with or without
cause) upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Stock and the Preferred Stock, by
registered or certified
mail, and to the registered holders of the Rights Certificates, if any, by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. Notwithstanding the foregoing provisions of
this Section 21, in no event shall the resignation or removal of a Rights Agent be effective until
a successor Rights Agent shall have been appointed and have accepted such appointment. If the
Company shall fail to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the registered holder of a Rights Certificate (who shall, with
such notice, submit such holder’s Rights Certificate for inspection by the Company), then the
Rights Agent or the registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a Person organized and doing business
under the laws of the United States or any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a Person described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the registered

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holders, if any, of
the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.

          Section 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by 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 Expiration Date, 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 on or prior to 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 of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided, however, that
(i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would be issued, and
(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.

          (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the Close of Business on the tenth day following the first date of public announcement of
the occurrence of a Flip-In Event (or, if such date shall have occurred prior to the Record Date,
the Close of Business on the tenth day following the Record Date) (in either event, subject to
acceleration to such earlier date as may be determined by the Company’s Board of Directors as set
forth below) and (ii) the Expiration Date, cause the Company to redeem all but not less than all
the then outstanding Rights at a redemption price of $0.01 per Right, as such amount may be
appropriately adjusted, if necessary, to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however, that if there is an
Acquiring Person the Rights may not be redeemed (i) if from and after the time a Person became an
Acquiring Person, an Acquiring Person has caused the composition of the Board of Directors to be
changed with the result that a majority of its members are representatives, nominees, designees,
Affiliates or Associates of an Acquiring Person (including the Acquiring Person as a designee of
the Acquiring Person), or (ii) following any merger to which the Company is a party that (i) occurs
when there is an Acquiring Person and (ii) was not approved (x) prior to the time such Person
became an Acquiring Person by the Board of Directors of the Company and (y) prior to such merger by
the stockholders of the Company at a stockholders’ meeting (and not by written consent).
Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Flip-In Event until such time as the

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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
Board of Directors of the Company may, to the extent set forth in the first sentence of this
Section 23(a), irrevocably accelerate the time set forth in clause (i) of such sentence to a
specified earlier time or to an unspecified earlier time to be determined by a subsequent action or
event (but in no event to a time later than the time otherwise specified in clause (i)), in which
event the Rights shall not be redeemable from and after such specified time.

          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights (the effectiveness of which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may be effective at
some future time), evidence of which shall be filed with 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 effectiveness of the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and
the registered holders of the then outstanding Rights by mailing such notice to all such holders at
each holder’s last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made.

          Section 24. Exchange.

          (a) The Board of Directors of the Company may, at its option, at any time and from time to
time after the occurrence of a Flip-In Event, 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 or Common Stock Equivalents or any
combination thereof, at an exchange ratio of one share of Common Stock, or such number of Common
Stock Equivalents or units representing fractions thereof as would be deemed to have the same value
as one share of Common Stock, per Right, appropriately adjusted, if necessary, to reflect any stock
split, stock dividend or similar transaction occurring after the Rights Dividend Declaration Date
(such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board of Directors may not effect such exchange at any time after (i) any Person
(other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the shares of Common Stock then outstanding or (ii) the
occurrence of a Flip-Over Event.

          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to and in accordance with subsection (a) of this
Section 24 (the effectiveness of which action may be conditioned on the occurrence of one or more
events or on the existence of one or more facts or may be effective at some future time) and
without any further action and without any notice, the right to exercise

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such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock and/or Common Stock Equivalents equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of
any such exchange (with prompt written notice thereof to the Rights Agent); provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the registered holders of
such Rights at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock and/or Common Stock Equivalents for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected as nearly pro rata as possible based on the number of Rights
(other than Rights that 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 the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit an
exchange of Rights as contemplated in accordance with this Section 24, the Company may, at its
option, take all such action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.

          (d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates or scrip evidencing fractional shares of Common Stock upon exchange of the
Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights 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 value of a whole share of Common
Stock. For purposes of this Section 24, the value of a whole share of Common Stock shall be the
Closing Price per share of Common Stock for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.

          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 wholly owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), or to effect any sale, lease or other
transfer of all or substantially all the Company’s assets, cash flow or earning power to any other
Person or Persons (other than a wholly owned Subsidiary of the Company in a transaction that
complies

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with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to the Rights Agent and to each holder
of record of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, lease, 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 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 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. The
failure to give notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any such action.

          (b) In case any Flip-In Event or Flip-Over Event shall occur, then (i) the Company shall as
soon as practicable thereafter give to each registered holder of a Rights Certificate (or if
occurring prior to the Distribution Date, the registered holders of Common Stock), 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) or Section 13(a) 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.

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

Encore Acquisition Company

777 Main Street, Suite 1400

Fort Worth, Texas 76102

Attention: President

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

Mellon Investor Services LLC

600 N. Pearl Street, Suite 1010

Dallas , TX 75201

Attention: Relationship Manager

With a copy to:

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Mellon Investor Services LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, NJ 07310

Attention: General Counsel

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

          Section 27. Supplements and Amendments. Except as provided in the last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement in any respect without the
approval of any holders of Rights or holders of Common Stock. At any time when the Rights are not
redeemable, except as provided in the last sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein that may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent;
provided that no such amendment or supplement shall materially adversely affect the interests of
the holders of Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person); and further provided that this Agreement may not be supplemented or amended pursuant to
this sentence to lengthen (A) a time period relating to when the Rights may be redeemed or (B) any
other time period unless the lengthening of such other time period is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than any Acquiring Person and its Affiliates and Associates). Upon the delivery of a
certificate from an appropriate officer of the Company, and, if requested by the Rights Agent, an
opinion of counsel, which states that the proposed supplement or amendment is in compliance with
the terms of this Section 27, the Rights Agent shall execute such supplement or amendment;
provided, however, that the Rights Agent may, but shall not be obligated to, enter into any such
supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement, and the Rights Agent shall not be bound by any such supplement or
amendment. Notwithstanding anything contained in this Agreement to the contrary, no supplement or
amendment shall be made that decreases the Redemption Price.

