Document:

exv4w1

Exhibit 4.1

RIGHTS AGREEMENT

by and between

SOURCEFIRE, INC.

and

CONTINENTAL STOCK TRANSFER & TRUST CO.

as Rights Agent

Dated as of October 30, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	Section 1.

	 	Certain Definitions
	 	 	1	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	7	 
	Section 3.

	 	Issuance of Rights Certificates
	 	 	7	 
	Section 4.

	 	Form of Rights Certificates
	 	 	9	 
	Section 5.

	 	Countersignature and Registration
	 	 	10	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	10	 
	Section 7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	11	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	13	 
	Section 9.

	 	Reservation and Availability of Capital Stock
	 	 	14	 
	Section 10.

	 	Preferred Stock Record Date
	 	 	15	 
	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
	 	 	28	 
	Section 15.

	 	Rights of Action
	 	 	30	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	30	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	31	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	31	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	31	 
	Section 20.

	 	Duties of Rights Agent
	 	 	32	 
	Section 21.

	 	Change of Rights Agent
	 	 	34	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	34	 
	Section 23.

	 	Redemption and Termination
	 	 	35	 
	Section 24.

	 	Exchange
	 	 	36	 
	Section 25.

	 	Notice of Certain Events
	 	 	37	 
	Section 26.

	 	Notices
	 	 	38	 
	Section 27.

	 	Supplements and Amendments
	 	 	39	 

 

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	Section 28.

	 	Successors
	 	 	39	 
	Section 29.

	 	Determinations and Actions by the Board of Directors, etc
	 	 	39	 
	Section 30.

	 	Requests for Copies of this Agreement
	 	 	40	 
	Section 31.

	 	Benefits of this Agreement
	 	 	40	 
	Section 32.

	 	Severability
	 	 	40	 
	Section 33.

	 	Governing Law
	 	 	41	 
	Section 34.

	 	Counterparts
	 	 	41	 
	Section 35.

	 	Descriptive Headings
	 	 	41	 
	 
	 	 	 	 	 	 
	Exhibits:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit A.

	 	Form of Rights Certificate
	 	A-1

	Exhibit B.

	 	Form of Summary of Rights
	 	B-1

	Exhibit C

	 	Certificate of Designation
	 	C-1

ii

 

RIGHTS AGREEMENT

     RIGHTS AGREEMENT, dated as of October 30, 2008 (the “Agreement”), between Sourcefire,
Inc., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Co., a
banking organization organized under the laws of the State of New York, as rights agent (the “Rights Agent”).

     WHEREAS, effective October 29, 2008 (the “Rights Dividend Declaration Date”), the
Board of Directors of the Company (the “Board of Directors”) (i) authorized and declared a
dividend of one right (“Right”) for each share of Common Stock, par value $.001 per share,
of the Company (the “Company Common Stock”) outstanding at the Close of Business on
November 14, 2008 (the “Record Date”), and (ii) authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant hereto) for each share of Company Common Stock
issued between the Record Date and the earlier of the Distribution Date and the Expiration Date
and, in certain circumstances, for each share of Company Common Stock issued after the Distribution
Date but before the Expiration Date; and

     WHEREAS, each Right initially represents the right to purchase, upon the terms and subject to
the conditions hereinafter set forth, one Unit of Series A Junior Participating Preferred Stock;

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

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

          (a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the
shares of Company Common Stock then outstanding. Notwithstanding the foregoing:

               (i) an “Acquiring Person” shall not include:

          (A) the Company;

          (B) any Subsidiary of the Company;

          (C) any employee benefit plan maintained by the Company or any of its
Subsidiaries;

          (D) any trustee or fiduciary with respect to such employee benefit plan acting
in such capacity or a trustee or fiduciary holding shares of Company Common Stock
for the purpose of funding any such plan;

          (E) any Person if:

          (1) the Board of Directors determines in good faith that such Person
who would otherwise be an “Acquiring Person” became such inadvertently
(including, without limitation, because (x) such Person was

 

 

unaware that it beneficially owned a percentage of Company Common Stock
that would otherwise cause such Person to be an “Acquiring Person” or (y)
such Person was aware of the extent of its Beneficial Ownership of Company
Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company;

          (2) such Person does not become the Beneficial Owner of any additional
 shares of Company Common Stock after such Person becomes aware that such
Person would be an Acquiring Person (but for the operation of this clause
(E)); and

          (3) such Person as promptly as practicable (as determined in good faith
by the Board of Directors) divested or divests itself of Beneficial
Ownership of a sufficient number of shares of Company Common Stock so that
such Person would no longer be an “Acquiring Person;”

or

          (F) any Person who becomes the Beneficial Owner of 15% or more of the
then-outstanding shares of Company Common Stock as a result of the acquisition of
 shares of Company Common Stock directly from the Company in one or more transactions
approved by the Board of Directors,

and

          (ii) no Person shall be deemed an “Acquiring Person” as a result of the acquisition of
 shares of Company Common Stock by the Company which, by reducing the number of shares of
Company Common Stock outstanding, increases the proportional number of shares beneficially
owned by such Person; provided, however, that if (x) a Person would become
an Acquiring Person (but for the operation of this subclause (ii)) as a result of the
acquisition of shares of Company Common Stock by the Company and (y) after such share
acquisition by the Company, such Person becomes the Beneficial Owner of any additional
 shares of Company Common Stock (other than pursuant to the grant or exercise of an option
under a Company stock option plan or pursuant to a dividend or distribution paid or made by
the Company on the outstanding shares of Company Common Stock or pursuant to a split or
subdivision of the Company Common Stock), then such Person shall be deemed an Acquiring
Person unless, upon becoming the Beneficial Owner of such additional shares, such Person is
the Beneficial Owner of less than 15% of the outstanding shares of Company Common Stock.

Each Person identified in subclauses (A), (B), (C) and (D) of this Section (1)(a) is individually
an “Exempt Person” and collectively “Exempt Persons.”

2

 

          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as in effect on the date hereof.

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

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

          (ii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate of such other Person) with which such Person (or any of such Person’s
Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in the proviso to subparagraph (i) of this paragraph (c)) or
disposing of such securities;

          (iii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise; or

          (iv) in respect of which such Person or any of such Person’s Affiliates or Associates
has a Synthetic Long Position that has been disclosed in a filing by such Person or any of
such Person’s Affiliates or Associates with the Securities and Exchange Commission pursuant
to Regulation 13D-G or Regulation 14D under the Exchange Act in respect of which Company
Common Stock is the “subject security” (as such term is used in such Regulations);

provided, however, that under this paragraph (c) a Person shall not be deemed the
“Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own,” any securities

          (A) tendered pursuant to a tender or exchange offer made in accordance with
Exchange Act Regulations by such Person or any of such

3

 

Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange,

          (B) that may be issued upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or

          (C) that may be issued 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(c) or Section 22 hereof (the “Original Rights”) or pursuant to
Section 11(i) hereof in connection with an adjustment made with respect to any
Original Rights; and

further provided, however, that:

          (x) nothing in this paragraph (c) shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, to have “Beneficial Ownership”
of, or to “beneficially own,” any securities acquired through such Person’s participation in
good faith in a firm commitment underwriting until the expiration of forty days after the
date of such acquisition,

          (y) no decision reached, or action taken, by the Board of Directors or any committee
thereof shall cause any Person (or any Affiliate or Associate of such Person) who is a
member of the Board of Directors or such committee to be deemed, for the purposes of this
Agreement, to be a Beneficial Owner of any securities beneficially owned by any other Person
(or any Affiliate or Associate of such Person) who is a member of the Board of Directors or
any committee thereof solely by reason of such membership of the Board of Directors or any
committee thereof or participation in the decisions or actions thereof on the part of either
or both of such Persons, and

          (z) no Person who is an officer, director or employee of an Exempt Person shall be
deemed, solely by reason of such Person’s status or authority as such, to be the “Beneficial
Owner” of, to have “Beneficial Ownership” of, or to “beneficially own” any securities that
are “beneficially owned” (as defined in this paragraph (c)), including, without limitation,
in a fiduciary capacity, by an Exempt Person or by any other such officer, director or
employee of an Exempt Person.

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

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

          (f) “Common Stock” of any Person other than the Company shall mean the capital stock
of such Person with the greatest voting power, or, if such Person shall have no

4

 

capital stock, the equity securities or other equity interest having power to control or
direct the management of such Person.

          (g) “Company” has the meaning given it in the first paragraph of this Agreement, and
also means a Principal Party to the extent provided in Section 13(a).

          (h) “Person” shall mean any individual, partnership, firm, limited liability company,
corporation, association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act as in effect on
the date hereof.

          (i) “Preferred Stock” shall mean the Series A Junior Participating Preferred Stock,
par value $.001 per share, of the Company having the voting powers, designation, preferences and
relative, participating, optional or other special rights and qualifications, limitations and
restrictions described in the Certificate of Designation set forth as Exhibit C hereto and as
amended from time to time.

          (j) “Stock Acquisition Date” shall mean the first date of public announcement
(including, without limitation, the filing of any report, or any amendment to any report, pursuant
to Section 13(d) of the Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person that an Acquiring Person has become such; provided, however, that
if such Person is determined not to have become an Acquiring Person pursuant to Section 1(a)
hereof, then no Stock Acquisition Date shall be deemed to have occurred.

          (k) “Subsidiary” shall mean, with reference to any Person, any other Person of which
an amount of voting securities or equity interests sufficient to elect at least a majority of the
directors or equivalent governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or any other Person otherwise controlled by such first-mentioned
Person.

          (l) “Synthetic Long Position” shall mean any option, warrant, convertible security,
stock appreciation right or other contractual right, whether or not presently exercisable, which
has an exercise or conversion privilege or a settlement payment or mechanism at a price related to
Company Common Stock or a value determined in whole or part with reference to, or derived in whole
or in part from, the market price or value of Company Common Stock, whether or not such right is
subject to settlement in whole or in part in Company Common Stock, and which increases in value as
the value of Company Common Stock increases or which provides to the holder of such right an
opportunity, directly or indirectly, to profit or share in any profit derived from any increase in
the value of Company Common Stock, but shall not include:

          (i) rights of a pledgee under a bona fide pledge of Company Common Stock;

          (ii) rights of all holders of Company Common Stock to receive Company Common Stock pro
rata, or obligations to dispose of Company Common Stock, as a result of a merger, exchange
offer, or consolidation involving the Company;

5

 

          (iii) rights or obligations to surrender Company Common Stock, or have Company Common
Stock withheld, upon the receipt or exercise of a derivative security or the receipt or
vesting of equity securities, in order to satisfy the exercise price or the tax withholding
consequences of receipt, exercise or vesting;

          (iv) interests in broad-based index options, broad-based index futures, and broad-based
publicly traded market baskets of stocks approved for trading by the appropriate federal
governmental authority;

          (v) interests or rights to participate in employee benefit plans of the Company held by
employees or former employees of the Company; or

          (vi) options granted to an underwriter in a registered public offering for the purpose
of satisfying over-allotments in such offering.

     The number of shares of Company Common Stock in respect of which a Person has a Synthetic Long
Position shall be the notional or other number of shares of Company Common Stock specified in a
filing by such Person or any of such Person’s Affiliates or Associates with the Securities and
Exchange Commission pursuant to Regulation 13D-G or Regulation 14D under the Exchange Act in
respect of which Company Common Stock is the “subject security” (as such term is fined in such
Regulations) or in the documentation evidencing the Synthetic Long Position as being subject to be
acquired upon the exercise or settlement of the applicable right or as the basis upon which the
value or settlement amount of such right, or the opportunity of the holder of such right to profit
or share in any profit, is to be calculated in whole or in part or, if no such number of shares of
Company Common Stock is specified in such filing or documentation, as determined by the Board of
Directors of the Company in good faith to be the number of shares of Company Common Stock to which
the Synthetic Long Position relates.

