\nSection 21. Change of Rights Agent……………………………………………………….26<\/p>\nSection 22. Issuance of New Right Certificates…………………………………………….27<\/p>\n
Section 23. Redemption………………………………………………………………….27<\/p>\n
Section 24. Exchange……………………………………………………………………28<\/p>\n
Section 25. Notice of Certain Events……………………………………………………..29<\/p>\n
Section 26. Notices…………………………………………………………………….29<\/p>\n
Section 27. Supplements and Amendments……………………………………………………30<\/p>\n
Section 28. Successors………………………………………………………………….30<\/p>\n
Section 29. Benefits of this Agreement……………………………………………………30<\/p>\n
Section 30. Determinations and Actions by the Board of Directors…………………………….30<\/p>\n
Section 31. Severability………………………………………………………………..31<\/p>\n
Section 32. Governing Law……………………………………………………………….31<\/p>\n
Section 33. Counterparts………………………………………………………………..31<\/p>\n
Section 34. Descriptive Headings…………………………………………………………31<\/p>\n
Section 35. Termination…………………………………………………………………31
\n<\/c><\/c><\/s><\/table>\n
ii<\/p>\n
4<\/p>\n
RIGHTS AGREEMENT<\/p>\n
Rights Agreement, dated as of April 6, 1998 (“Agreement”),
\nbetween Harken Energy Corporation, a Delaware corporation (the “Company”), and
\nChaseMellon Shareholder Services L.L.C., as Rights Agent (the “Rights Agent”).<\/p>\n
The Board of Directors of the Company has authorized and
\ndeclared a dividend of one preferred share purchase right (a “Right”) for each
\nshare of Common Stock (as hereinafter defined) of the Company outstanding as of
\nthe Close of Business (as defined below) on April 17, 1998 (the “Record Date”),
\neach Right representing the right to purchase one one-thousandth (subject to
\nadjustment) of a share of Preferred Stock (as hereinafter defined), upon the
\nterms and subject to the conditions herein set forth, and has further authorized
\nand directed the issuance of one Right (subject to adjustment as provided
\nherein) with respect to each share of Common Stock that shall become outstanding
\nbetween the Record Date and the earlier of the Distribution Date and the
\nExpiration Date (as such terms are hereinafter defined); provided, however, that
\nRights may be issued with respect to shares of Common Stock that shall become
\noutstanding after the Distribution Date and prior to the Expiration Date in
\naccordance with Section 22.<\/p>\n
Accordingly, in consideration of the premises and the mutual
\nagreements herein set forth, the parties hereby agree as follows:<\/p>\n
Section 1. Certain Definitions. For purposes of this
\nAgreement, the following terms have the meaning indicated:<\/p>\n
(a) “Acquiring Person” shall mean any Person (as such term is
\nhereinafter defined) who or which shall be the Beneficial Owner (as such term is
\nhereinafter defined) of 15% or more of the shares of Common Stock then
\noutstanding, but shall not include an Exempt Person (as such term is hereinafter
\ndefined); provided, however, that (i) if the Board of Directors of the Company
\ndetermines in good faith that a Person who would otherwise be an “Acquiring
\nPerson” became such inadvertently (including, without limitation, because (A)
\nsuch Person was unaware that it beneficially owned a percentage of Common Stock
\nthat would otherwise cause such Person to be an “Acquiring Person” or (B) such
\nPerson was aware of the extent of its Beneficial Ownership of Common Stock but
\nhad no actual knowledge of the consequences of such Beneficial Ownership under
\nthis Agreement) and without any intention of changing or influencing control of
\nthe Company, and if such Person as promptly as practicable divested or divests
\nitself of Beneficial Ownership of a sufficient number of shares of Common Stock
\nso that such Person would no longer be an “Acquiring Person,” then such Person
\nshall not be deemed to be or to have become an “Acquiring Person” for any
\npurposes of this Agreement; (ii) if, as of the date hereof, any Person is the
\nBeneficial Owner of 15% or more but less than 20% of the shares of Common Stock
\noutstanding, such Person shall not be or become an “Acquiring Person” unless and
\nuntil such time as such Person shall become the Beneficial Owner of additional
\nshares of Common Stock (other than pursuant to a dividend or distribution paid
\nor made by the Company on the outstanding Common Stock in shares of Common Stock
\nor pursuant to a split or subdivision of the outstanding Common Stock), unless,
\nupon becoming the Beneficial Owner of such additional shares of Common Stock,
\nsuch Person is not then the Beneficial Owner of 15% or more of the shares of
\nCommon Stock then outstanding; and<\/p>\n
5<\/p>\n
(iii) no Person shall become an “Acquiring Person” as the result of an
\nacquisition of shares of Common Stock by the Company which, by reducing the
\nnumber of shares outstanding, increases the proportionate number of shares of
\nCommon Stock beneficially owned by such Person to 15% or more of the shares of
\nCommon Stock then outstanding, provided, however, that if a Person shall become
\nthe Beneficial Owner of 15% or more of the shares of Common Stock then
\noutstanding by reason of such share acquisitions by the Company and shall
\nthereafter become the Beneficial Owner of any additional shares of Common Stock
\n(other than pursuant to a dividend or distribution paid or made by the Company
\non the outstanding Common Stock in shares of Common Stock or pursuant to a split
\nor subdivision of the outstanding Common Stock), then such Person shall be
\ndeemed to be an “Acquiring Person” unless upon becoming the Beneficial Owner of
\nsuch additional shares of Common Stock such Person does not beneficially own 15%
\nor more of the shares of Common Stock then outstanding. For all purposes of this
\nAgreement, any calculation of the number of shares of Common Stock outstanding
\nat any particular time, including for purposes of determining the particular
\npercentage of such outstanding shares of Common Stock of which any Person is the
\nBeneficial Owner, shall be made in accordance with the last sentence of Rule
\n13d-3(d)(1)(i) of the General Rules and Regulations under the Securities
\nExchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date
\nhereof.<\/p>\n
(b) “Affiliate” and “Associate” shall have the respective
\nmeanings ascribed to such terms in Rule 12b-2 of the General Rules and
\nRegulations under the Exchange Act, as in effect on the date hereof.<\/p>\n
(c) A Person shall be deemed the “Beneficial Owner” of,
\nshall be deemed to have “Beneficial Ownership” of and shall be deemed to
\n“beneficially own” any securities:<\/p>\n
(i) which such Person or any of such Person’s
\nAffiliates or Associates is deemed to beneficially own, directly or indirectly,
\nwithin the meaning of Rule l3d-3 of the General Rules and Regulations under the
\nExchange Act as in effect on the date hereof;<\/p>\n
(ii) which such Person or any of such Person’s
\nAffiliates or Associates has (A) the right to acquire (whether such right is
\nexercisable immediately or only after the passage of time) pursuant to any
\nagreement, arrangement or understanding (other than customary agreements with
\nand between underwriters and selling group members with respect to a bona fide
\npublic offering of securities), or upon the exercise of conversion rights,
\nexchange rights, rights, warrants or options, or otherwise; provided, however,
\nthat a Person shall not be deemed the Beneficial Owner of, or to beneficially
\nown, (x) securities tendered pursuant to a tender or exchange offer made by or
\non behalf of such Person or any of such Person’s Affiliates or Associates until
\nsuch tendered securities are accepted for purchase, (y) securities which such
\nPerson has a right to acquire upon the exercise of Rights at any time prior to
\nthe time that any Person becomes an Acquiring Person or (z) securities issuable
\nupon the exercise of Rights from and after the time that any Person becomes an
\nAcquiring Person if such Rights were acquired by such Person or any of such
\nPerson’s Affiliates or Associates prior to the Distribution Date or pursuant to
\nSection 3(a) or Section 22 hereof (“Original Rights”) or pursuant to Section
\n11(i) or Section 11(n) with respect to an adjustment to Original Rights; or (B)
\nthe right to vote pursuant to any agreement, arrangement or understanding;
\nprovided, however, that a Person shall not be deemed the Beneficial Owner of, or
\nto beneficially own, any security by reason of such agreement, arrangement or
\nunderstanding if the agreement, arrangement or<\/p>\n
2
\n 6<\/p>\n
understanding to vote such security (1) arises solely from a revocable proxy or
\nconsent given to such Person in response to a public proxy or consent
\nsolicitation made pursuant to, and in accordance with, the applicable rules and
\nregulations promulgated under the Exchange Act and (2) is not also then
\nreportable on Schedule 13D under the Exchange Act (or any comparable or
\nsuccessor report); or<\/p>\n
(iii) which are beneficially owned, directly or
\nindirectly, by any other Person and with respect to which such Person or any of
\nsuch Person’s Affiliates or Associates has any agreement, arrangement or
\nunderstanding (other than customary agreements with and between underwriters and
\nselling group members with respect to a bona fide public offering of securities)
\nfor the purpose of acquiring, holding, voting (except to the extent contemplated
\nby the proviso to Section 1(c)(ii)(B)) or disposing of such securities of the
\nCompany; provided, however, that no Person who is an officer, director or
\nemployee of an Exempt Person shall be deemed, solely by reason of such Person’s
\nstatus or authority as such, to be the “Beneficial Owner” of, to have
\n“Beneficial Ownership” of or to “beneficially own” any securities that are
\n“beneficially owned” (as defined in this Section l(c)), including, without
\nlimitation, in a fiduciary capacity, by an Exempt Person or by any other such
\nofficer, director or employee of an Exempt Person.<\/p>\n
(d) “Business Day” shall mean any day other than a
\nSaturday, a Sunday or a day on which banking institutions in the State of New
\nYork or the city in which the principal office of the Rights Agent is located
\nare authorized or obligated by law or executive order to close.<\/p>\n
(e) “Close of Business” on any given date shall mean 5:00
\nP.M., New York City time, on such date; provided, however, that if such date is
\nnot a Business Day it shall mean 5:00 P.M., New York City time, on the next
\nsucceeding Business Day.<\/p>\n
(f) “Common Stock” when used with reference to the
\nCompany shall mean the Common Stock, presently par value $.01 per share, of the
\nCompany. “Common Stock” when used with reference to any Person other than the
\nCompany shall mean the common stock (or, in the case of an unincorporated
\nentity, the equivalent equity interest) with the greatest voting power of such
\nother Person or, if such other Person is a subsidiary of another Person, the
\nPerson or Persons which ultimately control such first-mentioned Person.<\/p>\n
(g) “Common Stock Equivalents” shall have the meaning set
\nforth in Section 11(a)(iii) hereof.<\/p>\n
(h) “Current Value” shall have the meaning set forth in
\nSection 11(a)(iii) hereof.<\/p>\n
(i) “Distribution Date” shall have the meaning set forth
\nin Section 3 hereof.<\/p>\n
(j) “Equivalent Preferred Shares” shall have the meaning
\nset forth in Section 11(b) hereof.<\/p>\n
(k) “Exempt Person” shall mean the Company or any
\nSubsidiary (as such term is hereinafter defined) of the Company, in each case
\nincluding, without limitation, in its fiduciary capacity, or any employee
\nbenefit plan of the Company or of any Subsidiary of the Company, or any <\/p>\n
3<\/p>\n
7<\/p>\n
entity or trustee holding Common Stock for or pursuant to the terms of any such
\nplan or for the purpose of funding any such plan or funding other employee
\nbenefits for employees of the Company or of any Subsidiary of the Company.<\/p>\n
(l) “Exchange Ratio” shall have the meaning set forth in
\nSection 24 hereof.<\/p>\n
(m) “Expiration Date” shall have the meaning set forth in
\nSection 7 hereof.<\/p>\n
(n) “Flip-In Event” shall have the meaning set forth in
\nSection 11(a)(ii) hereof.<\/p>\n
(o) “Final Expiration Date” shall have the meaning set
\nforth in Section 7 hereof.<\/p>\n
(p) “NASDAQ” shall mean the National Association of
\nSecurities Dealers, Inc. Automated Quotation System.<\/p>\n
(q) “New York Stock Exchange” shall mean the New York
\nStock Exchange, Inc.<\/p>\n
(r) “Person” shall mean any individual, firm,
\ncorporation, partnership, limited liability company, trust or other entity, and
\nshall include any successor (by merger or otherwise) to such entity.<\/p>\n
(s) “Preferred Stock” shall mean the Series E Junior
\nParticipating Preferred Stock, par value $1.00 per share, of the Company having
\nthe rights and preferences set forth in the Form of Certificate of Designation
\nattached to this Agreement as Exhibit A.<\/p>\n
(t) “Principal Party” shall have the meaning set forth in
\nSection 13(b) hereof.<\/p>\n
(u) “Redemption Date” shall have the meaning set forth in
\nSection 7 hereof.<\/p>\n
(v) “Redemption Price” shall have the meaning set forth
\nin Section 23 hereof.<\/p>\n
(w) “Right Certificate” shall have the meaning set forth
\nin Section 3 hereof.<\/p>\n
(x) “Securities Act” shall mean the Securities Act of
\n1933, as amended.<\/p>\n
(y) “Section 11(a)(ii) Trigger Date” shall have the