          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

-38-

 

percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. The Board of Directors of the Company (or, as set forth
herein, certain specified members thereof) 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 of the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to
amend this Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) that are
done or made by the Board of Directors of the Company in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights, as such, and all other
parties, and (y) not subject the Board of Directors to any liability to the holders of the Rights.
The Rights Agent is entitled always to assume the Company’s Board of Directors acted in good faith
and shall be fully protected and incur no liability in reliance thereon.

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

          Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated; provided,
however, that if such excluded provision shall effect the rights, immunities, duties or obligations
of the Rights Agent, the Rights Agent, subject to and in compliance with the terms of Section 21 of
this Agreement, shall be entitled to resign; provided, further, 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, then, unless there is an
Acquiring Person and there has occurred either a change in composition of the Board of Directors or
a merger in either case of the type referred to in the proviso to the first sentence of Section
23(a), the right of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such determination by the
Board of Directors of the Company or, if earlier, immediately prior to any such merger. Without
limiting the foregoing, if any provision requiring that a determination be made by less than the
entire Board of Directors of the Company 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 entire
Board of Directors of the Company.

-39-

 

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

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

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

-40-

 

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

	 	 	 	 	 	 	 
	 	 	ENCORE ACQUISITION COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Robert C. Reeves	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert C. Reeves	 	 
	 	 	Title: Senior Vice President, Chief Financial
Officer, Treasurer and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	MELLON INVESTOR SERVICES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Barbara J. Robbins	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Barbara J. Robbins	 	 
	 	 	Title: Vice President	 	 

-41-

 

Exhibit A

FORM OF

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

ENCORE ACQUISITION COMPANY

Pursuant to Section 151 of the General Corporation Law

of the State of Delaware

          ENCORE ACQUISITION COMPANY, a corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:

          That pursuant to the authority vested in the Board of Directors in accordance with the
provisions of the Second Amended and Restated Certificate of Incorporation of the said Corporation,
the said Board of Directors on October 28, 2008 adopted the following resolution creating a series
of 1,440,000 shares of Preferred Stock designated as “Series A Junior Participating Preferred Stock”:

     RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of the Second Amended and
Restated Certificate of Incorporation, a series of Preferred Stock, par value $0.01
per share, of the Corporation be and hereby is created, and that the designation and
number of shares thereof and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:

Series A Junior Participating Preferred Stock

          1. Designation and Amount. There shall be a series of Preferred Stock that shall be designated as
“Series A Junior Participating Preferred Stock,” and the number of shares constituting such series
shall be 1,440,000. Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, however, that no decrease shall reduce the number of shares of  Series A
Junior Participating Preferred Stock to less than the number of shares then issued and outstanding
plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.

          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 Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior Participating

A-1

 

Preferred
Stock, in preference to the holders of shares of any class or series of stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally available for the purpose,
(1) quarterly dividends payable in cash on the 15th day of March, June, September and December in
each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all cash dividends, and (2) the Adjustment
Number times the aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value $0.01 per share, of the Corporation (the “Common Stock”) since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The “Adjustment Number” shall initially be 100. In the event the Corporation
shall at any time after October 28, 2008 (the “Rights Declaration Date”) (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.

          (B) The Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

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

A-2

 

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

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

          (A) Each share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters submitted to a vote of
the stockholders of the Corporation.

          (B) Except as otherwise provided herein, in the Second Amended and Restated Certificate of
Incorporation or by law, the holders of shares of Series A Junior Participating Preferred Stock,
the holders of shares of any other class or series entitled to vote with the Common Stock and the
holders of shares of Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.

          (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a “default period”) that shall
extend until such time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, (1) the number of Directors shall be increased by two,
effective as of the time of election of such Directors as herein provided, and (2) the holders of
Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) upon which
these or like voting rights have been conferred and are exercisable (the “Voting Preferred Stock”)
with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such two Directors.

          (ii) During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Voting Preferred Stock of such voting right.

          (iii) Unless the holders of Voting Preferred Stock shall, during an existing default period,
have previously exercised their right to elect Directors, the Board of Directors
may order, or any stockholder or stockholders owning in the aggregate not less than ten
percent of the total number of shares of Voting Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of Voting Preferred Stock,
which meeting shall thereupon be called by the Chairman of the Board, the Chief Executive Officer,
the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of

A-3

 

any annual meeting at which holders of Voting Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Voting Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after
such order or request or, in default of the calling of such meeting within 60 days after such order
or request, such meeting may be called on similar notice by any stockholder or stockholders owning
in the aggregate not less than ten percent of the total number of shares of Voting Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting
shall be called during the period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.

          (iv) In any default period, after the holders of Voting Preferred Stock shall have exercised
their right to elect Directors voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their successors shall have been elected by
such holders or until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors theretofore elected by the
holders of the class or classes of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.

          (v) Immediately upon the expiration of a default period, (x) the right of the holders of
Voting Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Second Amended and Restated
Certificate of Incorporation or By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Second Amended and Restated Certificate of
Incorporation or By-Laws). Any vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.

          (D) Except as set forth herein, holders of Series A Junior Participating 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.

          4. Certain Restrictions.

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

          (i) declare or pay dividends on, make any other distributions on, or redeem or purchase
or otherwise acquire for consideration any shares of stock ranking

A-4

 

junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;

          (ii) declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating 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; or

          (iii) redeem or purchase or otherwise acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to all holders
of Series A Junior Participating Preferred Stock, or to all such holders and the holders of
any such shares ranking on a parity therewith, 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.

          5. Reacquired Shares. Any shares of Series A Junior Participating 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
any conditions and restrictions on issuance set forth herein.

          6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the date of such
payment (the “Series A Junior Participating Preferred Stock Liquidation Preference”). Following the
payment of the full amount of the Series A Junior Participating Preferred Stock Liquidation
Preference, no additional distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall
have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by
dividing (i) the Series A Junior Participating Preferred Stock Liquidation Preference by (ii) the
Adjustment Number. Following the payment of the full amount of the Series A Junior Participating
Preferred Stock Liquidation Preference

A-5

 

and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall, subject
to the prior rights of all other series of Preferred Stock, if any, ranking prior thereto, receive
their ratable and proportionate share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Series A Junior Participating Preferred Stock and
Common Stock, on a per share basis, respectively.