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

          In addition, the following terms are defined in the Sections indicated below:

	 	 	 
	Defined Term	 	Section Number
	Adjustment Shares

	 	11(a)(ii)
	Agreement

	 	Preamble
	Board of Directors

	 	Whereas clause
	common stock equivalents

	 	11(a)(iii)
	Company

	 	Preamble
	Company Common Stock

	 	Whereas clause
	current market price

	 	11(d)
	Current Value

	 	11(a)(iii)
	Distribution Date

	 	3(a)
	Equivalent Preferred Stock

	 	11(b)
	Exchange Act

	 	1(b)
	Exchange Act Regulations

	 	1(c)
	Exchange Ratio

	 	24(a)
	Exempt Person

	 	1(a)

6

 

	 	 	 
	Defined Term	 	Section Number
	Expiration Date

	 	7(a)
	Final Expiration Date

	 	7(a)
	Nasdaq

	 	11(d)(i)
	Original Rights

	 	1(c)
	Purchase Price

	 	7(b)
	Record Date

	 	Whereas clause
	Redemption Price

	 	23(a)
	Registered Common Stock

	 	13(b)(ii)
	Registration Date

	 	9(c)
	Registration Statement

	 	9(c)
	Right

	 	Whereas clause
	Rights Agent

	 	Preamble
	Rights Certificates

	 	3(a)
	Rights Dividend Declaration Date

	 	Whereas clause
	Section 11(a)(ii) Event

	 	11(a)(ii)
	Section 11(a)(iii) Trigger Date

	 	11(a)(iii)
	Section 13 Event

	 	13(a)
	Securities Act

	 	9(c)
	Spread

	 	11(a)(iii)
	Substitution Period

	 	11(a)(iii)
	Summary of Rights

	 	3(b)
	TIDE Committee

	 	29(b)
	Trading Day

	 	11(d)(i)
	Unit

	 	7(b)

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

     Section 3. Issuance of Rights Certificates.

          (a) Until the earlier of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date), and (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Board of Directors) after
the date that a tender or exchange offer by any Person (other than an Exempt Person) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or
any successor rule, if upon consummation thereof such Person would be an Acquiring Person
(including, in the case of both clause (i) and (ii), any such date which is after the date of this
Agreement and prior to the issuance of the Rights) (the earlier of (i) and (ii) above being the
“Distribution Date”):

          (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for shares of Company Common Stock

7

 

registered in the names of the holders of shares of Company Common Stock as of and
subsequent to the Record Date (which certificates for shares of Company Common Stock shall
be deemed also to be certificates for Rights) and not by separate certificates, and

          (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock including a transfer to the Company;

provided, however, that if a tender or exchange offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender
or exchange offer. As soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of shares of Company Common
Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, one or more rights certificates, in substantially the form of Exhibit A
hereto (the “Rights Certificates”), evidencing one Right for each share of Company Common
Stock so held, subject to adjustment as provided herein.

     In the event that an adjustment in the number of Rights per share of Company Common Stock has
been made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company may make the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

          (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Stock, in substantially the form attached hereto as Exhibit
B (the “Summary of Rights”), by first-class, postage prepaid mail, to each record holder of
shares of Company 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 certificates for Company Common
Stock outstanding as of the Record Date or issued subsequent to the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date, until the Distribution Date the Rights
will be evidenced by such certificates registered in the names of the holders thereof. Until the
Distribution Date (or, if earlier, the Expiration Date), the surrender for transfer of any such
certificate for Company Common Stock outstanding as of the Record Date shall also constitute the
transfer of the Rights associated with the Company Common Stock represented thereby.

          (c) Rights shall, without any further action, be issued in respect of all shares of Company
Common Stock which are issued (including any shares of Company Common Stock held in treasury) after
the Record Date but prior to the earlier of the Distribution Date and the Expiration Date. In
addition, Rights shall be issued with respect to all shares of Company Common Stock described in
the second sentence of Section 22 hereof, subject to the provisions thereof. Certificates
representing such shares of Company Common Stock issued after the Record Date shall bear the
following legend:

This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Sourcefire, Inc. (the “Company”) and Continental

8

 

Stock Transfer & Trust Co. (the “Rights Agent”) dated as of October 30, 2008, as amended
from time to time (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the office of the Rights Agent. Under
certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written request therefor.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY,
ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

With respect to certificates representing shares of Company Common Stock that bear the foregoing
legend, until the earlier of the Distribution Date and the Expiration Date, the Rights associated
with the shares of Company Common Stock represented by such certificates shall be evidenced by such
certificates alone and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the shares of Company Common Stock
represented by such certificates.

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

          (e) Notwithstanding anything to the contrary contained herein, shares of Company Common Stock
and Rights (and any securities issuable on their exercise) may be issued and transferred by
book-entry and not represented by physical certificates. Where shares of Company Common Stock and
Rights (and any securities issuable on their exercise) are held in uncertificated form, the Company
and the Rights Agent shall cooperate in all respects to give effect to the intent of the provisions
contained herein.

     Section 4. Form of Rights Certificates.

          (a) The Rights Certificates (and the forms of election to purchase and of assignment and the
certificates to be printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit A hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time be listed or to
conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record

9

 

Date (or in the case of Rights issued with respect to Common Stock issued by the Company after
the Record Date, as of the date of issuance of such Common Stock) and on their face shall entitle
the holders thereof to purchase such number of Units of Preferred Stock as shall be set forth
therein at the price set forth therein, provided, however, that the amount and type
of securities, cash or other assets that may be acquired upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.

          (b) Any Rights Certificate that represents Rights which are null and void pursuant to Section
7(e) of this Agreement and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:

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 are null and void.

The provisions of Section 7(e) hereof shall be operative whether or not the foregoing legend is
contained on any such Right Certificate.

     Section 5. Countersignature and Registration.

          (a) Any Rights Certificates shall be executed on behalf of the Company by its Chairman, its
Chief Executive Officer, its President or one of its Vice Presidents and shall be attested by its
Secretary, Treasurer or one of its Assistant Secretaries and shall have affixed thereto the
Company’s seal (if any) or a facsimile thereof. The signature of any of these officers on the
Rights Certificates may be manual or facsimile. Rights Certificates bearing the manual or
facsimile signatures of the individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the countersignature of such Rights Certificates or did not hold such offices
at the date of such Rights Certificates. No Rights Certificate shall be entitled to any benefit
under this Agreement or be valid for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual or facsimile signature of an
authorized signatory, and such countersignature upon any Rights Certificate shall be conclusive
evidence, and the only evidence, that such Rights Certificate has been duly countersigned as
required hereunder.

          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated 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
name and address of each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.

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

          (a) Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business on

10

 

the Expiration Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling the registered
holder to purchase a like number of Units of Preferred Stock (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder, in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have completed and
executed the certificate set forth 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) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to the provisions of Section 4, Section 7(e), 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. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.

          (b) Subject to Section 7(e) hereof, if a Rights Certificate shall be mutilated, lost, stolen
or destroyed, upon request by the registered holder of the Rights represented thereby and upon
payment to the Company and the Rights Agent of all reasonable expenses incident thereto, there
shall be issued, in exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft or destruction of
such Rights Certificate and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.

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

          (a) Prior to the earlier of (i) the Close of Business on the tenth anniversary hereof (the
“Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, and (iii) the time at which the Rights are exchanged as provided in Section 24
hereof, at which time the Rights are deemed terminated (the earlier of (i), (ii), and (iii) being
the “Expiration Date”), the registered holder of any Rights Certificate may, subject to the
other provisions hereof, including without limitation Sections 7(e), 7(f), 9(c), 11(a) and 23
hereof, exercise the Rights evidenced thereby, in whole or in part, at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price
for the number of Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) for which such surrendered Rights are then exercisable.

11

 

          (b) The purchase price for each one one-hundredth of a share (each such one one-hundredth of a
share being a “Unit”) of Preferred Stock upon exercise of Rights shall be $30.00, subject
to adjustment from time to time as provided in Sections 11 and 13(a) hereof (such purchase price,
as so adjusted, being the “Purchase Price”), and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.

          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to be purchased
thereby as set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly:

          (i) (A) requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent for the Preferred Stock) a certificate or
certificates for the number of Units of Preferred Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of Units 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 Units of
Preferred Stock as are to be purchased (in which case certificates for the Units of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to comply with
such request,

          (ii) 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,

          (iii) requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, and

          (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate.

In the event that the Company is obligated to issue Company Common Stock or other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such Company Common Stock, other securities, cash
and/or other property are available for distribution by the Rights Agent, if and when appropriate.
The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made by certified or bank check or money order payable to the order of the Rights
Agent.

          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the

12

 

registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Sections 6 and 14 hereof.

          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of any Section 11(a)(ii) Event, any Rights beneficially owned by:

          (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,

          (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which
becomes a transferee after the Acquiring Person becomes such, or

          (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any
Person with whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares of Company
Common Stock or the Company or (B) a transfer which the Board of Directors has determined to
be part of a plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e),

shall be null and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights or any other Person as a result of the Company’s failure to make or delay in making any
determinations with respect to an Acquiring Person or its Affiliates or Associates or any
transferee or any of them hereunder.

          (f) Notwithstanding anything in this Agreement or any Rights Certificate 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 by such registered holder unless
such registered holder shall have (i) completed and executed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate surrendered for such
exercise, (ii) not indicated an affirmative response to clause 1 or 2 thereof, and (iii) provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) of
the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the
Company 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 cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by
this

13

 

Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any Rights Certificates acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof
to the Company.

     Section 9. Reservation and Availability of Capital Stock.

          (a) The Company shall, at all times prior to the occurrence of a Section 11(a)(ii) Event,
cause to be reserved and kept available, out of its authorized and unissued shares of preferred
stock or its authorized and issued shares of preferred stock held in its treasury, and, after the
occurrence of a Section 11(a)(ii) Event, to the extent reasonably practical, cause to be reserved
and kept available, out of its authorized but unissued shares of preferred stock, Company Common
Stock and/or other securities or its authorized and issued shares held in its treasury, the number
of shares of Preferred Stock (and, following the occurrence of a Section 11(a)(ii) Event, Company
Common Stock and/or other securities) that, as provided in this Agreement, will be sufficient to
permit the exercise in full of all outstanding Rights. Upon the occurrence of any events resulting
in an increase in the aggregate number of shares of Preferred Stock (or other equity securities of
the Company) issuable upon exercise of all outstanding Rights above the number then reserved, the
Company shall make appropriate increases in the number of shares so reserved to the extent
reasonably practicable.

          (b) If the shares of Preferred Stock (and, following the occurrence of a Section 11(a)(ii)
Event, Company Common Stock and/or other securities) to be issued and delivered upon the exercise
of the Rights may be listed on any national securities exchange or automated quotation system, the
Company shall use its best efforts to cause, from and after the time that the Rights become
exercisable, all securities reserved for such issuance to be listed on such exchange or quotation
system upon official notice of issuance upon such exercise.

          (c) The Company shall use its best efforts:

          (i) as soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event and a determination by the Company of the consideration to be
delivered by the Company upon exercise of the Rights (including in accordance with Section
11(a)(iii) hereof) or, if so required by law, as soon as practicable following the
Distribution Date (such date being the “Registration Date”), to file a registration
statement on an appropriate form under the Securities Act of 1933, as amended (the
“Securities Act”), with respect to the securities that may be acquired upon exercise
of the Rights (the “Registration Statement”),

          (ii) to cause the Registration Statement to become effective as soon as practicable
after such filing,

          (iii) to cause the Registration Statement to continue to be effective (and to include a
prospectus complying with the requirements of the Securities Act) until the

14

 

earlier of (A) the date as of which the Rights are no longer exercisable for the
securities covered by the Registration Statement, and (B) the Expiration Date, and

          (iv) to take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the Rights
complies with any applicable state securities or “blue sky” laws. 

The Company may temporarily suspend, for a period of time not to exceed one hundred twenty (120)
days after the Registration Date, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no longer
in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained, the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.

          (d) The Company shall take all such action as may be necessary to ensure that all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, any other securities that may
be delivered upon exercise of Rights) shall be, at the time of delivery of the certificates or
depositary receipts for such securities (subject to payment of the Purchase Price), duly and
validly authorized and issued and fully paid and nonassessable.

          (e) The Company shall pay any documentary, stamp or other tax or charge imposed in connection
with the issuance or delivery of the Rights Certificates or of any Preferred Stock (or any other
securities or assets, as the case may be) upon the exercise of Rights; provided,
however, the Company shall not be required to pay any such tax or charge imposed in
connection with the issuance or delivery of Units of Preferred Stock, or any certificates or
depositary receipts for such Units of Preferred Stock (or, following the occurrence of a Triggering
Event, any other securities, cash or assets, as the case may be) to any Person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered for exercise. The
Company shall not be required to issue or deliver any certificates or depositary receipts for Units
of Preferred Stock (or, following the occurrence of a Triggering Event, any other securities, cash
or assets, as the case may be) to, or in a name other than that of, the registered holder upon the
exercise of any Rights until any such tax or charge shall have been paid (any such tax or charge
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax or charge is due.