\nmeaning set forth in Section 11(a)(iii) hereof.<\/p>\n
(z) “Spread” shall have the meaning set forth in Section
\n11(a)(iii) hereof.<\/p>\n
(aa) “Stock Acquisition Date” shall mean the first date of
\npublic announcement (which, for purposes of this definition, shall include,
\nwithout limitation, a report filed pursuant to Section 13(d) of the Exchange
\nAct) by the Company or an Acquiring Person that an Acquiring Person has become
\nsuch, or such earlier date as a majority of the Board of Directors shall become
\naware of the existence of an Acquiring Person.<\/p>\n
4<\/p>\n
8<\/p>\n
(bb) “Subsidiary” of any Person shall mean any corporation
\nor other entity of which securities or other ownership interests having ordinary
\nvoting power sufficient to elect a majority of the board of directors or other
\npersons performing similar functions are beneficially owned, directly or
\nindirectly, by such Person, and any corporation or other entity that is
\notherwise controlled by such Person.<\/p>\n
(cc) “Substitution Period” shall have the meaning set
\nforth in Section 11(a)(iii) hereof.<\/p>\n
(dd) “Summary of Rights” shall have the meaning set forth
\n in Section 3 hereof.<\/p>\n
(ee) “Trading Day” shall have the meaning set forth in
\nSection 11(d)(i) hereof.<\/p>\n
Section 2. Appointment of Rights Agent. The Company hereby
\nappoints the Rights Agent to act as agent for the Company in accordance with the
\nterms and conditions hereof, and the Rights Agent hereby accepts such
\nappointment. The Company may from time to time appoint such co-Rights Agents as
\nit may deem necessary or desirable.<\/p>\n
Section 3. Issue of Right Certificates.<\/p>\n
(a) Until the Close of Business on the earlier of (i) the
\ntenth day after the Stock Acquisition Date or (ii) the tenth Business Day (or
\nsuch later date as may be determined by action of the Board of Directors prior
\nto such time as any Person becomes an Acquiring Person) after the date of the
\ncommencement by any Person (other than an Exempt Person) of, or of the first
\npublic announcement of the intention of such Person (other than an Exempt
\nPerson) to commence, a tender or exchange offer the consummation of which would
\nresult in any Person (other than an Exempt Person) becoming the Beneficial Owner
\nof shares of Common Stock aggregating 15% or more of the Common Stock then
\noutstanding (the earlier of such dates being herein referred to as the
\n“Distribution Date”; provided, however, that if either of such dates occurs
\nafter the date of this Agreement and on or prior to the Record Date, then the
\nDistribution Date shall be the Record Date), (x) the Rights will be evidenced
\n(subject to the provisions of Section 3(b) hereof) by the certificates for
\nCommon Stock registered in the names of the holders thereof and not by separate
\nRight Certificates, and (y) the Rights will be transferable only in connection
\nwith the transfer of Common Stock. As soon as practicable after the Distribution
\nDate, the Company will prepare and execute, the Rights Agent will countersign
\nand the Company will send or cause to be sent (and the Rights Agent will, if
\nrequested, send) by first-class, insured, postage-prepaid mail, to each record
\nholder of Common Stock as of the close of business on the Distribution Date
\n(other than any Acquiring Person or any Associate or Affiliate of an Acquiring
\nPerson), at the address of such holder shown on the records of the Company, a
\nRight Certificate, in substantially the form of Exhibit B hereto (a “Right
\nCertificate”), evidencing one Right (subject to adjustment as provided herein)
\nfor each share of Common Stock so held. As of the Distribution Date, the Rights
\nwill be evidenced solely by such Right Certificates.<\/p>\n
(b) On the Record Date, or as soon as practicable
\nthereafter, the Company will send a copy of a Summary of Rights to Purchase
\nShares of Preferred Stock, in substantially the form of Exhibit C hereto (the
\n“Summary of Rights”), by first-class, postage-prepaid mail, to each record<\/p>\n
5<\/p>\n
9<\/p>\n
holder of Common Stock as of the Close of Business on the Record Date (other
\nthan any Acquiring Person or any Associate or Affiliate of any Acquiring
\nPerson), at the address of such holder shown on the records of the Company. With
\nrespect to certificates for Common Stock outstanding as of the Record Date,
\nuntil the Distribution Date, the Rights will be evidenced by such certificates
\nregistered in the names of the holders thereof together with the Summary of
\nRights. Until the Distribution Date (or, if earlier, the Expiration Date), the
\nsurrender for transfer of any certificate for Common Stock outstanding on the
\nRecord Date, with or without a copy of the Summary of Rights, shall also
\nconstitute the transfer of the Rights associated with the Common Stock
\nrepresented thereby.<\/p>\n
(c) Certificates issued for Common Stock (including,
\nwithout limitation, upon transfer of outstanding Common Stock, disposition of
\nCommon Stock out of treasury stock or issuance or reissuance of Common Stock out
\nof authorized but unissued shares) after the Record Date but prior to the
\nearlier of the Distribution Date and the Expiration Date shall have impressed
\non, printed on, written on or otherwise affixed to them the following legend:<\/p>\n
This certificate also evidences and entitles the
\n holder hereof to certain rights as set forth in a
\n Rights Agreement between Harken Energy Corporation
\n (the “Company”) and ChaseMellon Shareholder Services
\n L.L.C., as Rights Agent, dated as of April 6, 1998
\n as the same may be amended from time to time (the
\n “Rights Agreement”), the terms of which are hereby
\n incorporated herein by reference and a copy of which
\n is on file at the principal executive offices of the
\n Company. Under certain circumstances, as set forth
\n in the Rights Agreement, such Rights will be
\n evidenced by separate certificates and will no
\n longer be evidenced by this certificate. The Company
\n will mail to the holder of this certificate a copy
\n of the Rights Agreement without charge after receipt
\n of a written request therefor. Under certain
\n circumstances, as set forth in the Rights Agreement,
\n Rights owned by or transferred to any Person who is
\n or becomes an Acquiring Person (as defined in the
\n Rights Agreement) and certain transferees thereof
\n will become null and void and will no longer be
\n transferable.<\/p>\n
With respect to such certificates containing the foregoing legend, until the
\nDistribution Date the Rights associated with the Common Stock represented by
\nsuch certificates shall be evidenced by such certificates alone, and the
\nsurrender for transfer of any such certificate, except as otherwise provided
\nherein, shall also constitute the transfer of the Rights associated with the
\nCommon Stock represented thereby. In the event that the Company purchases or
\notherwise acquires any Common Stock after the Record Date but prior to the
\nDistribution Date, any Rights associated with such Common Stock shall be deemed
\ncanceled and retired so that the Company shall not be entitled to exercise any
\nRights associated with the Common Stock which are no longer outstanding.<\/p>\n
Notwithstanding this paragraph (c), the omission of a legend
\nshall not affect the enforceability of any part of this Agreement or the rights
\nof any holder of the Rights.<\/p>\n
6<\/p>\n
10<\/p>\n
Section 4. Form of Right Certificates. The Right
\nCertificates (and the forms of election to purchase shares and of assignment to
\nbe printed on the reverse thereof) shall be substantially in the form set forth
\nin Exhibit B hereto and may have such marks of identification or designation and
\nsuch legends, summaries or endorsements printed thereon as the Company may deem
\nappropriate and as are not inconsistent with the provisions of this Agreement,
\nor as may be required to comply with any applicable law or with any rule or
\nregulation made pursuant thereto or with any rule or regulation of any stock
\nexchange or interdealer quotation system on which the Rights may from time to
\ntime be listed or quoted, or to conform to usage. Subject to the provisions of
\nSections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders
\nthereof to purchase such number of one one-thousandths of a share of Preferred
\nStock as shall be set forth therein at the price per one one-thousandth of a
\nshare of Preferred Stock set forth therein (the “Purchase Price”), but the
\nnumber of such one one-thousandths of a share of Preferred Stock and the
\nPurchase Price shall be subject to adjustment as provided herein.<\/p>\n
Section 5. Countersignature and Registration.<\/p>\n
(a) The Right Certificates shall be executed on behalf of
\nthe Company by the President of the Company, either manually or by facsimile
\nsignature, shall have affixed thereto the Company’s seal or a facsimile thereof
\nand shall be attested by the Secretary of the Company, either manually or by
\nfacsimile signature. The Right Certificates shall be manually countersigned by
\nthe Rights Agent and shall not be valid for any purpose unless countersigned. In
\ncase any officer of the Company who shall have signed any of the Right
\nCertificates shall cease to be such officer of the Company before
\ncountersignature by the Rights Agent and issuance and delivery by the Company,
\nsuch Right Certificates, nevertheless, may be countersigned by the Rights Agent
\nand issued and delivered by the Company with the same force and effect as though
\nthe Person who signed such Right Certificates had not ceased to be such officer
\nof the Company; and any Right Certificate may be signed on behalf of the Company
\nby any Person who, at the actual date of the execution of such Right
\nCertificate, shall be a proper officer of the Company to sign such Right
\nCertificate, although at the date of the execution of this Agreement any such
\nPerson was not such an officer.<\/p>\n
(b) Following the Distribution Date, the Rights Agent
\nwill keep or cause to be kept, at an office or agency designated for such
\npurpose, books for registration and transfer of the Right Certificates issued
\nhereunder. Such books shall show the names and addresses of the respective
\nholders of the Right Certificates, the number of Rights evidenced on its face by
\neach of the Right Certificates and the date of each of the Right Certificates.<\/p>\n
Section 6. Transfer, Split Up, Combination and Exchange of
\nRight Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.<\/p>\n
(a) Subject to the provisions of Sections 7(e), 11(a)
\n(ii), 13 and 14 hereof, at any time after the Distribution Date and prior to the
\nExpiration Date, any Right Certificate or Right Certificates may be transferred,
\nsplit up, combined or exchanged for another Right Certificate or Right
\nCertificates, entitling the registered holder to purchase a like number of one
\none-thousandths of a share of Preferred Stock as the Right Certificate or Right
\nCertificates surrendered then entitled such holder to purchase. Any registered
\nholder desiring to transfer, split up, combine or exchange any Right Certificate
\nor Right Certificates shall make such request in writing delivered to the Rights<\/p>\n
7<\/p>\n
11<\/p>\n
Agent, and shall surrender the Right Certificate or Right Certificates to be
\ntransferred, split up, combined or exchanged at the office or agency of the
\nRights Agent designated for such purpose. Thereupon the Rights Agent shall
\ncountersign and deliver to the Person entitled thereto a Right Certificate or
\nRight Certificates, as the case may be, as so requested. The Company may require
\npayment of a sum sufficient to cover any tax or governmental charge that may be
\nimposed in connection with any transfer, split up, combination or exchange of
\nRight Certificates.<\/p>\n
(b) Subject to the provisions of Section 11(a)(ii)
\nhereof, at any time after the Distribution Date and prior to the Expiration
\nDate, upon receipt by the Company and the Rights Agent of evidence reasonably
\nsatisfactory to them of the loss, theft, destruction or mutilation of a Right
\nCertificate, and, in case of loss, theft or destruction of indemnity or security
\nreasonably satisfactory to them, and, at the Company’s request, reimbursement to
\nthe Company and the Rights Agent of all reasonable expenses incidental thereto,
\nand upon surrender to the Rights Agent and cancellation of the Right Certificate
\nif mutilated, the Company will make and deliver a new Right Certificate of like
\ntenor to the Rights Agent for delivery to the registered holder in lieu of the
\nRight Certificate so lost, stolen, destroyed or mutilated.<\/p>\n
Section 7. Exercise of Rights, Purchase Price; Expiration
\nDate of Rights.<\/p>\n
(a) Except as otherwise provided herein, the Rights shall
\nbecome exercisable on the Distribution Date, and thereafter the registered
\nholder of any Right Certificate may, subject to Section 11(a)(ii) hereof and
\nexcept as otherwise provided herein, exercise the Rights evidenced thereby in
\nwhole or in part upon surrender of the Right Certificate, with the form of
\nelection to purchase on the reverse side thereof duly executed, to the Rights
\nAgent at the office or agency of the Rights Agent designated for such purpose,
\ntogether with payment of the aggregate Purchase Price with respect to the total