          (B) In the event, however, that there are not sufficient assets available to permit payment in
full of the Series A Junior Participating Preferred Stock Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, that rank on a parity with
the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably
to the holders of Common Stock.

          (C) Neither the merger or consolidation of the Corporation into or with another corporation
nor the merger or consolidation of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 6, but the sale, lease or conveyance of all or substantially all the Corporation’s assets
shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.

          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 each share of
Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to the Adjustment Number 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.

          8. Redemption. (A) The Corporation, at its option, may redeem shares of the Series A Junior Participating
Preferred Stock in whole at any time and in part from time to time, at a redemption price equal to
the Adjustment Number times the current per share market price (as such term is hereinafter
defined) of the Common Stock on the date of the mailing of the notice of redemption, together with
unpaid accumulated dividends to the date of such redemption. The “current per share market price” on
any date shall be deemed to be the average of the closing price per share of such Common Stock for
the ten consecutive Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market price of the Common
Stock is determined during a period following the announcement of (A) a dividend or distribution on
the Common Stock other than a regular quarterly cash dividend or (B) any subdivision, combination
or reclassification of such Common Stock and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification, shall not
have occurred prior to the commencement of such ten Trading Day period, then, and in each such
case, the current per

A-6

 

share market price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sales 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 transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by such other self-regulatory organization
or registered securities information processor (as such terms are used under the Securities
Exchange Act of 1934, as amended) that then reports information concerning the Common Stock, or, if
sales price information is not so reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by such other entity, or, if on any such date the
Common Stock is not quoted by any such entity, 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 of the Corporation. If on any such date no such market maker is making a market in
the Common Stock, the fair value of the Common Stock on such date as determined in good faith by
the Board of Directors of the Corporation shall be used. The term “Trading Day” shall mean a day
on which the principal national securities exchange on which the Common Stock is listed or admitted
to trading is open for the transaction of business, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange but is quoted by such a self-regulatory
organization or registered securities information processor, a day on which such entity reports
trades, or, if the Common Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of New York are not authorized or obligated by law or
executive order to close.

          (B) In the event that fewer than all the outstanding shares of the Series A Junior
Participating Preferred Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be determined by lot or
pro rata as may be determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.

          (C) Notice of any such redemption shall be given by mailing to the holders of the shares of
Series A Junior Participating Preferred Stock to be redeemed a notice of such redemption, first
class postage prepaid, not later than the fifteenth day and not earlier than the sixtieth day
before the date fixed for redemption, at their last address as the same shall appear upon the books
of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the number of
shares to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place
or places where certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue on the close of
business on such redemption date. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the stockholder received such notice,
and failure duly to give such notice by mail, or any defect in such notice, to any holder of Series
A Junior Participating Preferred Stock shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Junior Participating Preferred Stock that are to be
redeemed. On or after the date fixed for redemption as stated in such notice,

A-7

 

each holder of the
shares called for redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be entitled to receive
payment of the redemption price. If fewer than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

The shares of Series A Junior Participating Preferred Stock shall not be subject to the operation
of any purchase, retirement or sinking fund.

          9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other
series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide otherwise, and shall rank senior to the
Common Stock as to such matters.

          10. Amendment. At any time that any shares of Series A Junior Participating Preferred Stock are
outstanding, the Second Amended and Restated Certificate of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating 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 Junior Participating Preferred Stock, voting separately as a class.

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

          IN WITNESS WHEREOF, the undersigned has executed this Certificate and does affirm the
foregoing as true this 28th day of October, 2008.

	 	 	 	 	 
	 

	 	 

Jon S. Brumley
	 	 
	 

	 	Chief Executive Officer and President	 	 

A-8

 

Exhibit B

[Form of Rights Certificate]

Certificate No. R-

 ________ Rights

NOT EXERCISABLE AFTER OCTOBER 28, 2011 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Rights Certificate

ENCORE ACQUISITION COMPANY

          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 October 28, 2008 as it may
from time to time be supplemented or amended (the “Rights Agreement”), between Encore Acquisition
Company, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey
limited liability company (the “Rights Agent”), to purchase from the Company at any time prior to
5:00 p.m. (New York, New York time) on October 28, 2011 at the office of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid,
nonassessable share (a “Fractional Share”) of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the “Preferred Stock”), of the Company, at a purchase price of $120.00 per
one one-hundredth of a share (the “Purchase Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate set forth on the reverse
hereof duly executed. The Purchase Price may be paid in cash or by certified check, cashier’s or
official bank check or bank draft payable to the order of the Company or the Rights Agent. The
number of Rights evidenced by this Rights Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per Fractional Share set
forth above, are the number and Purchase Price as of October 28, 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.

          From and after the first occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by or
transferred to (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the

B-1

 

Rights Agreement, a transferee of a person who, concurrently with or after such transfer,
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such Rights shall,
with certain exceptions, become null and void in the circumstances set forth in the Rights
Agreement, and no holder hereof shall have any rights whatsoever with respect to such Rights from
and after the occurrence of such Triggering Event.

          As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities or assets that may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.

          This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written request to the
Company or 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 Fractional Shares of Preferred Stock as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to
purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.

          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at its option at a redemption price of $0.01 per Right, payable,
at the election of the Company, in cash or shares of Common Stock or such other consideration as
the Board of Directors may determine, at any time prior to the earlier of the Close of Business on
(a) the tenth day following the first public announcement of the occurrence of a Flip-In Event (as
such time period may be extended or shortened pursuant to the Rights Agreement) and (b) the
Expiration Date (as such term is defined in the Rights Agreement) or (ii) may be exchanged in whole
or in part for shares of Common Stock and/or other equity securities of the Company deemed to have
the same value as shares of Common Stock, at any time prior to a person’s becoming the beneficial
owner of 50% or more of the shares of Common Stock outstanding or the occurrence of a Flip-Over
Event.

          No fractional shares of Preferred Stock are required to be issued upon the exercise of any
Right or Rights evidenced hereby (other than, except as set forth above, fractions that are
integral multiples of a Fractional Share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.