     Section 10. Preferred Stock Record Date. Each Person in whose name any certificate or
depositary receipt for Units of Preferred Stock (or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of
the Units of Preferred Stock (or other securities) 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 any applicable taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or other securities, as the case may be) transfer books of the Company
are

15

 

closed, such Person shall be deemed to have become the record holder of such securities on,
and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock
(or other securities) transfer books of the Company are open; further provided,
however, that if delivery of Units of Preferred Stock (or other securities, as the case may
be) is delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have become the
record holders of such Units of Preferred Stock (or other securities) only when such Units (or
other securities) first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to securities 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 securities purchasable 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 date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into
a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided for herein, including 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 other capital stock, as the case may be,
issuable on such date upon exercise of the Rights, 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 other capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the transfer books of the Company were
still open, such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

          (ii) In the event any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person, other than pursuant to any transaction set forth in
Section 13(a) hereof, then, immediately upon the occurrence of such event (a “Section
11(a)(ii) Event”), each holder of a Right (except as otherwise provided herein,
including Section 7(e) hereof) shall thereafter have the right to receive, upon exercise of
such Right at the then-current Purchase Price in accordance with the terms of this
Agreement, in lieu of the number of Units of Preferred Stock for which a Right was

16

 

exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event
(whether or not such Right was then exercisable), such number of Units of Preferred Stock as
shall equal the result obtained by:

          (A) multiplying the then-current Purchase Price by the number of Units of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (whether or not such Right was then
exercisable) (such product thereafter being, for all purposes of this Agreement,
other than Section 13 hereof, the “Purchase Price”), and

          (B) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per Unit of Preferred Stock on the date of such
first occurrence

(such Units of Preferred Stock being the “Adjustment Shares”); provided,
however, that the Purchase Price and the number of Units of Preferred Stock so
receivable upon exercise of a Right shall, following the Section 11(a)(ii) Event, be subject
to further adjustment as appropriate in accordance with this Section 11. From and after the
occurrence of a Section 13(a) Event, any Rights that have not theretofore been exercised
pursuant to this Section 11(a)(ii) shall thereafter be exercisable only in connection with
Section 13 and not pursuant to this Section 11(a)(ii).

          (iii) The Company, by the vote of the Board of Directors, may at its option substitute
for a Unit of Preferred Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii), shares of Company Common Stock or fractions thereof having a
current market price (as determined by Section 11(d) hereof) equal to the current market
price of a Unit of Preferred Stock on the date of the Section 11(a)(ii) Event. In the event
that the number of shares of Preferred Stock (or, if the Company shall have determined to
substitute shares of Company Common Stock for Units of Preferred Stock pursuant to the
preceding sentence, Company Common Stock)  which are authorized by the Company’s
Certificate of Incorporation, but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights, 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:

          (A) determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the “Current Value”) over (2) the Purchase
Price (such excess being the “Spread”), and

          (B) with respect to each Right (other than Rights which have become void
pursuant to Section 7(e)), make adequate provision to substitute, in whole or in
part, for such Adjustment Shares, upon exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
 shares of Company Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock (such other
 shares being “common stock equivalents”)), (4) debt securities

17

 

of the Company, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value which, when added to the value of the Units of Preferred
Stock actually issued upon exercise of such Right, shall have an aggregate value
equal to the Current Value (less the amount of any reduction in such Purchase
Price), where such aggregate value has been determined by the Board of Directors,
after receiving advice from a nationally recognized investment banking firm;

provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (such thirty day period, as
it may be extended hereunder, being referred to herein as the “Substitution Period,”
and the later of (x) and (y) being referred to herein as the “Section 11(a)(iii) Trigger
Date”), then, subject to Section 24 hereof, the Company shall be obligated (to the
extent permitted by applicable law) to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, Units of Preferred Stock (to the extent
available) and then, if necessary, shares (or fractions of shares, at the discretion of the
Board of Directors) of Company Common Stock and cash, or a combination thereof, which Units
of Preferred Stock, shares (or fractions of shares) of Company Common Stock and/or cash
shall have an aggregate value equal to the Spread. If the Board of Directors determines in
good faith that it is likely that sufficient additional shares of Preferred Stock or Company
Common Stock could be authorized for issuance upon exercise in full of the Rights, then the
Substitution Period may be extended to the extent necessary, but not more than ninety days
after the Section 11(a)(iii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares.

     To the extent that the Company determines that some action need be taken pursuant to
the second and/or third 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
second sentence and to determine the value thereof. If any such suspension occurs, 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 the time such suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value of a Unit of
Preferred Stock or share of Company Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Unit of Preferred Stock or share of Company
Common Stock, as the case may be, on the Section 11(a)(iii) Trigger Date and the value of
any common stock equivalent shall be deemed to have the same value as a Unit of Preferred
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 forty-five calendar days after such record date) shares of Preferred Stock
(or shares having substantially the same rights, privileges and preferences as shares of

18

 

Preferred Stock (“Equivalent Preferred Stock”)) or securities convertible into
Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or per share
of Equivalent Preferred Stock (or having a conversion price per share, if a security convertible
into Preferred Stock or Equivalent Preferred Stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by multiplying:

          (i) the Purchase Price in effect immediately prior to such record date, by

          (ii) a fraction, (A) the numerator of which shall be the sum of the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of Preferred Stock
and/or 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 (B) 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, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. Shares of Preferred Stock owned by or held
for the account of the Company or any Subsidiary 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, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such record date had
not been fixed.

          (c) In case the Company shall fix a record date for a distribution to all holders of shares 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 periodic cash dividend paid out of funds legally available therefor), assets
(other than a dividend payable in shares of Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights, options 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:

          (i) the Purchase Price in effect immediately prior to such record date, by

          (ii) a fraction, (A) the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights

19

 

Agent and shall be conclusive for all purposes) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights, options or warrants
distributable in respect of a share of Preferred Stock and (B) the denominator of which
shall be such current market price per share of Preferred Stock.

Such adjustments shall be made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had not been fixed.

     (d) (i) For the purpose of any computation hereunder, the “current market
price” per share of Company Common Stock or Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such shares for the thirty
consecutive Trading Days immediately prior to such date; provided, however,
if prior to the expiration of such requisite thirty Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such shares or securities
convertible into such shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such shares, and the ex-dividend date for such dividend or distribution
or the record date for such subdivision, combination or reclassification, as the case may
be, shall not have occurred prior to the commencement of the requisite thirty Trading Day
period, then, and in each such case, the “current market price” shall be properly
adjusted to take into account such event. The closing price for each day shall be:

          (x) the last sale price, regular way, or, in the case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which
such shares are listed or admitted to trading, or

          (y) if such shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq Stock Market (“Nasdaq”) or such other system then in use, or

          (z) if on any such date such shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by the Board of Directors.

If on any such date no market maker is making a market in such shares, or if such shares are
not publicly held or so listed or traded, “current market price” per share shall
mean the fair value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. The term “Trading Day” shall mean, if such shares are
listed or admitted to trading on any national securities exchange, a day on which the
principal national securities exchange on which such shares are listed or admitted to
trading is open

20

 

 for the transaction of business or, if such shares are not so listed or admitted, a Business
Day.

          (ii) For the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth for Company
Common Stock in clause (i) of this Section 11(d) (other than the penultimate sentence
thereof). If the current market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held or listed or traded
in a manner described in clause (i) of this Section 11(d), the “current market
price” per share of Preferred Stock shall be conclusively deemed to be an amount equal
to (A) 100 (as such amount may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to Company Common Stock occurring after
the date of this Agreement) multiplied by (B) the current market price per share of Company
Common Stock. If neither Company Common Stock nor Preferred Stock is publicly held or so
listed or traded, “current market price” per share of the Preferred Stock shall mean
the fair value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the “current market
price” of a Unit of Preferred Stock shall be equal to (A) the current market price of
one share of Preferred Stock divided by (B) 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 which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or
to the nearest one one-thousandth of a share of Company Common Stock or Common Stock or other share
or one one hundred-thousandth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction which mandates such
adjustment and (ii) the Expiration Date.

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

          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of Units of Preferred Stock (or other securities or amount of cash or combination thereof)
that may be acquired from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.

21

 

          (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of Units of Preferred
Stock (calculated to the nearest one ten-thousandth of a Unit) obtained by (i) multiplying (x) the
number of Units 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 Units of Preferred Stock
that may be acquired 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 Units of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of Rights (calculated to
the nearest one ten-thousandth) obtained by dividing (x) the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the (y) Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued,
shall be at least ten days later than the date of such 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 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 to be so
distributed shall be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date specified in the public
announcement.

          (j) Irrespective of any adjustment or change in the Purchase Price or the number of Units 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 Unit and the number of Units of
Preferred Stock which were expressed in the initial Rights Certificates issued hereunder.

          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the par or stated value, if any, of the number of Units of Preferred Stock or other shares of
capital stock issuable upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the

22

 

Company may validly and legally issue such fully paid and nonassessable number of Units of
Preferred Stock or other shares 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
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date of that number of Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and shares of 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
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 which by
their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock, shall not be taxable to such holders or
shall reduce the taxes payable by such holders.

          (n) The Company shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of
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 other Person or
Persons (other than the Company and/or any of its wholly owned Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if:

          (x) at the time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, or

          (y) prior to, simultaneously with or immediately after such consolidation,
merger, sale or transfer, the Person which constitutes, or would constitute, the
“Principal Party” for purposes of Section 13(a) hereof shall have
distributed or otherwise transferred to its stockholders or other persons holding an
equity interest in such Person Rights previously owned by such Person or any of its
Affiliates and Associates.

23

 

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

          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Company Common Stock payable in shares of Company
Common Stock, (ii) subdivide the outstanding shares of Company Common Stock or (iii) combine the
outstanding shares of Company Common Stock into a smaller number of shares, the number of Rights
associated with each share of Company Common Stock then outstanding, or issued or delivered
thereafter prior to the Distribution Date or in accordance with Section 22 hereof, shall be
proportionately adjusted so that the number of Rights thereafter associated with each share of
Company Common Stock following any such event shall equal the result obtained by multiplying:

          (x) the number of Rights associated with each share of Company Common Stock
immediately prior to such event, by

          (y) a fraction, (A) the numerator of which shall be the total number of shares
of Company Common Stock outstanding immediately prior to the occurrence of the event
and (B) the denominator of which shall be the total number of shares of Company
Common Stock outstanding immediately following the occurrence of such event.

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Company Common Stock) in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of such adjustment or the force or
effect of the requirement for such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.

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

          (a) In the event that, following the first occurrence of a Section 11(a)(ii) Event, directly
or indirectly, either:

          (x) the Company shall consolidate with, or merge with and into, any other Person (other
than a wholly owned Subsidiary of the Company in a transaction

24

 

which complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger,

          (y) any Person (other than a wholly owned Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Company 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 or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) to any Person or Persons (other than the Company or any of
its wholly owned Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), in one or more transactions, assets, cash flow or earning power
aggregating 50% or more of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole)

(any such event being a “Section 13 Event”), then, and in each such case, proper provision
shall be made so that:

          (i) each holder of a Right (other than Rights which have become void as provided in
Section 7(e) hereof) shall thereafter have the right to receive, upon the exercise thereof
at the then-current Purchase Price, in accordance with this Agreement and in lieu of Units
of Preferred Stock or shares of Company Common Stock, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party, which shares shall not be subject to any liens, encumbrances, rights of
call or first refusal, transfer restrictions or other adverse claims, as shall be equal to
the result obtained by:

          (A) multiplying (x) the then-current Purchase Price by (y) the number of Units
of Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying (x) the number of
such Units for which a Right was exercisable hereunder immediately prior to such
first occurrence of a Section 11(a)(ii) Event by (y) the Purchase Price in effect
immediately prior to such first occurrence), and

          (B) dividing that product (which, following the first occurrence of a Section
13 Event, shall be the “Purchase Price” for all purposes of this Agreement)
by 50% of the current market price (determined pursuant to Section 11(d) hereof) per
share of the Common Stock of such Principal Party on the date of consummation of
such Section 13 Event;

provided, however, that the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to further
adjustment as

25

 

appropriate in accordance with Section 11(f) hereof to reflect any events occurring in
respect of the Common Stock of such Principal Party after the occurrence of such Section 13
Event;

          (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company pursuant to this
Agreement;

          (iii) the term “Company” shall thereafter be deemed to refer to such Principal
Party in all respects, it being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the first occurrence of a Section
13 Event;

          (iv) such Principal Party shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this Agreement 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;

          (v) such Principal Party shall take such steps as may be necessary to assure that, upon
the subsequent occurrence of any merger, consolidation, sale of all or substantially all of
the assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase
Price, such cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property; and

          (vi) the provisions of Section 11(a)(ii) hereof shall be of no further effect following
the first occurrence of any Section 13 Event.