\nnumber of one one-thousandths of a share of Preferred Stock (or other
\nsecurities, cash or other assets, as the case may be) as to which the Rights are
\nexercised, at any time which is both after the Distribution Date and prior to
\nthe time (the “Expiration Date”) that is the earliest of (i) the Close of
\nBusiness on April 6, 2008 (the “Final Expiration Date”), (ii) the time at which
\nthe Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”)
\nor (iii) the time at which such Rights are exchanged as provided in Section 24
\nhereof.<\/p>\n
(b) The Purchase Price shall be initially $35.00 for each
\none one-thousandth of a share of Preferred Stock purchasable upon the exercise
\nof a Right. The Purchase Price and the number of one one-thousandths of a share
\nof Preferred Stock or other securities or property to be acquired upon exercise
\nof a Right shall be subject to adjustment from time to time as provided in
\nSections 11 and 13 hereof and shall be payable in lawful money of the United
\nStates of America in accordance with paragraph (c) of this Section 7.<\/p>\n
(c) Except as otherwise provided herein, upon receipt of
\na Right Certificate representing exercisable Rights, with the form of election
\nto purchase duly executed, accompanied by payment of the aggregate Purchase
\nPrice for the shares of Preferred Stock to be purchased and an amount equal to
\nany applicable transfer tax required to be paid by the holder of such Right
\nCertificate in accordance with Section 9 hereof, in cash or by certified check,
\ncashier’s check or money order payable to the order of the Company, the Rights
\nAgent shall thereupon promptly (i) (A) requisition from any transfer agent of
\nthe Preferred Stock certificates for the number of shares of<\/p>\n
8<\/p>\n
12<\/p>\n
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
\nits transfer agent to comply with all such requests, or (B) requisition from the
\ndepositary agent depositary receipts representing interests in such number of
\none one-thousandths of a share of Preferred Stock as are to be purchased (in
\nwhich case certificates for the Preferred Stock represented by such receipts
\nshall be deposited by the transfer agent with the depositary agent) and the
\nCompany hereby directs the depositary agent to comply with such request, (ii)
\nwhen appropriate, requisition from the Company the amount of cash to be paid in
\nlieu of issuance of fractional shares in accordance with Section 14 hereof,
\n(iii) promptly after receipt of such certificates or depositary receipts, cause
\nthe same to be delivered to or upon the order of the registered holder of such
\nRight Certificate, registered in such name or names as may be designated by such
\nholder and (iv) when appropriate, after receipt, promptly deliver such cash to
\nor upon the order of the registered holder of such Right Certificate.<\/p>\n
(d) Except as otherwise provided herein, in case the
\nregistered holder of any Right Certificate shall exercise less than all of the
\nRights evidenced thereby, a new Right Certificate evidencing Rights equivalent
\nto the exercisable Rights remaining unexercised shall be issued by the Rights
\nAgent to the registered holder of such Right Certificate or to his duly
\nauthorized assigns, subject to the provisions of Section 14 hereof.<\/p>\n
(e) Notwithstanding anything in this Agreement to the
\ncontrary, neither the Rights Agent nor the Company shall be obligated to
\nundertake any action with respect to a registered holder of Rights upon the
\noccurrence of any purported transfer or exercise of Rights pursuant to Section 6
\nhereof or this Section 7 unless such registered holder shall have (i) completed
\nand signed the certificate contained in the form of assignment or form of
\nelection to purchase set forth on the reverse side of the Rights Certificate
\nsurrendered for such transfer or exercise and (ii) provided such additional
\nevidence of the identity of the Beneficial Owner (or former Beneficial Owner)
\nthereof as the Company shall reasonably request.<\/p>\n
Section 8. Cancellation and Destruction of Right
\nCertificates. All Right Certificates surrendered for the purpose of exercise,
\ntransfer, split up, combination or exchange shall, if surrendered to the Company
\nor to any of its agents, be delivered to the Rights Agent for cancellation or in
\ncanceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
\nand no Right Certificates shall be issued in lieu thereof except as expressly
\npermitted by any of the provisions of this Agreement. The Company shall deliver
\nto the Rights Agent for cancellation and retirement, and the Rights Agent shall
\nso cancel and retire, any other Right Certificate purchased or acquired by the
\nCompany otherwise than upon the exercise thereof. The Rights Agent shall deliver
\nall canceled Right Certificates to the Company, or shall, at the written request
\nof the Company, destroy such canceled Right Certificates, and in such case shall
\ndeliver a certificate of destruction thereof to the Company.<\/p>\n
Section 9. Availability of Shares of Preferred Stock.<\/p>\n
(a) The Company covenants and agrees that it will cause
\nto be reserved and kept available out of its authorized and unissued shares of
\nPreferred Stock or any shares of Preferred Stock held in its treasury, the
\nnumber of shares of Preferred Stock that will be sufficient to permit the
\nexercise in full of all outstanding Rights.<\/p>\n
9<\/p>\n
13<\/p>\n
(b) So long as the shares of Preferred Stock issuable
\nupon the exercise of Rights may be listed or admitted to trading on any national
\nsecurities exchange, or quoted on NASDAQ, the Company shall use its best efforts
\nto cause, from and after such time as the Rights become exercisable, all shares
\nreserved for such issuance to be listed or admitted to trading on such exchange,
\nor quoted on NASDAQ, upon official notice of issuance upon such exercise.<\/p>\n
(c) From and after such time as the Rights become
\nexercisable, the Company shall use its best efforts, if then necessary to permit
\nthe issuance of shares of Preferred Stock upon the exercise of Rights, to
\nregister and qualify such shares of Preferred Stock under the Securities Act and
\nany applicable state securities or “Blue Sky” laws (to the extent exemptions
\ntherefrom are not available), cause such registration statement and
\nqualifications to become effective as soon as possible after such filing and
\nkeep such registration and qualifications effective until the earlier of the
\ndate as of which the Rights are no longer exercisable for such securities and
\nthe Expiration Date. The Company may temporarily suspend, for a period of time
\nnot to exceed 90 days, the exercisability of the Rights in order to prepare and
\nfile a registration statement under the Securities Act and permit it to become
\neffective. Upon any such suspension, the Company shall issue a public
\nannouncement stating that the exercisability of the Rights has been temporarily
\nsuspended, as well as a public announcement at such time as the suspension is no
\nlonger in effect. Notwithstanding any provision of this Agreement to the
\ncontrary, the Rights shall not be exercisable in any jurisdiction unless the
\nrequisite qualification in such jurisdiction shall have been obtained and until
\na registration statement under the Securities Act (if required) shall have been
\ndeclared effective.<\/p>\n
(d) The Company covenants and agrees that it will take
\nall such action as may be necessary to ensure that all shares of Preferred Stock
\ndelivered upon exercise of Rights shall, at the time of delivery of the
\ncertificates therefor (subject to payment of the Purchase Price), be duly and
\nvalidly authorized and issued and fully paid and nonassessable shares.<\/p>\n
(e) The Company further covenants and agrees that it will
\npay when due and payable any and all federal and state transfer taxes and
\ncharges which may be payable in respect of the issuance or delivery of the Right
\nCertificates or of any shares of Preferred Stock upon the exercise of Rights.
\nThe Company shall not, however, be required to pay any transfer tax which may be
\npayable in respect of any transfer or delivery of Right Certificates to a Person
\nother than, or the issuance or delivery of certificates or depositary receipts
\nfor the Preferred Stock in a name other than that of, the registered holder of
\nthe Right Certificate evidencing Rights surrendered for exercise or to issue or
\ndeliver any certificates or depositary receipts for Preferred Stock upon the
\nexercise of any Rights until any such tax shall have been paid (any such tax
\nbeing payable by that holder of such Right Certificate at the time of surrender)
\nor until it has been established to the Company’s reasonable satisfaction that
\nno such tax is due.<\/p>\n
Section 10. Preferred Stock Record Date. Each Person in
\nwhose name any certificate for Preferred Stock is issued upon the exercise of
\nRights shall for all purposes be deemed to have become the holder of record of
\nthe shares of Preferred Stock represented thereby on, and such certificate shall
\nbe dated, the date upon which the Right Certificate evidencing such Rights was
\nduly surrendered and payment of the Purchase Price (and any applicable transfer
\ntaxes) was made; provided, however, that if the date of such surrender and
\npayment is a date upon which the Preferred Stock transfer books of the Company
\nare closed, such Person shall be deemed to have become the<\/p>\n
10<\/p>\n
14<\/p>\n
record holder of such shares on, and such certificate shall be dated, the next
\nsucceeding Business Day on which the Preferred Stock transfer books of the
\nCompany are open. Prior to the exercise of the Rights evidenced thereby, the
\nholder of a Right Certificate shall not be entitled to any rights of a holder of
\nPreferred Stock for which the Rights shall be exercisable, including, without
\nlimitation, the right to vote or to receive dividends or other distributions,
\nand shall not be entitled to receive any notice of any proceedings of the
\nCompany, except as provided herein.<\/p>\n
Section 11. Adjustment of Purchase Price, Number and
\nKind of Shares and Number of Rights. The Purchase Price, the number of shares of
\nPreferred Stock or other securities or property purchasable upon exercise of
\neach Right and the number of Rights outstanding are subject to adjustment from
\ntime to time as provided in this Section 11.<\/p>\n
(a)(i) In the event the Company shall at any time after the
\ndate of this Agreement (A) declare and pay a dividend on the Preferred Stock
\npayable in shares of Preferred Stock, (B) subdivide the outstanding Preferred
\nStock, (C) combine the outstanding Preferred Stock into a smaller number of
\nshares of Preferred Stock or (D) issue any shares of its capital stock in a
\nreclassification of the Preferred Stock (including any such reclassification in
\nconnection with a consolidation or merger in which the Company is the continuing
\nor surviving corporation), except as otherwise provided in this Section 11(a),
\nthe Purchase Price in effect at the time of the record date for such dividend or
\nof the effective date of such subdivision, combination or reclassification, and
\nthe number and kind of shares of capital stock issuable on such date, shall be
\nproportionately adjusted so that the holder of any Right exercised after such
\ntime shall be entitled to receive the aggregate number and kind of shares of
\ncapital stock which, if such Right had been exercised immediately prior to such
\ndate and at a time when the Preferred Stock transfer books of the Company were
\nopen, the holder would have owned upon such exercise and been entitled to
\nreceive by virtue of such dividend, subdivision, combination or
\nreclassification; provided, however, that in no event shall the consideration to
\nbe paid upon the exercise of one Right be less than the aggregate par value of
\nthe shares of capital stock of the Company issuable upon exercise of one Right.<\/p>\n
(ii) Subject to Section 24 of this Agreement, in the
\nevent any Person becomes an Acquiring Person (the first occurrence of such event
\nbeing referred to hereinafter as the “Flip-In Event”), then (A) the Purchase
\nPrice shall be adjusted to be the Purchase Price in effect immediately prior to
\nthe Flip-In Event multiplied by the number of one one-thousandths of a share of
\nPreferred Stock for which a Right was exercisable immediately prior to such
\nFlip-In Event, whether or not such Right was then exercisable, and (B) each
\nholder of a Right, except as otherwise provided in this Section 11(a)(ii) and
\nSection 11(a)(iii) hereof, shall thereafter have the right to receive, upon
\nexercise thereof at a price equal to the Purchase Price (as so adjusted), in
\naccordance with the terms of this Agreement and in lieu of shares of Preferred
\nStock, such number of shares of Common Stock as shall equal the result obtained
\nby dividing the Purchase Price (as so adjusted) by 50% of the current per share
\nmarket price of the Common Stock (determined pursuant to Section 11(d) hereof)
\non the date of such Flip-In Event; provided, however, that the Purchase Price
\n(as so adjusted) and the number of shares of Common Stock so receivable upon
\nexercise of a Right shall, following the Flip-In Event, be subject to further
\nadjustment as appropriate in accordance with Section 11(f) hereof.