B-2

 

          No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of
the Company that may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of
the rights of a stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this 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 November 7, 2008

	 	 	 	 	 
	ATTEST:	 	ENCORE ACQUISITION COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	Secretary

	 	 	 	Title:
	 
	 	 	 	 
	Countersigned:
	 	 	 	 
	 
	 	 	 	 
	MELLON SINVESTOR SERVICES LLC
	 	 	 	 

	 	 	 	 	 
	By
	 	 	 	 
	 

	 	 

Authorized Signature
	 	 

B-3

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires

to transfer any Rights evidenced by the Rights Certificate.)

FOR VALUE RECEIVED                                              
hereby sells, assigns and transfers
unto                                              

 

(Please print name and address of transferee)

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

Dated:                     , 20___

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

B-4

 

Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

          (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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); and

          (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 or who is a direct
or indirect transferee of an Acquiring Person or of an Affiliate or Associate of an Acquiring
Person.

Dated:                     , 20___

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

NOTICE

          The signatures 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-5

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)

To: ENCORE ACQUISITION COMPANY

          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 that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares (or other securities) be
issued in the name of and delivered to:

Please insert social security

or other identifying number

 

(Please print name and address)

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

Please insert social security

or other identifying number

 

(Please print name and address)

Dated:                     , 20___

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

B-6

 

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); and

          (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 or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an Acquiring Person.

Dated:                     , 20___

	 	 	 	 	 
	 

	 	 

Signature
	 	 

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).

NOTICE

          The signatures 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-7

 

Exhibit C

Under certain circumstances set forth in the Rights Agreement, Rights beneficially owned by or
transferred to any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), and certain transferees thereof, will
become null and void and will no longer be transferable.

SUMMARY OF RIGHTS

          On October 28, 2008, the Board of Directors of Encore Acquisition Company (the “Company”)
declared a dividend of one right (“Right”) for each outstanding share of the Company’s Common
Stock, par value $0.01 per share (“Common Stock”), to stockholders of record at the Close of
Business on November 7, 2008. Each Right entitles the registered holder to purchase from the
Company a unit consisting of one one-hundredth of a share (a “Fractional Share”) of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), at a purchase
price of $120.00 per Fractional Share, subject to adjustment (the “Purchase Price”). The
description and terms of the Rights are set forth in a Rights Agreement dated as of October 28,
2008 as it may from time to time be supplemented or amended (the “Rights Agreement”) between the
Company and Mellon Investor Services LLC, as Rights Agent.

          Initially, the Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders of the Common Stock or, for Common Stock held in book-entry accounts through
the direct registration service of the Company’s transfer agent, by such book-entry accounts
(together with a direct registration transaction advice with respect to such shares), and no
separate certificates for the Rights (“Rights Certificates”) will be distributed. The Rights will
separate from the Common Stock and a “Distribution Date” will occur, with certain exceptions, upon
the earlier of (i) ten days following a public announcement that a person or group of affiliated or
associated persons (an “Acquiring Person”) has acquired, or obtained the right to acquire,
beneficial ownership of 10% or more of the outstanding shares of Common Stock (the date of the
announcement being the “Stock Acquisition Date”), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person’s becoming an
Acquiring Person. In certain circumstances, the Distribution Date may be deferred by the Board of
Directors. Certain inadvertent acquisitions will not result in a person’s becoming an Acquiring
Person if the person promptly divests itself of sufficient Common Stock. If at the time of the
adoption of the Rights Agreement, any person or group of affiliated or associated persons is the
beneficial owner of 10% or more of the outstanding shares of Common Stock, such person shall not
become an Acquiring Person unless and until certain increases in such person’s beneficial ownership
occur or are deemed to occur. Until the Distribution Date, (a) the Rights will be evidenced by the
Common Stock certificates (together with a copy of this Summary of Rights or bearing the notation
referred to below) or, for Common Stock held in book-entry accounts through the direct registration
service of the Company’s transfer agent, by such book-entry accounts (together with a direct
registration transaction advice with respect to such shares), and the Rights will be transferred
with and only with such Common Stock certificates, (b) new Common Stock certificates issued after
November 7, 2008 will contain a notation incorporating the Rights Agreement by reference and
(c) the surrender for transfer of any certificate for Common Stock (with or without a copy of this
Summary of Rights) will also

C-1

 

constitute the transfer of the Rights associated with the Common Stock represented by such
certificate.

          The Rights are not exercisable until the Distribution Date and will expire at the Close of
Business on October 28, 2011, unless earlier redeemed or exchanged by the Company as described
below.

          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Common Stock as of the Close of Business on the Distribution Date and, from
and after the Distribution Date, the separate Rights Certificates alone will represent the Rights.
All shares of Common Stock issued prior to the Distribution Date will be issued with Rights.
Shares of Common Stock issued after the Distribution Date in connection with certain employee
benefit plans or upon conversion of certain securities will be issued with Rights. Except as
otherwise determined by the Board of Directors, no other shares of Common Stock issued after the
Distribution Date will be issued with Rights. In the event the Company elects to distribute any
Rights by crediting book-entry accounts, the provisions described in this summary that reference
Rights Certificates will be interpreted to reflect that the Rights are credits to the book-entry
accounts, that separate Rights Certificates are not issued with respect to some or all of the
Rights, and that any legend required on a Rights Certificate may be placed on the direct
registration transaction advice with respect to certain Rights.

          In the event (a “Flip-In Event”) that a person becomes an Acquiring Person (except pursuant to
a tender or exchange offer for all outstanding shares of Common Stock at a price and on terms that
a majority of the independent directors of the Company determines to be fair to and otherwise in
the best interests of the Company and its stockholders (a “Permitted Offer”)), each holder of a
Right will thereafter have the right to receive, upon exercise of such Right, a number of shares of
Common Stock (or, in certain circumstances, cash, property or other securities of the Company)
having a Current Market Price (as defined in the Rights Agreement) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence of any Triggering
Event, all Rights that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by or transferred to an Acquiring Person (or by certain related parties)
will be null and void in the circumstances set forth in the Rights Agreement. However, Rights are
not exercisable following the occurrence of any Flip-In Event until such time as the Rights are no
longer redeemable by the Company as set forth below.