          (b) “Principal Party” shall mean:

          (i) in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a) hereof, (A) the Person that is the issuer of any securities into which
 shares of Company Common Stock are converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of Common Stock that has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof) and (B) if no securities
are so issued, the Person that is the other party to such merger or consolidation, or, if
there is more than one such Person, the Person the

26

 

Common Stock of which has the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and

          (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a) hereof, the Person that is the party receiving the largest 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 transferred pursuant to such transaction
or transactions or if the Person receiving the largest portion of the assets, cash flow or
earning power cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section 11(d) hereof);

provided, however, that in any such case:

          (1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve-month period registered under Section 12 of the
Exchange Act (“Registered Common Stock”) or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has Registered Common
Stock outstanding, “Principal Party” shall refer to such other Person;

          (2) if the Common Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another Person but
is not a direct or indirect Subsidiary of another Person which has Registered Common Stock
outstanding, “Principal Party” shall refer to the ultimate parent entity of such
first-mentioned Person;

          (3) if such Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price (determined pursuant to Section
11(d) hereof); and

          (4) if such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have Registered Common Stock outstanding, “Principal
Party” shall refer to whichever ultimate parent entity is the corporation having the
greatest stockholders equity or, if no such ultimate parent entity is a corporation, shall
refer to whichever ultimate parent entity is the entity having the greatest net assets.

          (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its Common Stock which
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 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 the
Principal Party, as soon as practicable after the date of such Section 13 Event, at its own
expense, shall:

27

 

          (i) (A) file on an appropriate form a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of the Rights, (B)
use its best efforts to cause such registration statement to become effective as soon as
practicable after filing and remain effective (and to include a prospectus complying with
the requirements of the Securities Act) until the Expiration Date, and (C) take all such
action as may be required to enable the Principal Party to issue the securities purchasable
upon exercise of the Rights and to assure that any acquisition of such securities upon the
exercise of the Rights complies with any applicable state securities or “blue sky” laws,
including but not limited to the registration or qualification of such securities under all
requisite securities and “blue sky” laws of the various states and the listing of such
securities on such exchanges and trading markets as may be necessary or appropriate; and

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

          (d) In case the Principal Party which is to be a party to a transaction referred to in this
Section 13 has a provision in any of its authorized securities or in its certificate of
incorporation or by-laws or other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 13, shares of Common
Stock or common stock equivalents of such Principal Party at less than the then current market
price per share (determined pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock or common stock equivalents of such Principal Party at less than
such then current market price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection with the issuance
of the Common Stock of such Principal Party pursuant to the provisions of this Section 13; then, in
such event, the Company shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.

          (e) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall occur, any
Rights which theretofore have not been exercised pursuant to Section 11(a)(ii) shall thereafter be
exercisable only in the manner and for the securities described in Section 13(a).

     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 which
evidence fractional Rights. In lieu of issuing such fractional Rights, there shall be paid to the
Persons to which such fractional Rights would otherwise be issuable an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this

28

 

Section 14(a), the market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be:

          (x) the last sale price, regular way, or, in the case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or

          (y) if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such other system then
in use, or

          (z) if on any such date the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors.

If on any such date no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors shall be used and such
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence such fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share
of Preferred Stock); provided, however, that in lieu of fractions of shares of
Preferred Stock which are integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may provide for the issuance of depositary receipts pursuant to Section 7(c) hereof.
In lieu of such fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share, 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 the then current market price of a share of Preferred Stock on the day of exercise, determined
in accordance with Section 11(d) hereof.

          (c) The Company shall not be required to issue fractions of shares of Company Common Stock
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Company Common Stock. In lieu of such fractional shares of Company 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 the same fraction of the current market value of one (1)
share of Company Common Stock. For purposes of this Section 14(c), the current market value of one
share of Company Common Stock shall be the closing price per share of Company Common Stock (as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to the date of
such exercise.

29

 

          (d) The holder of a Right by the acceptance of the Rights 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.

     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 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of certificates representing shares of Company Common Stock); and any
registered holder of a Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Company 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 a certificate
representing shares of Company Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced
by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to 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 be transferable only in connection with
the transfer of Company Common Stock;

          (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate
forms and certificates 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 Company 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 Company Common Stock certificate made by any Person other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, 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 any 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, decree, judgment or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative

30

 

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 order, decree, judgment or ruling lifted or otherwise overturned as promptly as practicable.

     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 shares of Preferred Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or, except as provided in Section 25 hereof,
to receive notice of meetings or other actions affecting stockholders, 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. This Section 17 shall also
apply to holders, as such, of Rights prior to the issuance of Rights Certificates.

     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
out-of-pocket expenses, including reasonable fees and disbursements of its counsel, incurred in
connection with the execution and administration of this Agreement and the exercise and performance
of its duties hereunder. The Company shall indemnify the Rights Agent for, and hold it harmless
against, any loss, liability or expense incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement or the exercise or performance
of its duties hereunder, including, without limitation, the reasonable costs and expenses of
defending against a claim of liability hereunder.

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

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

          (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under

31

 

this Agreement without the execution or filing of any document or any further act on the part
of any of the parties hereto; provided, however, that such corporation 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.

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

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

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

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

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

32

 

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

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

          (f) The Company shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further acts, instruments and assurances as may
reasonably be required by the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.

          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, 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 shall not be liable for any action taken, or
omitted to be taken by it in good faith in accordance with instructions of any such officer.

          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or have a pecuniary
interest 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 from acting in any other capacity for
the Company or for any other Person.

          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents.

          (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 or in the
exercise of its rights hereunder if the Rights Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.

33

 

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

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty days’ prior notice in
writing mailed to the Company and to each transfer agent for the Company Common Stock or Preferred
Stock, by registered or certified mail, and, if such resignation occurs after the Distribution
Date, to the holders of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty days’ prior notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent for the
Company Common Stock or Preferred Stock, by registered or certified mail, and, if such removal
occurs after the Distribution Date, to the holders of the Rights Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any 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
corporation organized and doing business under the laws of the United States or any state of the
United States in good standing, shall be authorized under applicable laws to exercise corporate
trust or stock transfer or stockholder service powers and shall be subject to supervision or
examination by federal or state authorities 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 corporation
described in clause (a). After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Company Common Stock or Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing to the registered
holders 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.

     Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or 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 the Board of Directors
to reflect any adjustment or change made in accordance with the provisions of this

34

 

Agreement in the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates.

     In addition, in connection with the issuance or sale of shares by the Company of Company
Common Stock following the Distribution Date and prior to the Expiration Date, the Company (a)
shall, with respect to shares of Company Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement granted or awarded as of the Distribution
Date, or upon the exercise, conversion or exchange of any other securities hereinafter issued by
the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights 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) Subject to Section 31 hereof, the Company may, at its option, by action of the Board of
Directors, at any time prior to the earlier of (i) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior
to the Record Date, the Close of Business on the tenth Business Day following the Record Date) or
(ii) the Final Expiration Date, redeem all but not less than all of the then-outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such redemption
price being the “Redemption Price”). The Company may, at its option, by action of the
Board of Directors, pay the Redemption Price either in shares of Company Common Stock (based on the
current market price, as defined in Section 11(d) hereof, of the shares of Company Common Stock at
the time of redemption) or cash or any other form of consideration deemed appropriate by the Board
of Directors and the redemption of the Rights shall be effective at such time and on the basis and
with such conditions as the Board of Directors may in its sole discretion establish.
Notwithstanding anything in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until such time as the Company’s right of
redemption has expired.

          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights as provided in Section 23(a) above (or at such later time as the Board of Directors may
establish for the effectiveness of such redemption), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so held. The Company
shall promptly give notice of such redemption to the Rights Agent and the 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 Company Common Stock, provided,
however, that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner herein provided shall be
deemed

35

 

given, whether or not the holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.

          (c) The Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the Rights in
accordance with this Agreement, and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights as their last addresses as they appear on the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent of the
Company Common Stock, and upon such action, all outstanding Rights and Rights Certificates shall be
null and void without any further action by the Company.

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

     Section 24. Exchange.

          (a) The Company, upon resolution of the Board of Directors, may, at its option, at any time
after the first occurrence of a Section 11(a)(ii) Event, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that have become void
pursuant to Section 7(e) hereof) for Units of Preferred Stock or shares of Company Common Stock (at
the election of the Board of Directors) at an exchange ratio of one Unit of Preferred Stock or one
share of Company Common Stock, as the case may be, per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Company Common Stock aggregating 50% or more of the shares of Company
Common Stock then outstanding. From and after the occurrence of a Section 13(a) Event, any Rights
that theretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole discretion may establish.

          (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 24(a), and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of Units of Preferred Stock or shares of Company Common Stock, as the
case may be, equal to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly provide public notice of any such exchange; provided,
however, that the failure to give or any defect in such notice shall not affect the
validity of such exchange. The Company shall promptly mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of

36

 

exchange shall state the method by which the exchange of Units of Preferred Stock or shares of
Company Common Stock, as the case may be, for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.

          (c) In the event that the number of Units of Preferred Stock or shares of Company Common
Stock, as the case may be, which are authorized by the Company’s Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance with this Section 24,
then the Company, at the election of the Board of Directors, shall take all such action as may be
necessary to authorize additional shares of Preferred Stock or Company Common Stock, as the case
may be, for issuance upon exchange of the Rights.

          (d) The Company shall not be required to issue fractions of Units of Preferred Stock or
fractions of shares of Company Common Stock or to distribute certificates which evidence fractional
Units or fractional shares. In lieu of issuing fractional Units or fractional shares, the Company
may pay to the registered holders of Rights Certificates at the time such Rights are exchanged as
herein provided an amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d) hereof) of one Unit of Preferred Stock or one share of
Company Common Stock, as the case may be, on the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events.

          (a) In case the Company shall propose, at any time after the Distribution Date:

          (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other than a regular
periodic cash dividend paid out of funds legally available therefor),

          (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,

          (iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of Preferred Stock),

          (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 which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions, of more
than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or any of its
wholly owned Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or

37

 

          (v) to effect the liquidation, dissolution or winding up of the Company,

then, in each such case, the Company shall give to each holder of a Rights Certificate, 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, transfer,
liquidation, dissolution, or winding up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least twenty (20) days prior
to the date of the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier; provided,
however, no such notice shall be required pursuant to this Section 25, if any wholly owned
Subsidiary of the Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets, cash flow or earnings power to, any other wholly owned Subsidiary of the
Company.

          (b) In case any Triggering Event shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible
and 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 hereof, as the case may be, and (ii) all references in the preceding paragraph (a) to
Preferred Stock shall be deemed thereafter to refer also to Company Common Stock and/or, if
appropriate, other securities of the Company.

     Section 26. Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and mailed or sent or delivered, if to the
Company, at its address at:

Sourcefire, Inc.

9770 Patuxent Woods Drive

Columbia, Maryland 21046

Attention: Corporate Secretary

and if to the Rights Agent, at its address at:

Continental Stock Transfer &  Trust Co.

17 Battery Place

New York, New York 10004

     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 Company 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.

38

 

     Section 27. Supplements and Amendments. Prior to the Distribution Date, and subject
to the other provisions of this Section 27, 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 certificates representing Rights or
shares of Company Common Stock. From and after the Distribution Date, the Company may, in its
sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates in order:

          (i) to cure any ambiguity,

          (ii) to correct or supplement any provision contained herein which 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 which the Company
may deem necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person);

provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) subject to Section 31 hereof, a time
period relating to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Associate or Affiliate of an Acquiring Person).

     Upon the delivery of a certificate from an appropriate officer of the Company which states
that the proposed supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment.

     Prior to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Company Common Stock.

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

     Section 29. Determinations and Actions by the Board of Directors, etc.

          (a) For all purposes of this Agreement, any calculation of the number of shares of Company
Common Stock outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Company 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
Exchange Act Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted

39

 

to the Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Agreement, and (ii) to make all determinations deemed necessary or
advisable for the administration of this Agreement (including, without limitation, a determination
whether to redeem or not redeem the rights or to amend this Agreement and whether any proposed
amendment adversely affects the interest of the holders of Rights Certificates). All such actions,
calculations, interpretations and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the Board of Directors in good
faith shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors or any member thereof
to any liability to the holders of the Rights.

          (b) The Three-Year Independent Director Evaluation Committee (the “TIDE Committee”)
(as described below) of the Board of Directors shall review and evaluate this Agreement in order to
consider whether the maintenance of this Agreement continues to be in the best interests of the
Company and its stockholders, at least once every three years. Following each such review, the
TIDE Committee will communicate its conclusions to the full Board of Directors, including any
recommendation in light thereof as to whether this Agreement should be modified or the Rights
should be redeemed.