\nNotwithstanding anything in this Agreement to the contrary, however, from and
\nafter the Flip-In Event, any Rights that are beneficially owned by (x) any
\nAcquiring Person (or any Affiliate or Associate of any Acquiring Person), (y) a
\ntransferee of any Acquiring Person (or any such Affiliate<\/p>\n
11<\/p>\n
15<\/p>\n
or Associate) who becomes a transferee after the Flip-In Event or (z) a
\ntransferee of any Acquiring Person (or any such Affiliate or Associate) who
\nbecame a transferee prior to or concurrently with the Flip-In Event pursuant to
\neither (i) a transfer from the Acquiring Person to holders of its equity
\nsecurities or to any Person with whom it has any continuing agreement,
\narrangement or understanding regarding the transferred Rights or (ii) a transfer
\nwhich the Board of Directors has determined is part of a plan, arrangement or
\nunderstanding which has the purpose or effect of avoiding the provisions of this
\nparagraph, and subsequent transferees of such Persons, shall be void without any
\nfurther action and any holder of such Rights shall thereafter have no rights
\nwhatsoever with respect to such Rights under any provision of this Agreement.
\nThe Company shall use all reasonable efforts to ensure that the provisions of
\nthis Section 11(a)(ii) are complied with, but shall have no liability to any
\nholder of Right Certificates or other Person as a result of its failure to make
\nany determinations with respect to an Acquiring Person or its Affiliates,
\nAssociates or transferees hereunder. From and after the Flip-In Event, no Right
\nCertificate shall be issued pursuant to Section 3 or Section 6 hereof that
\nrepresents Rights that are or have become void pursuant to the provisions of
\nthis paragraph, and any Right Certificate delivered to the Rights Agent that
\nrepresents Rights that are or have become void pursuant to the provisions of
\nthis paragraph shall be canceled. From and after the occurrence of an event
\nspecified in Section 13(a) hereof, any Rights that theretofore have not been
\nexercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable
\nonly in accordance with Section 13 and not pursuant to this Section 11(a)(ii).<\/p>\n
(iii) The Company may at its option substitute for a share
\nof Common Stock issuable upon the exercise of Rights in accordance with the
\nforegoing subparagraph (ii) a number of shares of Preferred Stock or fraction
\nthereof such that the current per share market price of one share of Preferred
\nStock multiplied by such number or fraction is equal to the current per share
\nmarket price of one share of Common Stock. In the event that there shall not be
\nsufficient shares of Common Stock issued but not outstanding or authorized but
\nunissued to permit the exercise in full of the Rights in accordance with the
\nforegoing subparagraph (ii), the Board of Directors shall, to the extent
\npermitted by applicable law and any material agreements then in effect to which
\nthe Company is a party, (A) determine the excess (such excess, the “Spread”) of
\n(1) the value of the shares of Common Stock issuable upon the exercise of a
\nRight in accordance with the foregoing subparagraph (ii) (the “Current Value”)
\nover (2) the Purchase Price (as adjusted in accordance with the foregoing
\nsubparagraph (ii)), and (B) with respect to each Right (other than Rights which
\nhave become void pursuant to the foregoing subparagraph (ii)), make adequate
\nprovision to substitute for the shares of Common Stock issuable in accordance
\nwith the foregoing subparagraph (ii) upon exercise of the Right and payment of
\nthe Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
\nreduction in such Purchase Price, (3) shares of Preferred Stock or other equity
\nsecurities of the Company (including, without limitation, shares or fractions of
\nshares of preferred stock which, by virtue of having dividend, voting and
\nliquidation rights substantially comparable to those of the shares of Common
\nStock, are deemed in good faith by the Board of Directors to have substantially
\nthe same value as the shares of Common Stock (such shares of Preferred Stock and
\nshares or fractions of shares of preferred stock are hereinafter referred to as
\n“Common Stock Equivalents”)), (4) debt securities of the Company, (5) other
\nassets, or (6) any combination of the foregoing, having a value which, when
\nadded to the value of the shares of Common Stock issued upon exercise of such
\nRight, shall have an aggregate value equal to the Current Value (less the amount
\nof any reduction in such Purchase Price), where such aggregate value has been
\ndetermined by the Board of Directors upon the advice of a nationally recognized
\ninvestment banking firm selected in good faith by the<\/p>\n
12<\/p>\n
16<\/p>\n
Board of Directors; provided, however, that if the Company shall not make
\nadequate provision to deliver value pursuant to clause (B) above within thirty
\n(30) days following the Flip-In Event (the “Section 11(a)(ii) Trigger Date”),
\nthen the Company shall be obligated to deliver, to the extent permitted by
\napplicable law and any material agreements then in effect to which the Company
\nis a party, upon the surrender for exercise of a Right and without requiring
\npayment of such Purchase Price, shares of Common Stock (to the extent
\navailable), and then, if necessary, such number or fractions of shares of
\nPreferred Stock (to the extent available) and then, if necessary, cash, which
\nshares and\/or cash have an aggregate value equal to the Spread. If, upon the
\noccurrence of the Flip-In Event, the Board of Directors shall determine in good
\nfaith that it is likely that sufficient additional shares of Common Stock could
\nbe authorized for issuance upon exercise in full of the Rights, then, if the
\nBoard of Directors so elects, the thirty (30) day period set forth above may be
\nextended to the extent necessary, but not more than ninety (90) days after the
\nSection 11(a)(ii) Trigger Date, in order that the Company may seek stockholder
\napproval for the authorization of such additional shares (such thirty (30) day
\nperiod, as it may be extended, is herein called the “Substitution Period”). To
\nthe extent that the Company determines that some action need be taken pursuant
\nto the second and\/or third sentence of this Section 11(a)(iii), the Company (x)
\nshall provide, subject to Section 11(a)(ii) hereof and the last sentence of this
\nSection 11(a)(iii) hereof, that such action shall apply uniformly to all
\noutstanding Rights and (y) may suspend the exercisability of the Rights until
\nthe expiration of the Substitution Period in order to seek any authorization of
\nadditional shares and\/or to decide the appropriate form of distribution to be
\nmade pursuant to such second sentence and to determine the value thereof. In the
\nevent of any such suspension, the Company shall issue a public announcement
\nstating that the exercisability of the Rights has been temporarily suspended, as
\nwell as a public announcement at such time as the suspension is no longer in
\neffect. For purposes of this Section 11(a)(iii), the value of the shares of
\nCommon Stock shall be the current per share market price (as determined pursuant
\nto Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per share or
\nfractional value of any “Common Stock Equivalent” shall be deemed to equal the
\ncurrent per share market price of the Common Stock. The Board of Directors of
\nthe Company may, but shall not be required to, establish procedures to allocate
\nthe right to receive shares of Common Stock upon the exercise of the Rights
\namong holders of Rights pursuant to this Section 11(a)(iii).<\/p>\n
(b) In case the Company shall fix a record date for the
\nissuance of rights, options or warrants to all holders of Preferred Stock
\nentitling them (for a period expiring within 45 calendar days after such record
\ndate) to subscribe for or purchase Preferred Stock (or shares having the same
\nrights, privileges and preferences as the Preferred Stock (“equivalent preferred
\nshares”)) or securities convertible into Preferred Stock or equivalent preferred
\nshares at a price per share of Preferred Stock or equivalent preferred shares
\n(or having a conversion price per share, if a security convertible into shares
\nof Preferred Stock or equivalent preferred shares) less than the then current
\nper share market price of the Preferred Stock (determined pursuant to Section
\n11(d) hereof) on such record date, the Purchase Price to be in effect after such
\nrecord date shall be determined by multiplying the Purchase Price in effect
\nimmediately prior to such record date by a fraction, the numerator of which
\nshall be the number of shares of Preferred Stock and equivalent preferred shares
\noutstanding on such record date plus the number of shares of Preferred Stock and
\nequivalent preferred shares which the aggregate offering price of the total
\nnumber of shares of Preferred Stock and\/or equivalent preferred shares so to be
\noffered (and\/or the aggregate initial conversion price of the convertible
\nsecurities so to be offered) would purchase at such current market price, and
\nthe denominator of which shall be<\/p>\n
13<\/p>\n
17<\/p>\n
the number of shares of Preferred Stock and equivalent preferred shares
\noutstanding on such record date plus the number of additional shares of
\nPreferred Stock and\/or equivalent preferred shares to be offered for
\nsubscription or purchase (or into which the convertible securities so to be
\noffered are initially convertible); provided, however, that in no event shall
\nthe consideration to be paid upon the exercise of one Right be less than the
\naggregate par value of the shares of capital stock of the Company issuable upon
\nexercise of one Right. In case such subscription price may be paid in a
\nconsideration part or all of which shall be in a form other than cash, the value
\nof such consideration shall be as determined in good faith by the Board of
\nDirectors of the Company, whose determination shall be described in a statement
\nfiled with the Rights Agent. Shares of Preferred Stock and equivalent preferred
\nshares owned by or held for the account of the Company shall not be deemed
\noutstanding for the purpose of any such computation. Such adjustment shall be
\nmade successively whenever such a record date is fixed; and in the event that
\nsuch rights, options or warrants are not so issued, the Purchase Price shall be
\nadjusted to be the Purchase Price which would then be in effect if such record
\ndate had not been fixed.<\/p>\n
(c) In case the Company shall fix a record date for the
\nmaking of a distribution to all holders of the Preferred Stock (including any
\nsuch distribution made in connection with a consolidation or merger in which the
\nCompany is the continuing or surviving corporation) of evidences of indebtedness
\nor assets (other than a regular quarterly cash dividend or a dividend payable in
\nPreferred Stock) or subscription rights or warrants (excluding those referred to
\nin Section 11(b) hereof), the Purchase Price to be in effect after such record
\ndate shall be determined by multiplying the Purchase Price in effect immediately
\nprior to such record date by a fraction, the numerator of which shall be the
\nthen current per share market price of the Preferred Stock (determined pursuant
\nto Section 11(d) hereof) on such record date, less the fair market value (as
\ndetermined in good faith by the Board of Directors of the Company whose
\ndetermination shall be described in a statement filed with the Rights Agent) of
\nthe portion of the assets or evidences of indebtedness so to be distributed or
\nof such subscription rights or warrants applicable to one share of Preferred
\nStock, and the denominator of which shall be such current per share market price
\n(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
\nhowever, that in no event shall the consideration to be paid upon the exercise
\nof one Right be less than the aggregate par value of the shares of capital stock
\nof the Company to be issued upon exercise of one Right. Such adjustments shall
\nbe made successively whenever such a record date is fixed; and in the event that
\nsuch distribution is not so made, the Purchase Price shall again be adjusted to
\nbe the Purchase Price which would then be in effect if such record date had not
\nbeen fixed.<\/p>\n
(d)(i) Except as otherwise provided herein, for the purpose
\nof any computation hereunder, the “current per share market price” of any
\nsecurity (a “Security” for the purpose of this Section 11(d)(i)) on any date
\nshall be deemed to be the average of the daily closing prices per share of such
\nSecurity for the 30 consecutive Trading Days (as such term is hereinafter
\ndefined) immediately prior to such date; provided, however, that in the event
\nthat the current per share market price of the Security is determined during a
\nperiod following the announcement by the issuer of such Security of (A) a