          In the event (a “Flip-Over Event”) that, at any time from and after the time an Acquiring
Person becomes such, (i) the Company is acquired in a merger or other business combination
transaction (other than certain mergers that follow a Permitted Offer), or (ii) 50% or more of the
Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except
Rights that are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a Current Market Price
equal to two times the exercise price of the Right. Flip-In Events and Flip-Over Events are
collectively referred to as “Triggering Events.”

          The number of outstanding Rights associated with a share of Common Stock, or the number of
Fractional Shares of Preferred Stock issuable upon exercise of a Right and the

C-2

 

Purchase Price, are subject to adjustment in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock occurring prior to the
Distribution Date. The Purchase Price payable, and the number of Fractional Shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution in the event of certain transactions affecting the
Preferred Stock.

          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional shares of Preferred Stock
that are not integral multiples of a Fractional Share are required to be issued upon exercise of
Rights and, in lieu thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.

          At any time until ten days following the first date of public announcement of the occurrence
of a Flip-In Event, the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right, payable, at the option of the Company, in cash, shares of Common Stock or such
other consideration as the Board of Directors may determine. After a person becomes an Acquiring
Person, the right of redemption is subject to certain limitations in the Rights Agreement.
Immediately upon the effectiveness of the 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 $0.01 redemption price. The Rights Agreement does not prevent a stockholder from
conducting a proxy contest to remove and replace the Board with directors who then vote to redeem
the Rights, if such actions are taken prior to the time that such stockholder becomes an Acquiring
Person.

          At any time after the occurrence of a Flip-In Event and prior to a person’s becoming the
beneficial owner of 50% or more of the shares of Common Stock then outstanding or the occurrence of
a Flip-Over Event, the Company may exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person, which will have become null and
void), in whole or in part, at an exchange ratio of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common Stock, per Right, subject to
adjustment.

          Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights should not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above or are exchanged as provided in the
preceding paragraph.

          Other than the redemption price, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company as long as the Rights are redeemable. Thereafter, the
provisions of the Rights Agreement other than the redemption price may be amended by the Board of
Directors in order to cure any ambiguity, defect or

C-3

 

inconsistency, to make changes that do not materially adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption shall be made at such time as the Rights are not redeemable.

          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an exhibit to a Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Company and 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-4exv10w1

Exhibit 10.1

Cash America International, Inc.

Executive Change-in-Control Severance Agreement

     THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered into, and is effective
this 23rd day of October, 2008 (hereinafter referred to as the “Effective Date”), by and
between Cash America International, Inc. (the “Company”), a Texas corporation, and Timothy S. Ho
(“Executive”).

     WHEREAS, the Executive is currently employed by the Company as its President – Internet
Services Division; and

     WHEREAS, the Executive possesses considerable experience and knowledge of the business and
affairs of the Company concerning its policies, methods, personnel, and operations; and

     WHEREAS, the Company is desirous of assuring insofar as possible, that it will continue to
have the benefit of the Executive’s services; and the Executive is desirous of having such
assurances; and

     WHEREAS, the Company recognizes that circumstances may arise in which a Change in Control of
the Company occurs, through acquisition or otherwise, thereby causing uncertainty of employment
without regard to the Executive’s competence or past contributions. Such uncertainty may result in
the loss of the valuable services of the Executive to the detriment of the Company and its
shareholders; and

     WHEREAS, both the Company and the Executive are desirous that any proposal for a Change in
Control or acquisition will be considered by the Executive objectively and with reference only to
the business interests of the Company and its shareholders; and

     WHEREAS, the Executive will be in a better position to consider the Company’s best interests
if the Executive is afforded reasonable security, as provided in this Agreement, against altered
conditions of employment which could result from any such Change in Control or acquisition.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
of the parties set forth in this Agreement, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:

Article 1. Definitions

     Wherever used in this Agreement, the following terms shall have the meanings set forth below
and, when the meaning is intended, the initial letter of the word is capitalized:

	 	(a)	 	“Agreement” means this Executive Change-in-Control Severance Agreement.

 

 

	 	(b)	 	“Base Salary” means, at any time, the then regular annual rate of pay which the
Executive is receiving as annual salary, excluding amounts: (i) received under short-term
or long-term incentive or other bonus plans, regardless of whether or not the amounts are
deferred, or (ii) designated by the Company as payment toward reimbursement of expenses.
	 
	 	(c)	 	“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Cause” shall be determined solely by the Committee in the exercise of good faith and
reasonable judgment, and shall mean the occurrence of any one or more of the following:

	 	(i)	 	The Executive’s willful and continued failure to substantially
perform his duties with the Company (other than any such failure resulting from
the Executive’s Disability), after a written demand for substantial performance is
delivered to the Executive that specifically identifies the manner in which the
Committee believes that the Executive has not substantially performed his duties,
and the Executive has failed to remedy the situation within fifteen (15) business
days of such written notice from the Company; or
	 
	 	(ii)	 	The Executive’s conviction of a felony; or
	 
	 	(iii)	 	The Executive’s willful engaging in conduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise. However, no act or
failure to act on the Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the action or omission was in the best interests of the Company.

	 	(f)	 	“Change in Control” of the Company shall mean the occurrence of any one (1) or more
of the following events:

	 	(i)	 	Any Person (other than the Company, any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, and any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or such
proportionately owned corporation), is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company’s then outstanding securities;
	 
	 	(ii)	 	During any period of not more than twenty-four (24) consecutive
months, individuals who at the beginning of such period constitute the Board of
Directors of the Company, and any new director whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were

2

 

	 	 	 	directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof;
	 
	 	(iii)	 	The consummation of a merger or consolidation of the Company with any
other corporation, other than: (i) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than sixty percent (60%) of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (ii) a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than thirty percent (30%) of
the combined voting power of the Company’s then outstanding securities;
	 
	 	(iv)	 	The Company’s stockholders approve a plan of complete liquidation or
dissolution of the Company, or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets (or any transaction
having a similar effect); or
	 
	 	(v)	 	Any other transaction that the Board of Directors of the Company
designates as being a Change in Control.