          (c) The members of the TIDE Committee shall be appointed by the Board of Directors and
comprised of members of the Board of Directors who are not officers, employees or Affiliates of the
Company. The TIDE Committee shall have the power to set its own agenda and to retain, at the
expense of the Company, independent legal, accounting or other professional consultants selected by
the TIDE Committee, for any matters relating to the purpose of the TIDE Committee. The Company
shall cause its employees to make themselves available to cooperate with the TIDE Committee for any
matters related to its purpose. The TIDE Committee shall have the authority to review all
information of the Company and to consider any and all factors they deem relevant to an evaluation
of whether to maintain or modify the Agreement or redeem the Rights.

     Section 30. Requests for Copies of this Agreement. The Company will mail a copy of
this Agreement, as in effect on the date of mailing, without charge promptly after receipt of a
written request therefor by any person.

     Section 31. 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 shares of Company
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 shares of Company Common Stock).

     Section 32. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or

40

 

invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of Directors determines in
its good faith judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the Rights shall not then be redeemable, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until
the Close of Business on the tenth Business Day following the date of such determination by the
Board of Directors.

     Section 33. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely in such State.

     Section 34. Counterparts. This Agreement may be executed (including by facsimile) in
one or more counterparts, and by the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.

     Section 35. Descriptive Headings. The headings contained in this Agreement are for
descriptive purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

41

 

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

	 	 	 	 	 	 	 
	SOURCEFIRE, INC.	 	 
	 
	 	 	 	 	 	 
	By: 
	 	/s/ John C. Burris	 	 
	 	
 
	 	 
	 

	 	Name:	 	John C. Burris	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Chief Executive Officer	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	CONTINENTAL STOCK TRANSFER & TRUST CO.	 	 
	 
	 	 	 	 	 	 
	By: 
	 	/s/ John W. Comer, Jr.	 	 
	 	
 
	 	 
	 

	 	Name:	 	John W. Comer, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 

	 	 

42

 

EXHIBIT A

TO RIGHTS AGREEMENT

FORM OF RIGHTS CERTIFICATE

			
	Certificate No.                     
	 	                     Rights

     NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO
BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR
ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.

Rights Certificate

SOURCEFIRE, INC.

     This certifies that                     , or registered assigns, is the registered holder of
the number of Rights set forth above, each of which entitles the registered holder thereof, subject
to the terms and conditions of the Rights Agreement dated as of October 30, 2008, as amended from
time to time (the “Rights Agreement”) (terms defined therein being used herein with the same
meaning unless otherwise defined herein), between Sourcefire, Inc., a Delaware corporation (the
“Company”), and Continental Stock Transfer & Trust Co., as Rights Agent (which term shall include
any successor Rights Agent under the Rights Agreement), to purchase from the Company at any time
after the Distribution Date and prior to the Expiration Date, at the office of the Rights Agent,
one one-hundredth of a fully paid and nonassessable share of Series A Junior Participating
Preferred Stock, par value $.001 per share (the “Preferred Stock”), of the Company at the Purchase
Price initially of $30.00 per one one-hundredth share of Preferred Stock (each such one
one-hundredth of a share being a “Unit”), upon presentation and surrender of this Rights
Certificate with the Election to Purchase and related certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number and kind of shares which may be
purchased upon exercise thereof) and the Purchase Price per Unit set forth above, are the number
and Purchase Price as of                     , 20___, based on the Preferred Stock as constituted at such
date.

     Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person or (ii) under certain circumstances described in the Rights Agreement, a
direct or indirect transferee of any such Acquiring Person, Associate or Affiliate, including a
transferee of any person who, after such transfer, becomes an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof

A-1

 

shall have any right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.

     In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may
entitle the registered holder thereof to purchase capital stock of an entity other than the Company
or receive common stock, cash or other assets, all as provided in the Rights Agreement.

     As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities which 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 a Triggering Event.

     This Rights Certificate is subject to all of the terms and conditions of the Rights Agreement,
which terms 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 principal office
of the Rights Agent and are available from the Rights Agent upon written request.

     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 an aggregate number of Rights
equal to the aggregate number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company under certain circumstances at its option at a redemption price of
$.001 per Right (as such amount may be adjusted pursuant to the Rights Agreement), at any time
prior to the earlier of the Close of Business on (i) the tenth business day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth Business Day following the Record Date) and (ii) the Final
Expiration Date. In addition, subject to the provisions of the Rights Agreement, the Rights may be
exchanged, in whole or in part, for Units of Preferred Stock or shares of the Common Stock of the
Company. Immediately upon the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than Rights which are not
subject to such exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.

     No fractional shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock, which may, at the election of the Company be evidenced by

A-2

 

depositary receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

     No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of Preferred Stock or of any other securities which may at
any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends of subscription rights, or otherwise,
until the 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. Dated as of                     
___, 20___

	 	 	 	 	 
	 	SOURCEFIRE, INC.

 	 
	 	By:  	 	 
	 	 	    Name: 	 	 
	 	 	    Title: 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	    Name: 	 	 
	 	 	    Title: 	 	 
	 

Countersigned:

CONTINENTAL STOCK TRANSFER & TRUST CO.,

as Rights Agent

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	    Name:	 	 
	 
	 	    Title:	 	 

A-3

 

(Form of Reverse Side of Rights Certificate)

FORM OF ASSIGNMENT

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

transfer the Rights Certificate.)

     FOR VALUE RECEIVED                                          hereby sells,
assigns and transfers unto:
                                                         
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint
                    
Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of substitution.

	 	 	 
	 
	 	Dated:
                     ___, ___
	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:

Certificate

     The undersigned hereby certifies by checking the appropriate boxes in (1) and (2) that:

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

	 	 	 
	 
	 	Dated:
                     ___, ___
	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:

A-4

 

NOTICE

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

     Signatures must be guaranteed by an approved eligible financial institution acceptable to the
Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.

     In the event the certification set forth above is not completed, the Company will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and, in the case
of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange
for this Rights Certificate.

A-5

 

FORM OF ELECTION TO PURCHASE

(To be executed if the registered holder desires to exercise

Rights represented by the Rights Certificate.)

To: Sourcefire, Inc.

     The undersigned hereby irrevocably elects to exercise                      Rights represented
by this Rights Certificate to purchase the Units of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any other person or other property which
may be issuable upon the exercise of the Rights) and requests that certificates for such Units (or
such other securities) be issued in the name of and delivered to:                                         
(Please print name and address)                                         
(Please insert social security or other identifying number).

     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 print name and address)                              
           
(Please insert social security or other identifying number).

Dated:
                     __, ____

	 	 	 
	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:

A-6

 

Certificate

     The undersigned hereby certifies by checking the appropriate boxes in (1) and (2) 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 an Associate thereof (as
such terms are defined in 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 thereof.

Dated:
                     __, ____

	 	 	 
	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:

NOTICE

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

     Signatures must be guaranteed by an approved eligible financial institution acceptable to the
Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.

     In the event the certification set forth above is not completed, the Company will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and the election
to purchase will not be honored.

A-7

 

EXHIBIT B

TO RIGHTS AGREEMENT

UNDER CERTAIN CIRCUMSTANCES

SET FORTH IN THE RIGHTS AGREEMENT,

RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN

ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF

(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),

WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY

SUBSEQUENT HOLDER,
MAY BECOME NULL AND VOID.

SUMMARY OF
RIGHTS TO PURCHASE PREFERRED STOCK

     On October 29, 2008, the Board of
Directors of Sourcefire, Inc. (the “Company”) authorized and
declared a dividend of one right (“Right”) for each outstanding share of its Common Stock, par
value $.001 per share (the “Company Common Stock”), to stockholders of record at the close of
business on November 14, 2008 (the “Record Date”), and authorized the issuance of one Right for
each share of Company Common Stock issued by the Company (except as otherwise provided in the
Rights Agreement, as defined below) between the Record Date and the Distribution Date (as defined
below). Each Right entitles the registered holder, subject to the terms of the Rights Agreement
(as defined below), to purchase from the Company one one-hundredth of a share (a “Unit”) of Series
A Junior Participating Preferred Stock, par value $.001 per share (the “Preferred Stock”), at a
purchase price of $30.00  per Unit, subject to adjustment. The purchase price is payable by
certified or bank check or money order payable to the order of the Rights Agent (as defined below).
The description and terms of the Rights are set forth in a Rights Agreement between the Company
and Continental Stock Transfer & Trust Co., as rights agent (the “Rights Agent”), dated as of
October 30, 2008, as amended from time to time (the “Rights Agreement”).

     The Rights Agreement (which includes the Certificate of Designation attached as Exhibit C
thereto) has been filed with the Securities and Exchange Commission as Exhibit 4.1 to a
Registration Statement on Form 8-A dated                     , 2008. Copies of the Rights Agreement and the
Certificate of Designation are available free of charge from the Company. This summary description
of the Rights Agreement, the Rights and the Preferred Stock does not purport to be complete and is
qualified in its entirety by reference to all of the provisions of the Rights Agreement and the
Certificate of Designation, including the definitions therein of certain terms, which Rights
Agreement and Certificate of Designation are incorporated herein by reference.

     The Rights Agreement

     Certificates; Distribution Date. Initially, the Rights will attach to all certificates
representing shares of outstanding Company Common Stock, and no separate Rights Certificates will
be distributed. Subject to the provisions of the Rights Agreement, the Rights will separate

B-1

 

from the Company Common Stock and the “Distribution Date” will occur upon the earlier of (i)
ten business days following a public announcement (the date of such announcement being the “Stock
Acquisition Date”) that a person or group of affiliated or associated persons (an “Acquiring
Person”) has acquired or otherwise obtained beneficial ownership (which includes, among other
things, certain derivative or synthetic arrangements having characteristics of a long position in
Company Common Stock) of 15% or more of the then-outstanding shares of Company Common Stock (or, if
the tenth business day after the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), and (ii) ten business days (or such later date as may be determined
by action of the Board of Directors) following the commencement of a tender offer or exchange offer
that would result in a person or group becoming an Acquiring Person. Until the Distribution Date,
(i) the Rights will be evidenced by Company Common Stock certificates and will be transferred with
and only with such Company Common Stock certificates, (ii) new Company Common Stock certificates
issued after the Record Date (also including shares distributed from Treasury) will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of
any certificates representing outstanding Company Common Stock will also constitute the transfer of
the Rights associated with the Company Common Stock represented by such certificates.

     An “Acquiring Person” does not include certain persons specified in the Rights Agreement.

     The Rights are not exercisable until the Distribution Date and will expire at the close of
business on the tenth anniversary of the Rights Agreement unless earlier redeemed or exchanged by
the Company as described below. Under certain circumstances, as provided in the Rights Agreement,
the exercisability of the Rights may be suspended.

     As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Company Common Stock as of the close of business on the Distribution Date (and
to each initial holder of certain shares of Company Common Stock issued after the Distribution
Date) and, thereafter, the separate Rights Certificates alone will represent the Rights.

     Flip-In. If a person becomes an Acquiring Person, then each holder of a Right will thereafter
have the right to receive, upon exercise, Units of Preferred Stock or, at the option of the
Company, shares of Company Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price of the Right. The
exercise price is the purchase price multiplied by the number of Units of Preferred Stock issuable
upon exercise of a Right prior to the event described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or any affiliate or associate thereof (or certain transferees of any thereof)
will be null and void.

     Flip-Over. If, at any time following the date that any person becomes an Acquiring Person,
(i) the Company is acquired in a merger or other business combination transaction and the Company
is not the surviving corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property

B-2

 

of the Company or any other person or (iii) 50% or more of the Company’s assets, cash flow or
earning power is sold or transferred, each holder of a Right (except Rights which previously have
been voided as described above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise price of the Right.

     Redemption. At any time until ten business days following the Stock Acquisition Date (or, if
the Stock Acquisition Date shall have occurred prior to the Record Date, until ten business days
following the Record Date), the Board of Directors may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (subject to adjustment in certain events) payable, at the election
of the Board of Directors, in cash, shares of Company Common Stock or other consideration
considered appropriate by the Board of Directors. Immediately upon the action of the Board of
Directors ordering the redemption of the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the redemption price.

     Exchange. The Company may, at any time after there is an Acquiring Person, until the time
specified in the Rights Agreement, exchange all or part of the then-outstanding and exercisable
Rights (other than Rights that shall have become null and void) for Units of Preferred Stock or
shares of Company Common Stock pursuant to a one-for-one exchange ratio, subject to adjustment.