\ndividend or distribution on such Security payable in shares of such Security or
\nsecurities convertible into such shares, or (B) any subdivision, combination or
\nreclassification of such Security, and prior to the expiration of 30 Trading
\nDays after the ex-dividend date for such dividend or distribution, or the record
\ndate for such subdivision, combination or reclassification, then, and in each
\nsuch case, the current per share market price shall be appropriately adjusted to<\/p>\n
14<\/p>\n
18<\/p>\n
reflect the current market price per share equivalent of such Security. The
\nclosing price for each day shall be the last sale price, regular way, or, in
\ncase no such sale takes place on such day, the average of the closing bid and
\nasked prices, regular way, in either case as reported by the principal
\nconsolidated transaction reporting system with respect to securities listed or
\nadmitted to trading on the New York Stock Exchange or, if the Security is not
\nlisted or admitted to trading on the New York Stock Exchange, as reported in the
\nprincipal consolidated transaction reporting system with respect to securities
\nlisted on the principal national securities exchange on which the Security is
\nlisted or admitted to trading or, if the Security is not listed or admitted to
\ntrading on any national securities exchange, the last quoted price or, if not so
\nquoted, the average of the high bid and low asked prices in the over-the-counter
\nmarket, as reported by NASDAQ or such other system then in use, or, if on any
\nsuch date the Security is not quoted by any such organization, the average of
\nthe closing bid and asked prices as furnished by a professional market maker
\nmaking a market in the Security selected by the Board of Directors of the
\nCompany. The term “Trading Day” shall mean a day on which the principal national
\nsecurities exchange on which the Security is listed or admitted to trading is
\nopen for the transaction of business or, if the Security is not listed or
\nadmitted to trading on any national securities exchange, a Business Day.<\/p>\n
(ii) For the purpose of any computation hereunder, if the
\nPreferred Stock is publicly traded, the “current per share market price” of the
\nPreferred Stock shall be determined in accordance with the method set forth in
\nSection 11(d)(i). If the Preferred Stock is not publicly traded but the Common
\nStock is publicly traded, the “current per share market price” of the Preferred
\nStock shall be conclusively deemed to be the current per share market price of
\nthe Common Stock as determined pursuant to Section 11(d)(i) multiplied by the
\nthen applicable Adjustment Number (as defined in and determined in accordance
\nwith the Certificate of Designation for the Preferred Stock). If neither the
\nCommon Stock nor the Preferred Stock is publicly traded, “current per share
\nmarket price” shall mean the fair value per share as determined in good faith by
\nthe Board of Directors of the Company, whose determination shall be described in
\na statement filed with the Rights Agent.<\/p>\n
(e) No adjustment in the Purchase Price shall be required
\nunless such adjustment would require an increase or decrease of at least 1% in
\nthe Purchase Price; provided, however, that any adjustments which by reason of
\nthis Section 11(e) are not required to be made shall be carried forward and
\ntaken into account in any subsequent adjustment. All calculations under this
\nSection 11 shall be made to the nearest cent or to the nearest one
\nhundred-thousandth of a share of Preferred Stock or one-hundredth of a share of
\nCommon Stock or other share or security as the case may be. Notwithstanding the
\nfirst sentence of this Section 11(e), any adjustment required by this Section 11
\nshall be made no later than the earlier of (i) three years from the date of the
\ntransaction which requires such adjustment or (ii) the Expiration Date.<\/p>\n
(f) If as a result of an adjustment made pursuant to
\nSection 11(a) hereof, the holder of any Right thereafter exercised shall become
\nentitled to receive any shares of capital stock of the Company other than the
\nPreferred Stock, thereafter the Purchase Price and the number of such other
\nshares so receivable upon exercise of a Right shall be subject to adjustment
\nfrom time to time in a manner and on terms as nearly equivalent as practicable
\nto the provisions with respect to the Preferred Stock contained in Sections
\n11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and
\nthe provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
\nPreferred Stock shall apply on like terms to any such other shares.<\/p>\n
15<\/p>\n
19<\/p>\n
(g) All Rights originally issued by the Company
\nsubsequent to any adjustment made to the Purchase Price hereunder shall evidence
\nthe right to purchase, at the adjusted Purchase Price, the number of one
\none-thousandths of a share of Preferred Stock purchasable from time to time
\nhereunder upon exercise of the Rights, all subject to further adjustment as
\nprovided herein.<\/p>\n
(h) Unless the Company shall have exercised its election
\nas provided in Section 11(i), upon each adjustment of the Purchase Price as a
\nresult of the calculations made in Sections 11(b) and 11(c), each Right
\noutstanding immediately prior to the making of such adjustment shall thereafter
\nevidence the right to purchase, at the adjusted Purchase Price, that number of
\none one-thousandths of a share of Preferred Stock (calculated to the nearest one
\nhundred-thousandth of a share of Preferred Stock) obtained by (i) multiplying
\n(x) the number of one one-thousandths of a share purchasable upon the exercise
\nof a Right immediately prior to such adjustment by (y) the Purchase Price in
\neffect immediately prior to such adjustment of the Purchase Price and (ii)
\ndividing the product so obtained by the Purchase Price in effect immediately
\nafter such adjustment of the Purchase Price.<\/p>\n
(i) The Company may elect on or after the date of any
\nadjustment of the Purchase Price pursuant to Sections 11(b) or 11(c) hereof to
\nadjust the number of Rights, in substitution for any adjustment in the number of
\none one-thousandths of a share of Preferred Stock purchasable upon the exercise
\nof a Right. Each of the Rights outstanding after such adjustment of the number
\nof Rights shall be exercisable for the number of one one-thousandths of a share
\nof Preferred Stock for which a Right was exercisable immediately prior to such
\nadjustment. Each Right held of record prior to such adjustment of the number of
\nRights shall become that number of Rights (calculated to the nearest
\none-hundredth) obtained by dividing the Purchase Price in effect immediately
\nprior to adjustment of the Purchase Price by the Purchase Price in effect
\nimmediately after adjustment of the Purchase Price. The Company shall make a
\npublic announcement of its election to adjust the number of Rights, indicating
\nthe record date for the adjustment, and, if known at the time, the amount of the
\nadjustment to be made. Such record date may be the date on which the Purchase
\nPrice is adjusted or any day thereafter, but, if the Right Certificates have
\nbeen issued, shall be at least 10 days later than the date of the public
\nannouncement. If Right Certificates have been issued, upon each adjustment of
\nthe number of Rights pursuant to this Section 11(i), the Company may, as
\npromptly as practicable, cause to be distributed to holders of record of Right
\nCertificates on such record date Right Certificates evidencing, subject to
\nSection 14 hereof, the additional Rights to which such holders shall be entitled
\nas a result of such adjustment, or, at the option of the Company, shall cause to
\nbe distributed to such holders of record in substitution and replacement for the
\nRight Certificates held by such holders prior to the date of adjustment, and
\nupon surrender thereof, if required by the Company, new Right Certificates
\nevidencing all the Rights to which such holders shall be entitled after such
\nadjustment. Right Certificates so to be distributed shall be issued, executed
\nand countersigned in the manner provided for herein and shall be registered in
\nthe names of the holders of record of Right Certificates on the record date
\nspecified in the public announcement.<\/p>\n
(j) Irrespective of any adjustment or change in the
\nPurchase Price or the number of one one-thousandths of a share of Preferred
\nStock issuable upon the exercise of a Right, the Right Certificates theretofore
\nand thereafter issued may continue to express the Purchase Price and the number
\nof one one-thousandths of a share of Preferred Stock which were expressed in the
\ninitial Right Certificates issued hereunder.<\/p>\n
16<\/p>\n
20<\/p>\n
(k) Before taking any action that would cause an
\nadjustment reducing the Purchase Price below the then par value, if any, of the
\nfraction of Preferred Stock or other shares of capital stock issuable upon
\nexercise of a Right, the Company shall take any corporate action which may, in
\nthe opinion of its counsel, be necessary in order that the Company may validly
\nand legally issue fully paid and nonassessable shares of Preferred Stock or
\nother such shares at such adjusted Purchase Price.<\/p>\n
(l) In any case in which this Section 11 shall require
\nthat an adjustment in the Purchase Price be made effective as of a record date
\nfor a specified event, the Company may elect to defer until the occurrence of
\nsuch event issuing to the holder of any Right exercised after such record date
\nthe Preferred Stock and other capital stock or securities of the Company, if
\nany, issuable upon such exercise over and above the Preferred Stock and other
\ncapital stock or securities of the Company, if any, issuable upon such exercise
\non the basis of the Purchase Price in effect prior to such adjustment; provided,
\nhowever, that the Company shall deliver to such holder a due bill or other
\nappropriate instrument evidencing such holder’s right to receive such additional
\nshares upon the occurrence of the event requiring such adjustment.<\/p>\n
(m) Anything in this Section 11 to the contrary
\nnotwithstanding, the Company shall be entitled to make such adjustments in the
\nPurchase Price, in addition to those adjustments expressly required by this
\nSection 11, as and to the extent that it in its sole discretion shall determine
\nto be advisable in order that any consolidation or subdivision of the Preferred
\nStock, issuance wholly for cash of any shares of Preferred Stock at less than
\nthe current market price, issuance wholly for cash of Preferred Stock or
\nsecurities which by their terms are convertible into or exchangeable for
\nPreferred Stock, dividends on Preferred Stock payable in shares of Preferred
\nStock or issuance of rights, options or warrants referred to hereinabove in
\nSection 11(b), hereafter made by the Company to holders of its Preferred Stock
\nshall not be taxable to such stockholders.<\/p>\n
(n) Anything in this Agreement to the contrary
\nnotwithstanding, in the event that at any time after the date of this Rights
\nAgreement and prior to the Distribution Date, the Company shall (i) declare and
\npay any dividend on the Common Stock payable in Common Stock or (ii) effect a
\nsubdivision, combination or consolidation of the Common Stock (by
\nreclassification or otherwise than by payment of a dividend payable in Common
\nStock) into a greater or lesser number of shares of Common Stock, then, in each
\nsuch case, the number of Rights associated with each share of Common Stock then
\noutstanding, or issued or delivered thereafter, shall be proportionately
\nadjusted so that the number of Rights thereafter associated with each share of
\nCommon Stock following any such event shall equal the result obtained by
\nmultiplying the number of Rights associated with each share of Common Stock
\nimmediately prior to such event by a fraction the numerator of which shall be
\nthe total number of shares of Common Stock outstanding immediately prior to the
\noccurrence of the event and the denominator of which shall be the total number
\nof shares of Common Stock outstanding immediately following the occurrence of
\nsuch event.<\/p>\n
(o) The Company agrees that, after the earlier of the
\nDistribution Date or the Stock Acquisition Date, it will not, except as
\npermitted by Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to
\ntake) any action if at the time such action is taken it is reasonably
\nforeseeable that such action will diminish substantially or eliminate the
\nbenefits intended to be afforded by the Rights.<\/p>\n
17<\/p>\n
21<\/p>\n
Section 12. Certificate of Adjusted Purchase Price or Number
\nof Shares. Whenever an adjustment is made as provided in Section 11 or 13
\nhereof, the Company shall promptly (a) prepare a certificate setting forth such
\nadjustment, and a brief statement of the facts accounting for such adjustment,
\n(b) file with the Rights Agent and with each transfer agent for the Common Stock