	 	(g)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	“Committee” means the Management Development and Compensation Committee of the Board
of Directors of the Company, or, if no Management Development and Compensation Committee
exists, then the full Board of Directors of the Company, or a committee of Board members,
as appointed by the full Board to administer this Agreement.
	 
	 	(i)	 	“Company” means Cash America International, Inc., a Texas corporation (including any
and all subsidiaries), or any successor thereto as provided in Article 8 herein.
	 
	 	(j)	 	“Disability” shall have the meaning ascribed to such term in the Executive’s
governing long-term disability plan, or if no such plan exists, at the discretion of the
Board.
	 
	 	(k)	 	“Effective Date” means the date this Agreement is approved by the Board or the
Committee, or such other date as the Board or Committee shall designate in its resolution
approving this Agreement, and as specified in the opening sentence of this Agreement.
	 
	 	(l)	 	“Effective Date of Termination” means the date on which a Qualifying Termination
occurs, as provided in Section 2.2 herein, which triggers the payment of Severance
Benefits hereunder.
	 
	 	(m)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.

3

 

	 	(n)	 	“Good Reason” means, without the Executive’s express written consent, the occurrence
after a Change in Control of the Company of any one (1) or more of the following:

	 	(i)	 	The assignment of the Executive to duties materially inconsistent
with the Executive’s authorities, duties, responsibilities, and status (including
offices, titles, and reporting requirements) as an executive and/or officer of the
Company, or a material reduction or alteration in the nature or status of the
Executive’s authorities, duties, or responsibilities from those in effect as of
ninety (90) calendar days prior to the Change in Control, other than an
insubstantial and inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
	 
	 	(ii)	 	The Company’s requiring the Executive to be based at a location in
excess of thirty-five (35) miles from the location of the Executive’s principal
job location or office immediately prior to the Change in Control; except for
required travel on the Company’s business to an extent substantially consistent
with the Executive’s then present business travel obligations;
	 
	 	(iii)	 	A reduction by the Company of the Executive’s Base Salary in effect on
the Effective Date hereof, or as the same shall be increased from time to time;
	 
	 	(iv)	 	The failure of the Company to continue in effect any of the Company’s
short- and long-term incentive compensation plans, or employee benefit or
retirement plans, policies, practices, or other compensation arrangements in which
the Executive participates unless such failure to continue the plan, policy,
practice, or arrangement pertains to all plan participants generally; or the
failure by the Company to continue the Executive’s participation therein on
substantially the same basis, both in terms of the amount of benefits provided and
the level of the Executive’s participation relative to other participants, as
existed immediately prior to the Change in Control of the Company;
	 
	 	(v)	 	The failure of the Company to obtain a satisfactory agreement from
any successor to the Company to assume and agree to perform the Company’s
obligations under this Agreement, as contemplated in Article 8 herein; and
	 
	 	(vi)	 	A material breach of this Agreement by the Company which is not
remedied by the Company within ten (10) business days of receipt of written notice
of such breach delivered by the Executive to the Company.

	 	 	 	The Executive’s right to terminate employment for Good Reason shall not be affected by
the Executive’s incapacity due to physical or mental illness. The Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
	 
	 	(o)	 	“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined
in Section 13(d).

4

 

	 	(p)	 	“Qualifying Termination” means any of the events described in Section 2.2 herein, the
occurrence of which triggers the payment of Severance Benefits hereunder.
	 
	 	(q)	 	“SERP” means the Cash America International, Inc. Supplemental Executive Retirement
Plan, as amended from time to time.
	 
	 	(r)	 	“Severance Benefits” mean the payment of severance compensation as provided in
Section 2.3 herein.

Article 2. Severance Benefits

     2.1 Right to Severance Benefits. The Executive shall be entitled to receive from the Company
Severance Benefits as described in Section 2.3 herein, if there has been a Change in Control of the
Company and if, within twenty-four (24) calendar months thereafter, the Executive’s employment with
the Company shall end for any reason specified in Section 2.2 herein as being a Qualifying
Termination.

     The Executive shall not be entitled to receive Severance Benefits if he is terminated for
Cause, or if his employment with the Company ends due to death, Disability, voluntary normal
retirement (as defined under the then established rules of the Company’s tax-qualified retirement
plan), or due to a voluntary termination of employment for reasons other than as specified in
Section 2.2(b) herein.

     2.2 Qualifying Termination. The occurrence of any one of the following events within
twenty-four (24) calendar months after a Change in Control of the Company shall trigger the payment
of Severance Benefits to the Executive under this Agreement:

	 	(a)	 	The Company’s involuntary termination of the Executive’s employment
without Cause; and
	 
	 	(b)	 	The Executive’s voluntary employment termination for Good Reason.

     For purposes of this Agreement, a Qualifying Termination shall not include a termination of
employment by reason of death, Disability, or voluntary normal retirement (as such term is defined
under the then established rules of the Company’s tax-qualified retirement plan), the Executive’s
voluntary termination for reasons other than as specified in Section 2.2(b) herein, or the
Company’s involuntary termination for Cause.

     2.3 Description of Severance Benefits. In the event that the Executive becomes entitled to
receive Severance Benefits, as provided in Sections 2.1 and 2.2 herein, the Company shall pay to
the Executive and provide him with the following Severance Benefits:

	 	(a)	 	A lump-sum amount equal to the Executive’s unpaid Base Salary, accrued
vacation pay, unreimbursed business expenses, and all other items earned by and
owed to the Executive through and including the Effective Date of Termination.
	 
	 	(b)	 	A lump-sum amount equal to the Executive’s annual target bonus amount,
established under the annual bonus plan in which the Executive is then

5

 

	 	 	 	participating, for the bonus plan year in which the Executive’s Effective Date of
Termination occurs, multiplied by a fraction the numerator of which is the number
of full completed months in the year from January 1 through the Effective Date of
Termination, and the denominator of which is twelve (12). This payment will be in
lieu of any other payment to be made to the Executive under the annual bonus plan
in which the Executive is then participating for the plan year.
	 