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

     Amendment. Any of the provisions of the Rights Agreement may be amended without the approval
of the holders of the Rights or Company Common Stock at any time prior to the Distribution Date.
After such date, the provisions of the Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to shorten or lengthen any time period under the Rights
Agreement, or to make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person); provided, that no amendment
shall be made to lengthen (i) the time period governing redemption at such time as the Rights are
not redeemable or (ii) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights.

     Independent Director Review. The Rights Agreement provides that a Three-Year Independent
Director Evaluation Committee (the “TIDE Committee”) of the Board of Directors will review and
evaluate the Rights Agreement in order to consider whether the maintenance of the Rights Agreement
continues to be in the interests of the Company and its stockholders at least once every three
years. The TIDE Committee will be comprised of members of the Board of Directors who are not
officers, employees or Affiliates of the Company.

B-3

 

     Description of Preferred Stock

     The Units of Preferred Stock that may be acquired upon exercise of the Rights will be
nonredeemable.

     Each Unit of Preferred Stock will have a minimum preferential quarterly dividend of $0.01 per
Unit or any higher per share dividend declared on the Company Common Stock.

     In the event of liquidation, the holder of a Unit of Preferred Stock will receive a preferred
liquidation payment equal to the greater of $1.00 per Unit and the per share amount paid in respect
of a share of the Company Common Stock.

     Each Unit of Preferred Stock will have one vote, voting together with the Company Common
Stock.

     In the event of any merger, consolidation or other transaction in which shares of Company
Common Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the per share
amount paid in respect of each share of Company Common Stock.

     The rights of holders of the Preferred Stock with respect to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by customary antidilution
provisions.

     The economic value of one Unit of Preferred Stock that may be acquired upon the exercise of
each Right should approximate the economic value of one share of Company Common Stock.

B-4

 

EXHIBIT C

TO RIGHTS AGREEMENT

CERTIFICATE OF DESIGNATION

OF THE

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

SOURCEFIRE, INC.

     The undersigned officer of Sourcefire, Inc., a Delaware corporation (the
“Corporation”), DOES HEREBY CERTIFY:

     That, pursuant to the authority conferred upon the Board of Directors of the Corporation by
its Certificate of Incorporation (the “Certificate of Incorporation”), the said Board of
Directors, at a duly called meeting held on October 29, 2008, at which a quorum was present and
acted throughout, adopted the following resolution, which resolution remains in full force and
effect on the date hereof, creating a series of Preferred Stock having a par value of $.001 per
share, designated as Series A Junior Participating Preferred Stock (the “Series A Junior
Participating Preferred Stock”), out of the Corporation’s authorized shares of preferred stock
of the par value of $.001 per share (the “Preferred Stock”):

     RESOLVED, that pursuant to the authority vested in the Board of Directors in accordance with
the provisions of its Certificate of Incorporation, the Board of Directors does hereby create,
authorize and provide for 300,000 shares of its authorized Preferred Stock to be designated and
issued as the “Series A Junior Participating Preferred Stock,” having the relative rights,
preferences and limitations that are set forth as follows:

     1. Dividends and Distributions.

          (A) Subject to the prior and superior rights of the holders of any shares of any other series
of Preferred Stock or any other shares of stock of the Corporation ranking prior and superior to
the shares of Series A Junior Participating Preferred Stock with respect to dividends, each holder
of one one-hundredth (1/100) of a share (a “Unit”) of 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 that purpose, (i) quarterly dividends payable in cash on the
last day of February, May, August and November in each year (each such date being a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a Unit of Series A Junior Participating Preferred Stock, in an amount per Unit
(rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) subject to the provision for
adjustment hereinafter set forth, the aggregate per share amount of all cash dividends declared on
shares of 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 a Unit of
Series A Junior Participating Preferred Stock, and (ii) subject to the provision for adjustment
hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment
Date in an amount per Unit equal to the aggregate per share amount 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 shares of 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 a Unit of Series
A Junior Participating Preferred Stock. In the event that the Corporation shall at any time after
October 30, 2008 (the “Rights Declaration Date”) (i) declare any dividend on outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock or (iii) combine outstanding shares of Common Stock into a smaller number of shares,
then in each such case the amount to which the holder of a Unit of Series A Junior Participating
Preferred Stock was entitled immediately prior to such event under clause (i) (b) or clause (ii) of
the preceding sentence shall be adjusted by multiplying such amount by a fraction (y) the numerator
of which shall be the number of shares of Common Stock that are outstanding immediately after such
event and (z) the denominator of which shall be 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 Units of Series A Junior
Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or
otherwise); provided, however, that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per Unit 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 shall be cumulative on each outstanding Unit of Series
A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issuance of a Unit of Series A Junior Participating Preferred Stock, unless the date of
issuance of such Unit is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such Unit shall begin to accrue from the date of issuance of such Unit, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Units 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 Units of Series A
Junior Participating Preferred Stock in an amount less than the aggregate amount of all such
dividends at the time accrued and payable on such Units shall be allocated pro rata on a
Unit-by-Unit basis among all Units of Series A Junior Participating Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for the determination of holders of
Units 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.

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

 

 

          (A) Subject to the provision for adjustment hereinafter set forth, each Unit of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to one vote on all matters
submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall, at
any time after the Rights Declaration Date, (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock
or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, then in
each such case the number of votes per Unit to which holders of Units of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction (y) the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such event and (z) the denominator of which shall be the
number of shares of Common Stock that were outstanding immediately prior to such event.

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

     3. Certain Restrictions.

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

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

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

               (iii) redeem or purchase or otherwise acquire for consideration shares of any parity stock,
provided, however, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any junior stock; or

               (iv) redeem or purchase or otherwise acquire for consideration any Units of Series A Junior
Participating Preferred Stock, or any shares of parity stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of Directors) to all holders of
such Units and shares of parity stock 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 and 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 3, purchase or otherwise acquire such shares at such
time and in such manner.

     4. Reacquired Shares. Any Units of Series A Junior Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such Units shall, upon their cancellation,
become authorized but unissued shares (or fractions of shares) of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

     5. Liquidation, Dissolution or Winding Up.

          (A) Upon any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of junior stock, unless the
holders of Units of Series A Junior Participating Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the greater of either (a) $1.00 per Unit plus
an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, or (b) the amount equal to the aggregate per share amount to
be distributed to holders of shares of Common Stock, or (ii) to the holders of shares of parity
stock, unless simultaneously therewith distributions are made ratably on Units of Series A Junior
Participating Preferred Stock and all other shares of such parity stock in proportion to the total
amounts to which the holders of Units of Series A Junior Participating Preferred Stock are entitled
under clause (i)(a) of this sentence and to which the holders of shares of such parity stock are
entitled, in each case upon such liquidation, dissolution or winding up.

          (B) In the event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock
into a smaller number of shares, then in each such case the aggregate amount to which holders of
Units of Series A Junior Participating Preferred Stock were entitled immediately prior to such
event pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted by multiplying
such amount by a fraction (y) the numerator of which shall be the number of shares of Common Stock
that are outstanding immediately after such event and (z) the denominator of which shall be the
number of shares of Common Stock that were outstanding immediately prior to such event.

     6. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or converted into other stock or securities, cash and/or any other property, then in
any such case Units of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged for or converted into an amount per Unit (subject to the provision for

 

 

adjustment hereinafter set forth) equal to 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 converted or exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such case the amount set
forth in the immediately preceding sentence with respect to the exchange or conversion of Units of
Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction (y) the numerator of which shall be the number of shares of Common Stock that are
outstanding immediately after such event and (z) the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior to such event.

     7. Redemption. The Units of Series A Junior Participating Preferred Stock and shares
of Series A Junior Participating Preferred Stock shall not be redeemable.

     8. Ranking. The Units of Series A Junior Participating Preferred Stock and shares of
Series A Junior Participating Preferred Stock shall rank junior to all other series of the
Preferred Stock and to any other class of Preferred Stock that hereafter may be issued by the
Corporation as to the payment of dividends and the distribution of assets, unless the terms of any
such series or class shall provide otherwise.

     9. Fractional Shares. The Series A Junior Participating Preferred Stock may be issued
in Units or other fractions of a share, which Units or other fractions shall entitle the holder, in
proportion to such holder’s Units or other 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.

     10. Amendment. At any time when any Units of Series A Junior Participating Preferred
Stock are outstanding, neither the Certificate of Incorporation of the Corporation nor this
Certificate of Designation shall be amended in any manner which would materially alter or change
the powers, preferences or special rights of the Units of Series A Junior Participating Preferred
Stock so as to affect them adversely without the affirmative vote of the holders of a majority or
more of the outstanding Units of Series A Junior Participating Preferred Stock, voting separately
as a class.

     11. Certain Definitions. As used in this resolution with respect to the Series A
Junior Participating Preferred Stock, the following terms shall have the following meanings:

          (A) The term “Common Stock” shall mean the class of stock designated as the common stock, par
value $.001 per share, of the Corporation at the date hereof or any other class of stock resulting
from successive changes or reclassification of the common stock.

          (B) The term “junior stock” (i) as used in Section 3, shall mean the Common Stock and any
other class or series of capital stock of the Corporation over which the Series A Junior
Participating Preferred Stock has preference or priority as to dividends and (ii) as used in
Section 5, shall mean the Common Stock and any other class or series of capital stock of the

 

 

Corporation over which the Series A Junior Participating Preferred Stock has preference or
priority in any liquidation, dissolution or winding up of the Corporation.

          (C) The term “parity stock” (i) as used in Section 3, shall mean any class or series of
capital stock of the Corporation hereafter authorized or issued ranking pari passu with the Series
A Junior Participating Preferred Stock as to dividends and (ii) as used in Section 5, shall mean
any class or series of capital stock of the Corporation ranking pari passu with the Series A Junior
Participating Preferred Stock in any liquidation, dissolution or winding up.

     IN WITNESS WHEREOF, Sourcefire, Inc. has caused this Certificate of Designation to be signed
by its Chief Executive Officer  this 30th day of October 2008.

	 	 	 	 	 
	 	SOURCEFIRE, INC.

 	 
	 	By:  	 	 
	 	 	    Name: 	John C. Burris	 
	 	 	    Title: 	Chairman and Chief Executive
Officerexv10w1w1

Exhibit 10.1.1

AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT

CLASS A-1

     THIS AGREEMENT, amended and restated as of                     , 2008, between Trinity Industries,
Inc., a Delaware corporation (the “Company”) and                      (the “Executive”) amends and
restates that certain Executive Severance Agreement entered into between the Company and the
Executive as of
                             ,
           .

WITNESSETH

     WHEREAS, the Company’s Board of Directors has determined that it is appropriate to reinforce
and encourage the continued attention and dedication of members of the Company’s management,
including the Executive, to their assigned duties without distraction in potentially disturbing
circumstances arising from the possibility of a Change in Control of the Company (as hereinafter
defined); and

     WHEREAS, in consideration for the benefits provided under this Agreement, the Executive will
continue to give his or her attention and dedication to his or her duties with the Company; and

     WHEREAS, the Company and the Executive wish to amend and restate that certain Executive
Severance Agreement by and between the Company and the Executive which was executed as of the date
stated above in order to revise or clarify certain provisions to carry out the purposes of such
agreement;

     NOW, THEREFORE, this Agreement sets forth the severance compensation which the Company agrees
it will pay to the Executive if the Executive’s employment with the Company terminates under one of
the circumstances described herein in connection with a Change in Control of the Company.

     1. Term. This Agreement shall terminate, except to the extent that any obligation of the
Company hereunder remains unpaid as of such time, upon the earliest of:

     (a) September 9, 2010; provided, however, that, commencing on September 9, 2009 and on each
anniversary date thereafter (each such date, an “Anniversary Date”), the expiration date under this
clause (a) shall automatically be extended for one additional year unless, not later than the
December 31 immediately prior to such Anniversary Date, either party shall have given written
notice that it does not wish to extend this Agreement, but in no event shall the expiration date
under this clause (a) be earlier than the second anniversary of the Effective Date of a Change in
Control.

     (b) the termination of the Executive’s employment with the Company based on death, Disability
(as defined in Section 3(b) hereof) or Cause (as defined Section 3(c) hereof); and

1

 

     (c) the voluntary resignation of the Executive for any reason other than Good Reason (as
defined in Section 3(d)).