\nand the Preferred Stock a copy of such certificate and (c) mail a brief summary
\nthereof to each holder of a Right Certificate in accordance with Section 25
\nhereof (if so required under Section 25 hereof). The Rights Agent shall be fully
\nprotected in relying on any such certificate and on any adjustment therein
\ncontained and shall not be deemed to have knowledge of any such adjustment
\nunless and until it shall have received such certificate.<\/p>\n
Section 13. Consolidation, Merger or Sale or Transfer of
\nAssets or Earning Power.<\/p>\n
(a) In the event, directly or indirectly, at any time
\nafter the Flip-In Event (i) the Company shall consolidate with or shall merge
\ninto any other Person, (ii) any Person shall merge with and into the Company and
\nthe Company shall be the continuing or surviving corporation of such merger and,
\nin connection with such merger, all or part of the Common Stock shall be changed
\ninto or exchanged for stock or other securities of any other Person (or of the
\nCompany) or cash or any other property, or (iii) the Company shall sell or
\notherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
\ntransfer), in one or more transactions, assets or earning power aggregating 50%
\nor more of the assets or earning power of the Company and its Subsidiaries
\n(taken as a whole) to any other Person (other than the Company or one or more
\nwholly-owned Subsidiaries of the Company), then upon the first occurrence of
\nsuch event, proper provision shall be made so that: (A) each holder of a Right
\n(other than Rights which have become void pursuant to Section 11(a)(ii) hereof)
\nshall thereafter have the right to receive, upon the exercise thereof at the
\nPurchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
\nhereof), in accordance with the terms of this Agreement and in lieu of shares of
\nPreferred Stock or Common Stock of the Company, such number of validly
\nauthorized and issued, fully paid, non-assessable and freely tradeable shares of
\nCommon Stock of the Principal Party (as such term is hereinafter defined), not
\nsubject to any liens, encumbrances, rights of first refusal or other adverse
\nclaims, as shall equal the result obtained by dividing the Purchase Price (as
\ntheretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the
\ncurrent per share market price of the Common Stock of such Principal Party
\n(determined pursuant to Section 11(d) hereof) on the date of consummation of
\nsuch consolidation, merger, sale or transfer; provided, however, that the
\nPurchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
\nhereof) and the number of shares of Common Stock of such Principal Party so
\nreceivable upon exercise of a Right shall be subject to further adjustment as
\nappropriate in accordance with Section 11(f) hereof to reflect any events
\noccurring in respect of the Common Stock of such Principal Party after the
\noccurrence of such consolidation, merger, sale or transfer; (B) such Principal
\nParty shall thereafter be liable for, and shall assume, by virtue of such
\nconsolidation, merger, sale or transfer, all the obligations and duties of the
\nCompany pursuant to this Rights Agreement; (C) the term “Company” shall
\nthereafter be deemed to refer to such Principal Party; and (D) such Principal
\nParty shall take such steps (including, but not limited to, the reservation of a
\nsufficient number of its shares of Common Stock in accordance with Section 9
\nhereof) in connection with such consummation of any such transaction as may be
\nnecessary to assure that the provisions hereof shall thereafter be applicable,
\nas nearly as reasonably may be, in relation to the shares of its Common Stock
\nthereafter deliverable upon the exercise of the Rights; provided that, upon the
\nsubsequent occurrence of any consolidation, merger, sale or transfer of assets
\nor other<\/p>\n
18<\/p>\n
22<\/p>\n
extraordinary transaction in respect of such Principal Party, each holder of a
\nRight shall thereupon be entitled to receive, upon exercise of a Right and
\npayment of the Purchase Price as provided in this Section 13(a), such cash,
\nshares, rights, warrants and other property which such holder would have been
\nentitled to receive had such holder, at the time of such transaction, owned the
\nCommon Stock of the Principal Party receivable upon the exercise of a Right
\npursuant to this Section 13(a), and such Principal Party shall take such steps
\n(including, but not limited to, reservation of shares of stock) as may be
\nnecessary to permit the subsequent exercise of the Rights in accordance with the
\nterms hereof for such cash, shares, rights, warrants and other property.<\/p>\n
(b) “Principal Party” shall mean:<\/p>\n
(i) in the case of any transaction described in
\n(i) or (ii) of the first sentence of Section 13(a) hereof: (A) the Person that
\nis the issuer of the securities into which the shares of Common Stock are
\nconverted in such merger or consolidation, or, if there is more than one such
\nissuer, the issuer the shares of Common Stock of which have the greatest
\naggregate market value of shares outstanding, or (B) if no securities are so
\nissued, (x) the Person that is the other party to the merger, if such Person
\nsurvives said merger, or, if there is more than one such Person, the Person the
\nshares of Common Stock of which have the greatest aggregate market value of
\nshares outstanding or (y) if the Person that is the other party to the merger
\ndoes not survive the merger, the Person that does survive the merger (including
\nthe Company if it survives) or (z) the Person resulting from the consolidation;
\nand<\/p>\n
(ii) in the case of any transaction described in
\n(iii) of the first sentence in Section 13(a) hereof, the Person that is the
\nparty receiving the greatest portion of the assets or earning power transferred
\npursuant to such transaction or transactions, or, if each Person that is a party
\nto such transaction or transactions receives the same portion of the assets or
\nearning power so transferred or if the Person receiving the greatest portion of
\nthe assets or earning power cannot be determined, whichever of such Persons is
\nthe issuer of Common Stock having the greatest aggregate market value of shares
\noutstanding; provided, however, that in any such case described in the foregoing
\nclause (b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
\nor has not been continuously over the preceding 12-month period registered under
\nSection 12 of the Exchange Act, then (1) if such Person is a direct or indirect
\nSubsidiary of another Person the Common Stock of which is and has been so
\nregistered, the term “Principal Party” shall refer to such other Person, or (2)
\nif such Person is a Subsidiary, directly or indirectly, of more than one Person,
\nthe Common Stock of all of which is and has been so registered, the term
\n“Principal Party” shall refer to whichever of such Persons is the issuer of
\nCommon Stock having the greatest aggregate market value of shares outstanding,
\nor (3) if such Person is owned, directly or indirectly, by a joint venture
\nformed by two or more Persons that are not owned, directly or indirectly, by the
\nsame Person, the rules set forth in clauses (1) and (2) above shall apply to
\neach of the owners having an interest in the venture as if the Person owned by
\nthe joint venture was a Subsidiary of both or all of such joint venturers, and
\nthe Principal Party in each such case shall bear the obligations set forth in
\nthis Section 13 in the same ratio as its interest in such Person bears to the
\ntotal of such interests.<\/p>\n
(c) The Company shall not consummate any consolidation,
\nmerger, sale or transfer referred to in Section 13(a) hereof unless prior
\nthereto the Company and the Principal Party involved therein shall have executed
\nand delivered to the Rights Agent an agreement confirming that<\/p>\n
19<\/p>\n
23<\/p>\n
the requirements of Sections 13(a) and (b) hereof shall promptly be performed in
\naccordance with their terms and that such consolidation, merger, sale or
\ntransfer of assets shall not result in a default by the Principal Party under
\nthis Agreement as the same shall have been assumed by the Principal Party
\npursuant to Sections 13(a) and (b) hereof and providing that, as soon as
\npracticable after executing such agreement pursuant to this Section 13, the
\nPrincipal Party will:<\/p>\n
(i) prepare and file a registration statement
\nunder the Securities Act, if necessary, with respect to the Rights and the
\nsecurities purchasable upon exercise of the Rights on an appropriate form, use
\nits best efforts to cause such registration statement to become effective as
\nsoon as practicable after such filing and use its best efforts to cause such
\nregistration statement to remain effective (with a prospectus at all times
\nmeeting the requirements of the Securities Act) until the Expiration Date and
\nsimilarly comply with applicable state securities laws;<\/p>\n
(ii) use its best efforts, if the Common Stock of
\nthe Principal Party shall be listed or admitted to trading on the New York Stock
\nExchange or on another national securities exchange, to list or admit to trading
\n(or continue the listing of) the Rights and the securities purchasable upon
\nexercise of the Rights on the New York Stock Exchange or such securities
\nexchange, or, if the Common Stock of the Principal Party shall not be listed or
\nadmitted to trading on the New York Stock Exchange or a national securities
\nexchange, to cause the Rights and the securities receivable upon exercise of the
\nRights to be authorized for quotation on NASDAQ or on such other system then in
\nuse;<\/p>\n
(iii) deliver to holders of the Rights
\nhistorical financial statements for the Principal Party which comply in all
\nrespects with the requirements for registration on Form 10 (or any successor
\nform) under the Exchange Act; and<\/p>\n
(iv) obtain waivers of any rights of first
\nrefusal or preemptive rights in respect of the Common Stock of the Principal
\nParty subject to purchase upon exercise of outstanding Rights.<\/p>\n
(d) In case the Principal Party has provision in any of
\nits authorized securities or in its certificate of incorporation or by-laws or
\nother instrument governing its corporate affairs, which provision would have the
\neffect of (i) causing such Principal Party to issue (other than to holders of
\nRights pursuant to this Section 13), in connection with, or as a consequence of,
\nthe consummation of a transaction referred to in this Section 13, shares of
\nCommon Stock or Common Stock Equivalents of such Principal Party at less than
\nthe then current market price per share thereof (determined pursuant to Section
\n11(d) hereof) or securities exercisable for, or convertible into, Common Stock
\nor Common Stock Equivalents of such Principal Party at less than such then
\ncurrent market price, or (ii) providing for any special payment, tax or similar
\nprovision in connection with the issuance of the Common Stock of such Principal
\nParty pursuant to the provisions of Section 13, then, in such event, the Company
\nhereby agrees with each holder of Rights that it shall not consummate any such
\ntransaction unless prior thereto the Company and such Principal Party shall have
\nexecuted and delivered to the Rights Agent a supplemental agreement providing
\nthat the provision in question of such Principal Party shall have been canceled,
\nwaived or amended, or that the authorized securities shall be redeemed, so that
\nthe applicable provision will have no effect in connection with, or as a
\nconsequence of, the consummation of the proposed transaction.<\/p>\n
20<\/p>\n
24<\/p>\n
(e) The Company covenants and agrees that it shall not,
\nat any time after the Flip-In Event, enter into any transaction of the type
\ndescribed in clauses (i) through (iii) of Section 13(a) hereof if (i) at the
\ntime of or immediately after such consolidation, merger, sale, transfer or other
\ntransaction there are any rights, warrants or other instruments or securities
\noutstanding or agreements in effect which would substantially diminish or
\notherwise eliminate the benefits intended to be afforded by the Rights, (ii)
\nprior to, simultaneously with or immediately after such consolidation, merger,
\nsale, transfer or other transaction, the stockholders of the Person who
\nconstitutes, or would constitute, the Principal Party for purposes of Section
\n13(b) hereof shall have received a distribution of Rights previously owned by
\nsuch Person or any of its Affiliates or Associates or (iii) the form or nature
\nof organization of the Principal Party would preclude or limit the
\nexercisability of the Rights.<\/p>\n
Section 14. Fractional Rights and Fractional Shares.<\/p>\n
(a) The Company shall not be required to issue fractions
\nof Rights or to distribute Right Certificates which evidence fractional Rights
\n(except prior to the Distribution Date in accordance with Section 11(n) hereof).