	 	(c)	 	A lump-sum amount equal to two (2) multiplied by the higher of: (i) the
Executive’s annual rate of Base Salary in effect upon the Effective Date of
Termination, or (ii) the Executive’s annual rate of Base Salary in effect on the
date of the Change in Control.
	 
	 	(d)	 	A lump-sum amount equal to two (2) multiplied by the higher of: (i) the
Executive’s annual target bonus established under the annual bonus plan in which
the Executive is then participating for the bonus plan year in which the
Executive’s Effective Date of Termination occurs, or (ii) the actual annual bonus
payment made to the Executive under the annual bonus plan in which the Executive
participated in the year preceding the year in which the Effective Date of
Termination occurs.
	 
	 	(e)	 	An immediate vesting and cash-out of any and all outstanding cash-based
long-term incentive awards held by the Executive, as granted to the Executive by
the Company as a component of the Executive’s compensation. The cash-out shall be
in a lump-sum amount equal to the higher of actual performance goal achievement
or target award level established for each award, multiplied by a fraction the
numerator of which is the full number of completed calendar months in the
preestablished performance period as of the Effective Date of Termination, and
the denominator of which is the full number of months in the entire performance
period (i.e., typically thirty-six (36) months). This payment will be in lieu of
any other payment to be made to the Executive under these long-term
performance-based award plans.
	 
	 	(f)	 	An immediate vesting and the lapse of all restrictions on any and all
outstanding stock option, restricted stock and restricted stock unit awards held by
the Executive, as determined by the relevant plan document or award agreement.
	 
	 	(g)	 	Equivalent payment for continued medical coverage for a period of
twenty-four (24) months. Such equivalent payment shall be provided based on the
same coverage level, including dependent coverage, as in effect on the Effective
Date of Termination by: (i) providing payment of the Company’s portion of the
monthly COBRA premium (for the eighteen (18) months COBRA period); and (ii)
providing a lump-sum payment equal to the Company’s portion of the first monthly
COBRA premium times six (6). Dependent coverage shall continue for the full
twenty-four month period even if the Executive dies during the period. The Company
shall also pay for the Executive’s continued coverage under the Company’s
supplemental medical expense reimbursement plan (or any similar

6

 

	 	 	 	successor coverage
thereto) under the same coverage level for the twenty-four month period.
	 
	 	(h)	 	For a period of up to twenty-four (24) months following a Qualifying
Termination, the Executive shall be entitled, at the expense of the Company, to
receive standard executive placement services from a reputable executive
search/placement firm of the Executive’s selection. However, the Company’s total
obligation shall not exceed fifty thousand dollars ($50,000.00).

     2.4 Termination for Total and Permanent Disability. Following a Change in Control, if the
Executive’s employment is terminated with the Company due to Disability, the Executive’s benefits
shall be determined in accordance with the Company’s retirement, insurance, and other applicable
plans and programs then in effect.

     2.5 Termination for Retirement or Death. Following a Change in Control, if the Executive’s
employment with the Company is terminated by reason of his voluntary normal retirement (as defined
under the then established rules of the Company’s tax-qualified retirement plan), or death, the
Executive’s benefits shall be determined in accordance with the Company’s retirement, survivor’s
benefits, insurance, and other applicable programs then in effect.

     2.6 Termination for Cause or by the Executive Other Than for Good Reason. Following a Change
in Control, if the Executive’s employment is terminated either: (i) by the Company for Cause; or
(ii) voluntarily by the Executive for reasons other than as specified in Section 2.2(b) herein, the
Company shall pay the Executive his full Base Salary at the rate then in effect, accrued vacation,
and other items earned by and owed to the Executive through the Effective Date of Termination, plus
all other amounts to which the Executive is entitled under any compensation plans of the Company at
the time such payments are due, and the Company shall have no further obligations to the Executive
under this Agreement.

     2.7 Notice of Termination. Any termination of the Executive’s employment by the Company for
Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the
other party. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice
which shall indicate the specific termination provision in this Agreement relied upon, and shall
set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.

Article 3. Form and Timing of Severance Benefits

     3.1 Form and Timing of Severance Benefits. The Severance Benefits described in Sections
2.3(a), 2.3(b), 2.3(c), 2.3(d), 2.3(e) and 2.3(g) herein shall be paid in cash to the Executive in
a single lump sum as soon as practicable following the Effective Date of Termination, but in no
event beyond ten (10) calendar days from such date; provided, however, if any such payment is
deferred compensation subject to Section 409A of the Code, then such amount shall be paid as soon
as practicable after the six-month anniversary of the Effective Date of Termination, or at such
earlier date as is permitted under Section 409A of the Code.

7

 

     3.2 Withholding of Taxes. The Company shall withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as legally shall be required.

Article 4. Excise Tax

     4.1 Excise Tax Payment. If any portion of the Severance Benefits or any other payment under
this Agreement, or under any other agreement with, or plan of the Company (in the aggregate, “Total
Payments”) would constitute an “excess parachute payment,” such that a golden parachute excise tax
is due, the Company shall provide to the Executive, in cash, an additional payment in an amount
sufficient to cover the full cost of any excise tax and all of the Executive’s additional state and
federal income, excise, and employment taxes that arise on this additional payment (cumulatively,
the “Full Gross-Up Payment”), such that the Executive is in the same after-tax position as if he
had not been subject to the excise tax. For this purpose, the Executive shall be deemed to be in
the highest marginal rate of federal and state taxes. This payment shall be made as soon as
possible following the date of the Executive’s Qualifying Termination, but in no event later than
ten (10) calendar days from such date.

     For purposes of this Agreement, the term “excess parachute payment” shall have the meaning
assigned to such term in Section 280G of the Internal Revenue Code, as amended (the “Code”), and
the term “excise tax” shall mean the tax imposed on such excess parachute payment pursuant to
Sections 280G and 4999 of the Code.