     2. Change in Control.

     (a) Acceleration of Vesting and Extension of Exercise Rights of Equity Compensation Upon a
Change in Control. In addition to any provisions concerning acceleration of vesting in any
applicable plan or agreement relating to equity-type compensation that may be outstanding between
the Executive and the Company or any subsidiary of the Company (including, without limitation, any
stock option agreement, restricted stock agreement, career share agreement, bridge share agreement,
performance incentive plan agreement, and performance unit plan agreement), and notwithstanding any
provision to the contrary in any such plan or agreement, upon the Effective Date of a Change in
Control all units, stock options, incentive stock options, performance shares, performance awards,
and stock appreciation rights then held by the Executive shall immediately become 100% vested and
exercisable, and the Executive shall become 100% vested in all career shares, bridge shares, and
shares of restricted stock, held by or for the benefit of the Executive.

     In addition to any provisions concerning extension of exercise rights in any applicable plan
or agreement relating to equity-type rights or compensation that may be outstanding between the
Executive and the Company or any subsidiary of the Company (including, without limitation, any
stock option agreement, restricted stock agreement, career share agreement, bridge share agreement,
performance incentive plan agreement, and performance unit plan agreement), and notwithstanding any
provision to the contrary in any such plan or agreement, upon the Effective Date of a Change in
Control the Executive’s right to exercise any previously unexercised options or other equity-type
rights shall not terminate until the latest date on which the option or other right granted under
such agreement would expire under the terms of such agreement but for the Executive’s termination
of employment; with respect to any incentive stock option held by the Executive, if not exercised
within three months after termination of employment, such options shall immediately convert to
non-qualified stock options.

     (b) Acceleration of Vesting of Retirement and Deferred Compensation Benefits Upon a Change in
Control. In addition to any provisions concerning acceleration of vesting in any applicable plan
or agreement relating to retirement or deferred compensation-type benefits that may be outstanding
between the Executive and the Company (including, without limitation, the Company’s Profit Sharing
Plan, Supplemental Profit Sharing Plan, and Deferred Compensation Plan and Agreement), and
notwithstanding any provision to the contrary in any such plan or agreement, upon the Effective
Date of a Change in Control all accounts, interests, rights, and benefits of the Executive in any
such plan or agreement shall immediately become 100% vested and exercisable; however, such
acceleration shall not apply to the Company’s Pension Plan for Salaried Employees.

     (c) No Other Compensation Paid Prior to Termination of Employment. Except as provided in
paragraphs (a) and (b) of this Section 2, no compensation shall be payable or benefits
provided under this Agreement unless and until (x) there shall have been a Change in Control of the
Company, and (y) the Executive’s employment by the Company is terminated.

2

 

     (d) Definition of Change in Control. For purposes of this Agreement, a “Change in Control” of
the Company shall be deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred:

     (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power of the
Company’s then-outstanding securities, unless the transaction resulting in a Person becoming
the Beneficial Owner of 30% or more of the combined voting power of the Company’s
then-outstanding securities is approved in advance by the Company’s Board of Directors
(sometimes hereafter referred to as the “Board”), excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii)
below; or

     (ii) the following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on September 9, 2008, constitute the
Board and any new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on September 9, 2008 or whose
appointment, election or nomination for election was previously so approved or recommended;
or

     (iii) there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any securities acquired directly from the
Company or its Affiliates other than in connection with the acquisition by the Company or
its Affiliates of a business) representing 30% or more of the combined voting power of the
Company’s then outstanding securities; or

     (iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or a sale or disposition (whether by reorganization, merger,
consolidation, split-up, spin-off, split-off, combination, subdivision, or other similar
corporate transaction or event) by the Company of all or substantially all of the Company’s
assets (in one transaction or a series of transactions within any period of 24 consecutive
months) other than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior

3

 

to such sale. However, a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity (or two or more entities in one transaction or a
series of transactions within any period of 24 consecutive months), at least 60% of the
combined voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company immediately
prior to such sale or disposition shall be considered a Change in Control of the Company for
purposes of this Agreement if the Executive is not offered employment with such entity (or
one of such entities) on terms comparable to those described in Section 3(g) hereof.
The sale or disposition of a subsidiary or a division of the Company, or certain assets of
the Company (or of a subsidiary of the Company), shall not be a Change in Control unless any
such transaction or series of related transactions results in a sale or disposition by the
Company of all or substantially all of the Company’s assets as provided in subparagraph (iv)
above.

For purposes hereof:

     “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12
of the Exchange Act.

     “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.

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

     “Person” shall have the meaning given in Section 3(a) (9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of such
securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company.

     (e) Definition of Effective Date of a Change in Control. For purposes of this Agreement,
“Effective Date of a Change in Control” shall mean the first to occur of (A) the date on which a
Person first becomes the Beneficial Owner of 30% or more of the combined voting power of the
Company’s then outstanding securities as defined in subparagraph (d)(i) above, or (B) the effective
date of the election of one or more directors to the Board which results in the individuals defined
in subparagraph (d)(ii) above ceasing to constitute a majority of the number of directors then
serving, or (C) the effective date of the consummation of a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation as defined in
subparagraph (d)(iii) above, or (D) the effective date of a liquidation or dissolution of the
Company, or a sale or disposition by the Company of all or substantially all of the Company’s
assets, as defined in subparagraph (d)(iv) above.

4

 

     3. Termination Following Change in Control.

     (a) Compensation Payable Upon Termination. If a Change in Control of the Company shall have
occurred, the Executive shall be entitled to the compensation provided in Section 4 hereof
upon the termination of the Executive’s employment with the Company by the Executive or by the
Company unless such termination is as a result of:

     (i) the Executive’s death;

     (ii) the Executive’s Disability (as defined in Section 3(b) below;

     (iii) the Executive’s termination by the Company for Cause (as defined in Section
3(c) below); or

     (iv) the Executive’s decision to terminate employment other than for Good Reason (as
defined in Section 3(d) below).

     Notwithstanding the foregoing provisions of this Section 3, if the Executive’s
employment is terminated by the Company other than for Cause or Disability (for purposes of this
paragraph, Cause shall include all of the events set forth in Section 3(c) hereof and the
following: willfully engaging by the Executive in continued misconduct which is materially
injurious to the Company after having been advised in writing of the particular misconduct deemed
by the Company to be materially injurious to the Company and instructed in such writing to cease
any further misconduct of a similar nature) prior to a Change in Control, and it is reasonably
demonstrated that such termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with a
Change in Control, then for all purposes of this Agreement, such termination shall be deemed to
have occurred immediately following a Change in Control; in addition, if the Executive’s employment
is terminated by the Company other than for Cause (as defined in this paragraph) or Disability
within 90 days prior to a Change in Control, such termination shall conclusively be deemed to have
occurred following a Change in Control. For further clarification, in the event of a termination
of employment prior to a Change in Control that is treated as having occurred after a Change in
Control, the Executive shall not be entitled to benefits under Section 4 hereof if the
Executive voluntarily terminated his or her employment whether or not for Good Reason.

     (b) Disability. If, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from his or her duties with the Company on a
full-time basis for one year and within thirty days after written Notice of Termination (as
hereinafter defined) is thereafter given by the Company, the Executive shall not have returned to
the full-time performance of the Executive’s duties, the Company may terminate this Agreement for
“Disability.”

     (c) Cause. The Company may terminate the Executive’s employment for Cause. For purposes of
this Agreement only, the Company shall have “Cause” to terminate the Executive’s employment
hereunder only on the basis of:

5

 

     (i) the willful and continued failure by the Executive to substantially perform the
Executive’s duties with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness and other than in respect of any
duties inconsistent with, or more burdensome than, the Executive’s duties with the Company
immediately prior to a Change in Control of the Company);

     (ii) misappropriation or embezzlement from the Company or any other act or acts of
dishonesty by the Executive constituting a felony that results, or is intended to result,
directly or indirectly, in gain to or personal enrichment of the Executive at the Company’s
expense;

     (iii) the conviction of the Executive of a felony involving the moral turpitude of the
Executive; or

     (iv) the refusal of the Executive to accept offered employment after a Change in
Control which complies with the terms and conditions of Section 3(g) hereof.

For purposes of this Section 3(c), no act or failure to act on the part of the Executive
shall be considered “willful” unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the action or omission of the Executive was in the best
interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with the Executive’s
counsel, to be heard before the Board), finding that the Executive was guilty of conduct set forth
in this Section 3(c) and specifying the particulars thereof in detail.

     (d) Good Reason. The Executive may terminate the Executive’s employment for Good Reason at
any time after the Effective Date of a Change in Control of the Company. For purposes of this
Agreement “Good Reason” shall mean the occurrence of any of the following unless the Executive has
given his or her express prior written consent:

     (i) a good faith determination by the Executive that there has been a material adverse
change in the Executive’s working conditions or responsibilities relative to the most
favorable working conditions, and responsibilities applicable to the Executive during the 12
month period prior to the Change in Control (including, but not limited to, a significant
reduction in the level of support services, staff, secretarial and other assistance, office
space, and accoutrements);

     (ii) the assignment to the Executive by the Company of duties inconsistent with the
Executive’s position, duties, and reporting responsibilities with the Company immediately
prior to a Change in Control of the Company (including, but not limited to, a reduction in
the nature or scope of the Executive’s authority, powers, functions, or duties), or a change
in the Executive’s titles or offices as in effect immediately prior to a Change in Control
of the Company, or any removal of the Executive from or any failure to reelect the Executive
to any of such positions, except in connection with the

6

 

termination of his or her employment for Disability or Cause, or as a result of the
Executive’s death, or by the Executive other than for Good Reason;

     (iii) a reduction by the Company in the Executive’s base salary as in effect on the
date hereof or as the same may be increased from time to time during the term of this
Agreement, or the Company’s failure to increase (within 12 months of the Executive’s last
increase in base salary) the Executive’s base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the average percentage
increase in base salary for all officers of the Company effected in the preceding 12 months;

     (iv) any action by the Company which would adversely affect the Executive’s
participation in or materially reduce the Executive’s benefits, in the aggregate, under the
Benefit Plans, Incentive Plans, and Securities Plans; “Benefit Plans” include health and
welfare benefit plans in which the Executive is participating at the time of a Change in
Control of the Company (including, without limitation, the Company’s pension plans, group
life insurance plan, and medical, dental, accident and disability plans); “Incentive Plans”
include incentive compensation plans in which the Executive is participating at the time of
a Change in Control of the Company (including, without limitation, the Company’s annual
incentive compensation plan and the three-year Performance Incentive Plan); and “Securities
Plans” include any plan or arrangement to receive securities of the Company in which the
Executive is participating at the time of a Change in Control of the Company (including,
without limitation, the Company’s Stock Option Plan, and any other plan or arrangement to
receive and exercise stock options, stock appreciation rights, career shares, bridge shares,
restricted stock or grants thereof).

     (v) a relocation of the Company’s principal executive offices to a location outside of
Dallas County, Texas, or the Executive’s relocation to any place other than the location at
which the Executive performed the Executive’s duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations at the time of a
Change in Control of the Company;

     (vi) any failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled at the time of a Change in Control of the
Company;

     (vii) any material breach by the Company of any provision of this Agreement;

     (viii) any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company;

     (ix) any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 3(e)
below, and for purposes of this Agreement, no such purported termination shall be effective;
or

7

 

     (x) voluntary resignation by the Executive, or termination of employment by reason of
the Executive’s death or Disability, at any time during either:

     (A) the 90-day period beginning on the Effective Date of a Change in Control; or

     (B) the 30-day period beginning on the 365th day after the Effective
Date of a Change in Control.

     (e) Notice of Termination. Any termination by the Company pursuant to Section 3(b),
3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of
this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those
specific termination provisions in this Agreement relied upon and which sets 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. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of Termination.

     (f) Date of Termination. “Date of Termination” shall mean (a) if this Agreement is terminated
by the Company for Disability, thirty days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the Executive’s duties
on a full-time basis during such 30-day period), (b) if the Executive’s employment is terminated by
the Company for any other reason, the date on which a Notice of Termination is given, or (c) if the
Executive terminates his or her employment for Good Reason, the date on which a Notice of
Termination is given.

     (g) Continued Employment After Change in Control. If a Change in Control has occurred, the
Executive shall not be treated as having terminated employment for purposes of this Agreement, and
therefore will not be entitled to any benefits under this Agreement after such Change in Control,
if (i) the unit, division, or subsidiary for which the Executive primarily provides services is
spun-off, sold, or otherwise disposed of, (ii) such transaction (x) was approved by a vote of at
least two-thirds (2/3) of the directors of the Company who satisfy the requirements of subparagraph
(d)(ii) of Section 2 above, and (y) did not originate with an unsolicited offer (as
determined by the Board in good faith), and (iii) the Executive is offered employment in writing
with the purchasing or continuing entity, and (iv) such purchasing or continuing entity enters into
a written agreement with the Company and the Executive, which is approved by a vote of at least 2/3
of the directors of the Company who satisfy the requirement of subparagraph (d)(ii) of Section
2 hereof, which expressly, absolutely, and unconditionally assumes and agrees to perform this
Agreement in the same manner and to the same extent that a successor to all or substantially all of
the business and/or assets of the Company would be required as provided in Section 8 hereof
(except that subparagraph (d)(x) of Section 3 shall not be applicable to any such
Executive), and it shall be conclusively presumed for purposes of such agreement that a Change in
Control has occurred with respect to the Executive.