\nIn lieu of such fractional Rights, there shall be paid to the registered holders
\nof the Right Certificates with regard to which such fractional Rights would
\notherwise be issuable, an amount in cash equal to the same fraction of the
\ncurrent market value of a whole Right. For the purposes of this Section 14(a),
\nthe current market value of a whole Right shall be the closing price of the
\nRights for the Trading Day immediately prior to the date on which such
\nfractional Rights would have been otherwise issuable. The closing price for any
\nday shall be the last sale price, regular way, or, in case no such sale takes
\nplace on such day, the average of the closing bid and asked prices, regular way,
\nin either case as reported in the principal consolidated transaction reporting
\nsystem with respect to securities listed or admitted to trading on the New York
\nStock Exchange or, if the Rights are not listed or admitted to trading on the
\nNew York Stock Exchange, as reported in the principal consolidated transaction
\nreporting system with respect to securities listed on the principal national
\nsecurities exchange on which the Rights are listed or admitted to trading or, if
\nthe Rights are not listed or admitted to trading on any national securities
\nexchange, the last quoted price or, if not so quoted, the average of the high
\nbid and low asked prices in the over-the-counter market, as reported by NASDAQ
\nor such other system then in use or, if on any such date the Rights are not
\nquoted by any such organization, the average of the closing bid and asked prices
\nas furnished by a professional market maker making a market in the Rights
\nselected by the Board of Directors of the Company. If on any such date no such
\nmarket maker is making a market in the Rights, the fair value of the Rights on
\nsuch date as determined in good faith by the Board of Directors of the Company
\nshall be used.<\/p>\n
(b) The Company shall not be required to issue fractions
\nof Preferred Stock (other than fractions which are integral multiples of one
\none-thousandth of a share of Preferred Stock) or to distribute certificates
\nwhich evidence fractional shares of Preferred Stock (other than fractions which
\nare integral multiples of one one-thousandth of a share of Preferred Stock) upon
\nthe exercise or exchange of Rights. Interests in fractions of Preferred Stock in
\nintegral multiples of one one-thousandth of a share of Preferred Stock may, at
\nthe election of the Company, be evidenced by depositary receipts, pursuant to an
\nappropriate agreement between the Company and a depositary selected by it;
\nprovided, that such agreement shall provide that the holders of such depositary
\nreceipts shall have all the rights, privileges and preferences to which they are
\nentitled as beneficial owners of the Preferred Stock represented by such
\ndepositary receipts. In lieu of fractional shares<\/p>\n
21<\/p>\n
25<\/p>\n
of Preferred Stock that are not integral multiples of one one-thousandth of a
\nshare of Preferred Stock, the Company shall pay to the registered holders of
\nRight Certificates at the time such Rights are exercised or exchanged as herein
\nprovided an amount in cash equal to the same fraction of the current market
\nvalue of a whole share of Preferred Stock (as determined in accordance with
\nSection 14(a) hereof) for the Trading Day immediately prior to the date of such
\nexercise or exchange.<\/p>\n
(c) The Company shall not be required to issue fractions
\nof shares of Common Stock or to distribute certificates which evidence
\nfractional shares of Common Stock upon the exercise or exchange of Rights. In
\nlieu of such fractional shares of Common Stock, the Company shall pay to the
\nregistered holders of the Right Certificates with regard to which such
\nfractional shares of Common Stock would otherwise be issuable an amount in cash
\nequal to the same fraction of the current market value of a whole share of
\nCommon Stock (as determined in accordance with Section 14(a) hereof) for the
\nTrading Day immediately prior to the date of such exercise or exchange.<\/p>\n
(d) The holder of a Right by the acceptance of the Right
\nexpressly waives his right to receive any fractional Rights or any fractional
\nshares upon exercise or exchange of a Right (except as provided above).<\/p>\n
Section 15. Rights of Action. All rights of action in
\nrespect of this Agreement, excepting the rights of action given to the Rights
\nAgent under Section 18 hereof, are vested in the respective registered holders
\nof the Right Certificates (and, prior to the Distribution Date, the registered
\nholders of the Common Stock); and any registered holder of any Right Certificate
\n(or, prior to the Distribution Date, of the Common Stock), without the consent
\nof the Rights Agent or of the holder of any other Right Certificate (or, prior
\nto the Distribution Date, of the Common Stock), on his own behalf and for his
\nown benefit, may enforce, and may institute and maintain any suit, action or
\nproceeding against the Company to enforce, or otherwise act in respect of, his
\nright to exercise the Rights evidenced by such Right Certificate (or, prior to
\nthe Distribution Date, such Common Stock) in the manner provided therein and in
\nthis Agreement. Without limiting the foregoing or any remedies available to the
\nholders of Rights, it is specifically acknowledged that the holders of Rights
\nwould not have an adequate remedy at law for any breach of this Agreement and
\nwill be entitled to specific performance of the obligations under, and
\ninjunctive relief against actual or threatened violations of, the obligations of
\nany Person subject to this Agreement.<\/p>\n
Section 16. Agreement of Right Holders. Every holder of a
\nRight, by accepting the same, consents and agrees with the Company and the
\nRights Agent and with every other holder of a Right that:<\/p>\n
(a) prior to the Distribution Date, the Rights will be
\ntransferable only in connection with the transfer of the Common Stock;<\/p>\n
(b) after the Distribution Date, the Right Certificates
\nare transferable only on the registry books of the Rights Agent if surrendered
\nat the office or agency of the Rights Agent designated for such purpose, duly
\nendorsed or accompanied by a proper instrument of transfer; and<\/p>\n
(c) the Company and the Rights Agent may deem and treat
\nthe Person in whose name the Right Certificate (or, prior to the Distribution
\nDate, the Common Stock certificate) is<\/p>\n
22<\/p>\n
26<\/p>\n
registered as the absolute owner thereof and of the Rights evidenced thereby
\n(notwithstanding any notations of ownership or writing on the Right Certificates
\nor the Common Stock certificate made by anyone other than the Company or the
\nRights Agent) for all purposes whatsoever, and neither the Company nor the
\nRights Agent shall be affected by any notice to the contrary.<\/p>\n
Section 17. Right Certificate Holder Not Deemed a<\/p>\n
Stockholder. No holder, as such, of any Right Certificate shall be entitled to
\nvote, receive dividends or be deemed for any purpose the holder of the Preferred
\nStock or any other securities of the Company which may at any time be issuable
\non the exercise or exchange of the Rights represented thereby, nor shall
\nanything contained herein or in any Right Certificate be construed to confer
\nupon the holder of any Right Certificate, as such, any of the rights of a
\nstockholder of the Company or any right to vote for the election of directors or
\nupon any matter submitted to stockholders at any meeting thereof, or to give or
\nwithhold consent to any corporate action, or to receive notice of meetings or
\nother actions affecting stockholders (except as provided in this Agreement), or
\nto receive dividends or subscription rights, or otherwise, until the Rights
\nevidenced by such Right Certificate shall have been exercised or exchanged in
\naccordance with the provisions hereof.<\/p>\n
Section 18. Concerning the Rights Agent.<\/p>\n
(a) The Company agrees to pay to the Rights Agent
\nreasonable compensation for all services rendered by it hereunder and, from time
\nto time, on demand of the Rights Agent, its reasonable expenses and counsel fees
\nand other disbursements incurred in the administration and execution of this
\nAgreement and the exercise and performance of its duties hereunder. The Company
\nalso agrees to indemnify the Rights Agent for, and to hold it harmless against,
\nany loss, liability or expense, incurred without negligence, bad faith or
\nwillful misconduct on the part of the Rights Agent, for anything done or omitted
\nby the Rights Agent in connection with the acceptance and administration of this
\nAgreement, including the costs and expenses of defending against any claim of
\nliability arising therefrom, directly or indirectly.<\/p>\n
(b) The Rights Agent shall be protected and shall incur
\nno liability for, or in respect of any action taken, suffered or omitted by it
\nin connection with, its administration of this Agreement in reliance upon any
\nRight Certificate or certificate for the Preferred Stock or Common Stock or for
\nother securities of the Company, instrument of assignment or transfer, power of
\nattorney, endorsement, affidavit, letter, notice, direction, consent,
\ncertificate, statement or other paper or document believed by it to be genuine
\nand to be signed, executed and, where necessary, verified or acknowledged, by
\nthe proper Person or Persons, or otherwise upon the advice of counsel as set
\nforth in Section 20 hereof.<\/p>\n
Section 19. Merger or Consolidation or Change of Name of
\nRights Agent.<\/p>\n
(a) Any corporation into which the Rights Agent or any
\nsuccessor Rights Agent may be merged or with which it may be consolidated, or
\nany corporation resulting from any merger or consolidation to which the Rights
\nAgent or any successor Rights Agent shall be a party, or any corporation
\nsucceeding to the stock transfer or corporate trust powers of the Rights Agent
\nor any successor Rights Agent, shall be the successor to the Rights Agent under
\nthis Agreement without the execution or filing of any paper or any further act
\non the part of any of the parties hereto; provided,<\/p>\n
23<\/p>\n
27<\/p>\n
that such corporation would be eligible for appointment as a successor Rights
\nAgent under the provisions of Section 21 hereof. In case at the time such
\nsuccessor Rights Agent shall succeed to the agency created by this Agreement,
\nany of the Right Certificates shall have been countersigned but not delivered,
\nany such successor Rights Agent may adopt the countersignature of the
\npredecessor Rights Agent and deliver such Right Certificates so countersigned;
\nand in case at that time any of the Right Certificates shall not have been
\ncountersigned, any successor Rights Agent may countersign such Right
\nCertificates either in the name of the predecessor Rights Agent or in the name
\nof the successor Rights Agent; and in all such cases such Right Certificates
\nshall have the full force provided in the Right Certificates and in this
\nAgreement.<\/p>\n
(b) In case at any time the name of the Rights Agent
\nshall be changed and at such time any of the Right Certificates shall have been
\ncountersigned but not delivered, the Rights Agent may adopt the countersignature
\nunder its prior name and deliver Right Certificates so countersigned; and in
\ncase at that time any of the Right Certificates shall not have been
\ncountersigned, the Rights Agent may countersign such Right Certificates either
\nin its prior name or in its changed name and in all such cases such Right
\nCertificates shall have the full force provided in the Right Certificates and in
\nthis Agreement.<\/p>\n
Section 20. Duties of Rights Agent. The Rights Agent
\nundertakes the duties and obligations imposed by this Agreement upon the
\nfollowing terms and conditions, by all of which the Company and the holders of
\nRight Certificates, by their acceptance thereof, shall be bound:<\/p>\n
(a) The Rights Agent may consult with legal counsel (who
\nmay be legal counsel for the Company), and the opinion of such counsel shall be
\nfull and complete authorization and protection to the Rights Agent as to any
\naction taken or omitted by it in good faith and in accordance with such opinion.<\/p>\n
(b) Whenever in the performance of its duties under this
\nAgreement the Rights Agent shall deem it necessary or desirable that any fact or
\nmatter be proved or established by the Company prior to taking or suffering any
\naction hereunder, such fact or matter (unless other evidence in respect thereof
\nbe herein specifically prescribed) may be deemed to be conclusively proved and
\nestablished by a certificate signed by the President and the Secretary of the
\nCompany and delivered to the Rights Agent; and such certificate shall be full
\nauthorization to the Rights Agent for any action taken or suffered in good faith
\nby it under the provisions of this Agreement in reliance upon such certificate.<\/p>\n
(c) The Rights Agent shall be liable hereunder to the
\nCompany and any other Person only for its own negligence, bad faith or willful
\nmisconduct. Anything to the contrary notwithstanding, in no event shall the
\nRights Agent be liable for special, indirect, consequential or incidental loss
\nor damage of any kind whatsoever (including but not limited to lost profits),
\neven if the Rights Agent has been advised of the likelihood of such loss or
\ndamage.<\/p>\n
(d) The Rights Agent shall not be liable for or by reason
\nof any of the statements of fact or recitals contained in this Agreement or in