     4.2 Subsequent Recalculation. In the event the Internal Revenue Service subsequently adjusts
the excise tax computation herein described, the Company shall reimburse the Executive for the full
amount necessary to make the Executive whole on an after-tax basis (less any amounts received by
the Executive that the Executive would not have received had the computations initially been
computed as subsequently adjusted), including the value of any underpaid excise tax, and any
related interest and/or penalties due to the Internal Revenue Service.

Article 5. The Company’s Payment Obligation

     5.1 Payment Obligations Absolute. The Company’s obligation to make the payments and the
arrangements provided for herein shall be absolute and unconditional, and shall not be affected by
any circumstances including, without limitation, any offset, counterclaim, recoupment, defense, or
other right which the Company may have against the Executive or anyone else. All amounts payable by
the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder
by the Company shall be final, and the Company shall not seek to recover all or any part of such
payment from the Executive or from whomsoever may be entitled thereto, for any reasons whatsoever.

     The Executive shall not be obligated to seek other employment in mitigation of the amounts
payable or arrangements made under any provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of the Company’s obligations to make the
payments and arrangements required to be made under this Agreement, except to the extent provided
in Section 2.3(h) herein.

8

 

     5.2 Contractual Rights to Benefits. This Agreement establishes and vests in the Executive a
contractual right to the benefits to which he is entitled hereunder. However, nothing herein
contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company
to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to
provide for any payments to be made or required hereunder.

Article 6. Term of Agreement

     This Agreement will commence on the Effective Date and shall continue in effect for
two (2) full years. However, at the end of such two (2) year period and, if extended, at the
end of each additional year thereafter, the term of this Agreement shall be extended automatically
for one (1) additional year, unless either party delivers written notice six (6) months prior to
the end of such term, or extended term, stating that the Agreement will not be extended. In such
case, the Agreement will terminate at the end of the term, or extended term, then in progress.

     However, in the event of a Change in Control of the Company, the term of this Agreement shall
automatically be extended for two (2) years from the date of the Change in Control.

Article 7. Legal Remedies

     7.1 Dispute Resolution. The Executive shall have the right and option to elect to have any
good faith dispute or controversy arising under or in connection with this Agreement settled by
litigation or arbitration. If arbitration is selected, such proceeding shall be conducted by final
and binding arbitration before a panel of three (3) arbitrators in accordance with the laws and
under the administration of the American Arbitration Association.

     7.2 Payment of Legal Fees. In the event that it shall be necessary or desirable for the
Executive to retain legal counsel and/or to incur other costs and expenses in connection with the
enforcement of any or all of his rights under this Agreement, the Company shall pay (or the
Executive shall be entitled to recover from the Company) the Executive’s reasonable attorneys’
fees, costs, and expenses in connection with the good faith enforcement of his rights including the
enforcement of any arbitration award. This shall include, without limitation, court costs and
attorneys’ fees incurred by the Executive as a result of any good faith claim, action, or
proceeding, including any such action against the Company arising out of, or challenging the
validity or enforceability of, this Agreement or any provision hereof.

Article 8. Successors

     The Company shall require any successor (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) of all
or a significant portion of the assets of the Company by agreement, in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if no such succession
had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding
upon any successor in accordance with the operation of law and such successor shall be deemed the
“Company” for purposes of this Agreement.

9

 

Article 9. Miscellaneous

     9.1 Employment Status. This Agreement is not, and nothing herein shall be deemed to create, an
employment contract between the Executive and the Company or any of its subsidiaries. The Executive
acknowledges that the rights of the Company remain wholly intact to change or reduce at any time
and from time to time his compensation, title, responsibilities, location, and all other aspects of
the employment relationship, or to discharge him prior to a Change in Control (subject to such
discharge possibly being considered a Qualifying Termination pursuant to Section 2.2).

     9.2 Entire Agreement. This Agreement contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof. In addition, the payments provided for under
this Agreement in the event of the Executive’s termination of employment shall be in lieu of any
severance benefits payable under any severance plan, program, or policy of the Company to which he
might otherwise be entitled.

     9.3 Notices. All notices, requests, demands, and other communications hereunder shall be
sufficient if in writing and shall be deemed to have been duly given if delivered by hand or if
sent by registered or certified mail to the Executive at the last address he has filed in writing
with the Company or, in the case of the Company, at its principal offices.

     9.4 Execution in Counterparts. This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on any one counterpart.

     9.5 Conflicting Agreements. The Executive hereby represents and warrants to the Company that
his entering into this Agreement, and the obligations and duties undertaken by him hereunder, will
not conflict with, constitute a breach of, or otherwise violate the terms of, any other employment
or other agreement to which he is a party, except to the extent any such conflict, breach, or
violation under any such agreement has been disclosed to the Board in writing in advance of the
signing of this Agreement.

     9.6 Severability. In the event any provision of this Agreement shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.

     Notwithstanding any other provisions of this Agreement to the contrary, the Company shall have
no obligation to make any payment to the Executive hereunder to the extent, but only to the extent,
that such payment is prohibited by the terms of any final order of a federal or state court or
regulatory agency of competent jurisdiction; provided, however, that such an order shall not
affect, impair, or invalidate any provision of this Agreement not expressly subject to such order.

     9.7 Modification. No provision of this Agreement may be modified, waived, or discharged unless
such modification, waiver, or discharge is agreed to in writing and signed by the Executive and by
the Company, as applicable, or by the respective parties’ legal representatives or successors.

10

 

Notwithstanding the foregoing, if any provision of this Agreement would cause compensation to be
includible in the Executive’s income pursuant to Section 409A of the Code, then such provision
shall be null and void, and the Company shall amend the Agreement in such a way as to cause
substantially similar economic results without causing such inclusion; any such amendment shall be
binding on the Executive.

     9.8 Applicable Law. To the extent not preempted by the laws of the United States, the laws of
the State of Texas shall be the controlling law in all matters relating to this Agreement without
giving effect to principles of conflicts of laws.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	 	CASH AMERICA INTERNATIONAL, INC.

 	 
	 	By:  	      /s/ Daniel R. Feehan
 	 
	 	 	      Daniel R. Feehan 	 
	 	 	          Chief Executive Officer and President 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	          /s/ Timothy S. Ho
 	 
	 	      Timothy S. Ho 	 
	 	 	 
	 

11

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