     4. Severance Compensation upon Termination of Employment. The Company may terminate the
Executive’s employment at any time; however, if (a) during the two-year period beginning on the
Effective Date of a Change in Control, the Company shall terminate the Executive’s employment other
than pursuant to Section 3(b) or 3(c) or if the Executive shall terminate his or
her employment for Good Reason or (b) during any period of time after a

8

 

Change in Control has occurred but prior to either the Effective Date of a Change in Control
or the date on which the Board (or shareholders of the Company, if applicable) takes any action
which has the effect of rescinding or nullifying the Change in Control (or on the date a Change of
Control is rescinded or nullified without the necessity of any such action), the Company shall
terminate the Executive’s employment other than pursuant to Section 3(b) or 3(c) or
if the Executive shall terminate his or her employment for Good Reason other than pursuant to
Section 3(d)(x), then as severance pay:

     (a) The Company shall pay to the Executive in a lump sum, in cash, on or before the fifth day
following the Date of Termination, an amount equal to three (3.0) times the sum of (A) the
Executive’s base salary as in effect immediately prior to the Change in Control or, if higher, in
effect immediately prior to the Date of Termination, plus the annual allowance for the Executive
under the Company’s Executive Perquisite Program, and (B) the greater of (i) the average bonus
(under all Company bonus plans for which the Executive is eligible) earned with respect to the
three most recently completed full fiscal years (or, if the Executive has not been employed for at
least three full fiscal years, all of completed full fiscal years during which he or she has been
employed), or (ii) the target bonus (under all Company bonus plans for which the Executive is
eligible) for the fiscal year in which the Change in Control occurs.

     (b) For a period of thirty-six (36) months subsequent to the Executive’s Date of Termination,
the Company shall at its expense continue on behalf of the Executive and his or her dependents and
beneficiaries, all medical, dental, vision, health, and life insurance benefits, which were being
provided to the Executive at the time of termination of employment. The benefits provided in this
Section 4(b) shall be no less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage in effect immediately prior to the Change in
Control (or, if more favorable to tile Executive, immediately prior to the Notice of Termination).
The Company’ s obligation hereunder to provide a benefit shall terminate if the Executive obtains
comparable coverage under a subsequent employer’s benefit plan. For purposes of the preceding
sentence, benefits will not be comparable during any waiting period for eligibility, for such
benefits or during any period during which there is a preexisting condition limitation on such
benefits. The Company also shall pay a lump sum equal to the amount of any additional income tax
payable by the Executive and attributable to the benefits provided under this subparagraph (b) at
the time such tax is imposed upon the Executive. In the event that the Executive’s participation
in any such coverage is barred under the general terms and provisions of the plans and programs
under which such coverage is provided, or any such coverage is discontinued or the benefits
thereunder are materially reduced, the Company shall provide or arrange to provide the Executive
with benefits substantially similar to those which the Executive was entitled to receive under such
coverage immediately prior to the Notice of Termination. At the end of the period of coverage set
forth above, the Executive shall have the option to have assigned to him at no cost to the
Executive and with no apportionment of prepaid premiums, any assignable insurance owned by the
Company and relating specifically to the Executive, and the Executive shall be entitled to all
health and similar benefits that are or would have been made available to the Executive under law
(including continuation coverage under COBRA).

     (c) The Company shall pay to the Executive and, if applicable, to his or her beneficiaries, in
cash, on or before the fifth day following the Date of Termination, a lump sum representing the
present value of the excess of (i) the benefit (expressed as a life annuity

9

 

commencing at age 65 or such earlier date as of which the actuarial equivalent of such annuity
is greatest) that the Executive would have accrued under the provisions of the Company’s Pension
Plan for Salaried Employees in effect immediately prior to the Change in Control had the Executive
continued to be employed for an additional thirty-six months following the Date of Termination at
the annual rate of compensation (exclusive of the annual allowance for the Executive under the
Company’s Executive Perquisite Program) taken into account under clause (a) hereof (taking such
thirty-six months into account both for vesting and for benefits), over (ii) the benefit actually
accrued by the Executive under such plan. For purposes hereof, “present value” shall be determined
using a per annum discount rate as established from time to time for the Company’s Pension Plan for
Salaried Employees and “actuarial equivalent” shall be determined using the same assumptions
utilized under such plan. In addition, with respect to the benefits attributable to the additional
thirty-six months, the benefit under (i) above shall be calculated without regard to the
limitations of Section 415 and Section 401(a)(17) of the Internal Revenue Code of 1986, as amended
(the “Code”), and such amount shall be paid without regard to any vesting requirement in such plan.

     The foregoing payments shall be subject to withholding of federal, state and local income,
FICA and similar taxes, if required by law.

     5. Gross-Up Payment.

     (a) Total Payments. Whether or not the Executive becomes entitled to the payments
under Section 4 hereof, if any of the payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive’s termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being
hereinafter referred to as the “Total Payments”) would be subject to the excise tax imposed under
Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any federal, state and local income and employment
taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal
income taxes at the highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates
of taxation in the state and locality of the residence of the Executive on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.

     (b) Determination By Accountant. All determinations required to be made under this
Section 5, including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the independent accounting firm which served as the Company’s auditor
immediately prior to the Change in Control (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen (15) business days
after the Date of Termination, if applicable, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is also serving as accountant or auditor for the individual,
entity, or group effecting the Change in Control, the Executive may appoint another nationally
recognized public accounting firm to make the determinations

10

 

required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder), by giving written notice of such appointment to the Company within five (5) business
days after the Date of Termination. All fees and expenses of the Accounting Firm shall be borne
solely by the Company and it shall be the Company’s obligation to cause the Accounting Firm to take
any actions required hereby.

     If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with an opinion that he or she has substantial authority not to report any
Excise Tax on his or her federal income tax return. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that a Gross-Up Payment which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to Section 5(c)
and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

     (c) Notification Required. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten (10) business days after the Executive knows of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the thirty-(30) day period following the date on
which he or she gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such claim, the Executive
shall:

     (i) give the Company any” information reasonably requested by the Company relating to
such claim,

     (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,

     (iii) cooperate with the Company in good faith in order to effectively contest such
claim,

     (iv) permit the Company to participate in any proceedings relating to such claim,
provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax, including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or

11

 

forgo any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund, or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.

     (d) Repayment. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 5(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c),
a determination is made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.

     6. Six Month Delay.

     (a) To the extent (i) any payment or payments to which the Executive becomes entitled under
this Agreement, or any agreement or plan referenced herein, in connection with the Executive’s
termination of employment with the Company constitute deferred compensation subject to Section 409A
of the Code, and (ii) the Executive is deemed at the time of such termination of employment to be a
“specified employee” under Section 409A of the Code, then such payment or payments shall not be
made or commence until the earliest of (A) the expiration of the six (6) month period measured from
the date of the Executive’s “separation from service” (as such term is defined in final Treasury
Regulations issued under Section 409A of the Code and any other guidance issued thereunder) with
the Company; (B) the date the Executive becomes “disabled” (as defined in Section 409A of the
Code); or (C) the date of the Executive’s death following such separation from service. Upon the
expiration of the applicable deferral period, any payments which would have otherwise been made
during that period (whether in a single sum or in installments) in the absence of this Section
6 shall be paid to the Executive or the Executive’s beneficiary in one lump sum.

12

 

     (b) To the extent that any payment or payments referenced in Section 6(a) above become
subject to the six month delay due to the Executive’s status as a specified employee, any such
payment shall be paid into the Trinity Industries, Inc. Severance Benefits Trust, under agreement
dated as of September 9, 2008, on the date on which the Executive would have received such payment
without application of this Section 6, and shall be paid to the Executive at the time the
Executive becomes entitled to such payment or payments under this Section 6.

     (c) The Executive has reviewed with the Executive’s own tax advisors the tax consequences of
this Agreement and the transactions contemplated hereby. The Executive is relying solely on his or
her tax advisors and not on any statements or representations of the Company or any of its agents
and understands that the Executive (and not the Company) shall be responsible for the Executive’s
own tax liability that may arise as a result of this Agreement or the transactions contemplated
hereby, except as otherwise specifically provided in this Agreement.

     7. No Obligation To Mitigate Damages; No Effect on Other Contracts.

     (a) The Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the Date of Termination, or
otherwise.

     (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Executive’s existing rights, or rights
which would accrue solely as a result of the passage of time, under any other agreement, contract,
plan or arrangement with the Company.

     8. Successor to the Company.

     (a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession had taken
place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement and shall entitle the Executive to
terminate the Executive’s employment for Good Reason. As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section 8 or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

     (b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal and legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in

13

 

accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to executor or administrator
of the Executive’s estate.

     9. Notice. For purposes of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage prepaid, as follows:

If to the Company:

Trinity Industries, Inc.

P. O. Box 568887

Dallas, Texas 75356-8887

Attention: President

If to the Executive:

(Home Address)

or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

     10. Miscellaneous. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.

     11. Validity. The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

     12. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     13. Legal Fees and Expenses. The Company shall pay, upon written demand therefor by the
Executive, all legal fees and expenses which the Executive may reasonably incur as a result of any
dispute or contest (regardless of the outcome thereof) by or with the Company or others regarding
the validity or enforceability of, or liability under, any provision hereof (including as a result
of any contest about the amount of any payments pursuant to Sections 4 or 5), plus in each
case interest at the “applicable Federal rate” (as defined in Section 1274(d) of the Code). In any
action brought by the Executive for damages or to enforce any provisions hereof, he or she shall be
entitled to seek both legal and equitable relief and remedies, including, without

14

 

limitation, specific performance of the Company’s obligations hereunder, in his or her sole
discretion.

     14. Continuation of Salary During Dispute. In the event of any dispute or contest by or with
the Company or others regarding the validity or enforceability of, or liability under, any
provision hereof (including as a result of any contest about the amount of any payments pursuant to
Sections 4 or 5), and upon written demand by the Executive, the Company shall continue to
pay the Executive his or her base salary as in effect immediately prior to the date of the Change
in Control. Said periodic payments shall be made in accordance with the Company’s normal payroll
practices. Payments shall continue until final resolution of such dispute or contest either by an
agreement between the Executive and the Company or formal order of a court with proper
jurisdiction. In the event that the Company substantially prevails in such dispute, the Executive
shall be obligated to repay to the Company all amounts he or she has received under this
Section 14 (after taxes applicable thereto) plus interest at the “applicable Federal rate”
(as defined in Section 1274(d) of the Code).

     15. Confidentiality. The Executive shall retain in confidence any and all confidential
information known to the Executive concerning the Company and its business so long as such
information is not otherwise publicly disclosed.

     16. Modification. No change or modification of this Agreement shall be valid or binding upon
the parties unless the change or modification is in writing and signed by the parties.

     17. Subsidiaries. In this Agreement, there are numerous references to the Executive’s
employment by and duties with the Company, payment of benefits and compensation by the Company, and
termination of employment with the Company. The parties to this Agreement acknowledge that the
Executive may be employed, currently or at some time in the future, by a subsidiary of the Company.
As used in this Agreement, a subsidiary means an entity which is at least 80% owned, directly or
indirectly, by the Company. It is the parties’ intention that transfer of the Executive’s
employment from the Company to a subsidiary or from one subsidiary to another subsidiary will not
constitute a termination of employment with the Company for any reason hereunder unless otherwise
specifically provided herein. In addition, unless otherwise specifically provided herein
(including Section 3(g)), “termination of employment with the Company” shall mean
termination of employment with the Company and all of its subsidiaries, and “termination of
employment by Company” shall mean termination of employment by the entity which actually employs
the Executive. Other references to employment by the Company, duties with the Company, and salary
and benefits shall include employment, duties, salary, and benefits with respect to the entity
which actually employs the Executive. However, with respect to the definition of Change in Control
of the Company, except as otherwise specifically provided herein, references to the Company shall
mean only the Company, and the obligations under Sections 4 and 5 herein shall be
obligations of the Company.

* * * * *

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRINITY INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Timothy R. Wallace
	 	 
	 

	 	Title:
	 	Chairman and President	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

16

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