\nthe Right Certificates (except its countersignature thereof) or be required to
\nverify the same, but all such statements and recitals are and shall be deemed to
\nhave been made by the Company only.<\/p>\n
24<\/p>\n
28<\/p>\n
(e) The Rights Agent shall not be under any
\nresponsibility in respect of the validity of this Agreement or the execution and
\ndelivery hereof (except the due execution hereof by the Rights Agent) or in
\nrespect of the validity or execution of any Right Certificate (except its
\ncountersignature thereof); nor shall it be responsible for any breach by the
\nCompany of any covenant or condition contained in this Agreement or in any Right
\nCertificate; nor shall it be responsible for any change in the exercisability of
\nthe Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
\nhereof) or any adjustment in the terms of the Rights provided for in Sections 3,
\n11, 13, 23 and 24, or the ascertaining of the existence of facts that would
\nrequire any such change or adjustment (except with respect to the exercise of
\nRights evidenced by Right Certificates after receipt of a certificate furnished
\npursuant to Section 12, describing such change or adjustment); nor shall it by
\nany act hereunder be deemed to make any representation or warranty as to the
\nauthorization or reservation of any shares of Preferred Stock or other
\nsecurities to be issued pursuant to this Agreement or any Right Certificate or
\nas to whether any shares of Preferred Stock or other securities will, when
\nissued, be validly authorized and issued, fully paid and nonassessable.<\/p>\n
(f) The Company agrees that it will perform, execute,
\nacknowledge and deliver or cause to be performed, executed, acknowledged and
\ndelivered all such further and other acts, instruments and assurances as may
\nreasonably be required by the Rights Agent for the carrying out or performing by
\nthe Rights Agent of the provisions of this Agreement.<\/p>\n
(g) The Rights Agent is hereby authorized and directed to
\naccept instructions with respect to the performance of its duties hereunder from
\nany person reasonably believed by the Rights Agent to be one of the President or
\nthe Secretary of the Company, and to apply to such officers for advice or
\ninstructions in connection with its duties, and it shall not be liable for any
\naction taken or suffered by it in good faith in accordance with instructions of
\nany such officer or for any delay in acting while waiting for those
\ninstructions. Any application by the Rights Agent for written instructions from
\nthe Company may, at the option of the Rights Agent, set forth in writing any
\naction proposed to be taken or omitted by the Rights Agent under this Agreement
\nand the date on and\/or after which such action shall be taken or such omission
\nshall be effective. The Rights Agent shall not be liable for any action taken
\nby, or omission of, the Rights Agent in accordance with a proposal included in
\nany such application on or after the date specified in such application (which
\ndate shall not be less than five Business Days after the date any officer of the
\nCompany actually receives such application unless any such officer shall have
\nconsented in writing to an earlier date) unless, prior to taking any such action
\n(or the effective date in the case of an omission), the Rights Agent shall have
\nreceived written instructions in response to such application specifying the
\naction to be taken or omitted.<\/p>\n
(h) The Rights Agent and any stockholder, director,
\nofficer or employee of the Rights Agent may buy, sell or deal in any of the
\nRights or other securities of the Company or become pecuniarily interested in
\nany transaction in which the Company may be interested, or contract with or lend
\nmoney to the Company or otherwise act as fully and freely as though it were not
\nRights Agent under this Agreement. Nothing herein shall preclude the Rights
\nAgent from acting in any other capacity for the Company or for any other legal
\nentity.<\/p>\n
(i) The Rights Agent may execute and exercise any of the
\nrights or powers hereby vested in it or perform any duty hereunder either itself
\nor by or through its attorneys or agents, and<\/p>\n
25<\/p>\n
29<\/p>\n
the Rights Agent shall not be answerable or accountable for any act, default,
\nneglect or misconduct of any such attorneys or agents or for any loss to the
\nCompany resulting from any such act, default, neglect or misconduct, provided
\nreasonable care was exercised in the selection and continued employment thereof.<\/p>\n
(j) If, with respect to any Rights Certificate
\nsurrendered to the Rights Agent for exercise or transfer, the certificate
\ncontained in the form of assignment or the form of election to purchase set
\nforth on the reverse thereof, as the case may be, has not been completed to
\ncertify the holder is not an Acquiring Person (or an Affiliate or Associate
\nthereof), the Rights Agent shall not take any further action with respect to
\nsuch requested exercise or transfer without first consulting with the Company.<\/p>\n
Section 21. Change of Rights Agent. The Rights Agent or any
\nsuccessor Rights Agent may resign and be discharged from its duties under this
\nAgreement upon 30 days’ notice in writing mailed to the Company and to each
\ntransfer agent of the Common Stock or Preferred Stock by registered or certified
\nmail, and, following the Distribution Date, to the holders of the Right
\nCertificates by first-class mail. The Company may remove the Rights Agent or any
\nsuccessor Rights Agent upon 30 days’ notice in writing, mailed to the Rights
\nAgent or successor Rights Agent, as the case may be, and to each transfer agent
\nof the Common Stock or Preferred Stock by registered or certified mail, and,
\nfollowing the Distribution Date, to the holders of the Right Certificates by
\nfirst-class mail. If the Rights Agent shall resign or be removed or shall
\notherwise become incapable of acting, the Company shall appoint a successor to
\nthe Rights Agent. If the Company shall fail to make such appointment within a
\nperiod of 30 days after giving notice of such removal or after it has been
\nnotified in writing of such resignation or incapacity by the resigning or
\nincapacitated Rights Agent or by the holder of a Right Certificate (who shall,
\nwith such notice, submit his Right Certificate for inspection by the Company),
\nthen the registered holder of any Right Certificate may apply to any court of
\ncompetent jurisdiction for the appointment of a new Rights Agent. Any successor
\nRights Agent, whether appointed by the Company or by such a court, shall be
\neither (a) a corporation organized and doing business under the laws of the
\nUnited States or the laws of any state of the United States or the District of
\nColumbia, in good standing, having an office in the State of Texas or the State
\nof New York, which is authorized under such laws to exercise corporate trust or
\nstock transfer powers and is subject to supervision or examination by federal or
\nstate authority and which has at the time of its appointment as Rights Agent a
\ncombined capital and surplus of at least $50 million or (b) an affiliate of such
\na corporation. After appointment, the successor Rights Agent shall be vested
\nwith the same powers, rights, duties and responsibilities as if it had been
\noriginally named as Rights Agent without further act or deed; but the
\npredecessor Rights Agent shall deliver and transfer to the successor Rights
\nAgent any property at the time held by it hereunder, and execute and deliver any
\nfurther assurance, conveyance, act or deed necessary for the purpose. Not later
\nthan the effective date of any such appointment the Company shall file notice
\nthereof in writing with the predecessor Rights Agent and each transfer agent of
\nthe Common Stock or Preferred Stock, and, following the Distribution Date, mail
\na notice thereof in writing to the registered holders of the Right Certificates.
\nFailure to give any notice provided for in this Section 21, however, or any
\ndefect therein, shall not affect the legality or validity of the resignation or
\nremoval of the Rights Agent or the appointment of the successor Rights Agent, as
\nthe case may be.<\/p>\n
26<\/p>\n
30<\/p>\n
Section 22. Issuance of New Right Certificates.
\nNotwithstanding any of the provisions of this Agreement or of the Rights to the
\ncontrary, the Company may, at its option, issue new Right Certificates
\nevidencing Rights in such forms as may be approved by its Board of Directors to
\nreflect any adjustment or change in the Purchase Price and the number or kind or
\nclass of shares or other securities or property purchasable under the Right
\nCertificates made in accordance with the provisions of this Agreement. In
\naddition, in connection with the issuance or sale of Common Stock following the
\nDistribution Date and prior to the Expiration Date, the Company may with respect
\nto shares of Common Stock so issued or sold pursuant to (i) the exercise of
\nstock options, (ii) under any employee plan or arrangement, (iii) upon the
\nexercise, conversion or exchange of securities, notes or debentures issued by
\nthe Company or (iv) a contractual obligation of the Company, in each case
\nexisting prior to the Distribution Date, issue Rights Certificates representing
\nthe appropriate number of Rights in connection with such issuance or sale.<\/p>\n
Section 23. Redemption.<\/p>\n
(a) The Board of Directors of the Company may, at any
\ntime prior to the Flip-In Event, redeem all but not less than all the then
\noutstanding Rights at a redemption price of $.01 per Right, appropriately
\nadjusted to reflect any stock split, stock dividend or similar transaction
\noccurring after the date hereof (the redemption price being hereinafter referred
\nto as the “Redemption Price”). The redemption of the Rights may be made
\neffective at such time, on such basis and with such conditions as the Board of
\nDirectors in its sole discretion may establish. The Redemption Price shall be
\npayable, at the option of the Company, in cash, shares of Common Stock, or such
\nother form of consideration as the Board of Directors shall determine.<\/p>\n
(b) Immediately upon the action of the Board of Directors
\nordering the redemption of the Rights pursuant to paragraph (a) of this Section
\n23 (or at such later time as the Board of Directors may establish for the
\neffectiveness of such redemption), and without any further action and without
\nany notice, the right to exercise the Rights will terminate and the only right
\nthereafter of the holders of Rights shall be to receive the Redemption Price.
\nThe Company shall promptly give public notice of any such redemption; provided,
\nhowever, that the failure to give, or any defect in, any such notice shall not
\naffect the validity of such redemption. Within 10 days after such action of the
\nBoard of Directors ordering the redemption of the Rights (or such later time as
\nthe Board of Directors may establish for the effectiveness of such redemption),
\nthe Company shall mail a notice of redemption to all the holders of the then
\noutstanding Rights at their last addresses as they appear upon the registry
\nbooks of the Rights Agent or, prior to the Distribution Date, on the registry
\nbooks of the transfer agent for the Common Stock. Any notice which is mailed in
\nthe manner herein provided shall be deemed given, whether or not the holder
\nreceives the notice. Each such notice of redemption shall state the method by
\nwhich the payment of the Redemption Price will be made.<\/p>\n
Section 24. Exchange.<\/p>\n
(a) The Board of Directors of the Company may, at its
\noption, at any time after the Flip-In Event, exchange all or part of the then
\noutstanding and exercisable Rights (which shall not include Rights that have
\nbecome void pursuant to the provisions of Section 11(a)(ii) hereof) for Common
\nStock at an exchange ratio of one share of Common Stock per Right, appropriately
\nadjusted to reflect any stock split, stock dividend or similar transaction
\noccurring after the date<\/p>\n
27<\/p>\n
31<\/p>\n
hereof (such amount per Right being hereinafter referred to as the “Exchange
\nRatio”). Notwithstanding the foregoing, the Board of Directors shall not be
\nempowered to effect such exchange at any time after an Acquiring Person shall
\nhave become the Beneficial Owner of shares of Common Stock aggregating 50% or
\nmore of the shares of Common Stock then outstanding. From and after the
\noccurrence of an event specified in Section 13(a) hereof, any Rights that
\ntheretofore have not been exchanged pursuant to this Section 24(a) shall
\nthereafter be exercisable only in accordance with Section 13 and may not be
\nexchanged pursuant to this Section 24(a). The exchange of the Rights by the
\nBoard of Directors may be made effective at such time, on such basis and with
\nsuch conditions as the Board of Directors in its sole discretion may establish.<\/p>\n
(b) Immediately upon the effectiveness of the action of
\nthe Board of Directors of the Company ordering the exchange of any Rights
\npursuant to paragraph (a) of this Section 24 and without any further action and
\nwithout any notice, the right to exercise such Rights shall terminate and the
\nonly right thereafter of a holder of such Rights shall be to receive that number
\nof shares of Common Stock equal to the number of such Rights held by such holder
\nmultiplied by the Exchange Ratio. The Company shall promptly give public notice
\nof any such exchange; provided, however, that the failure to give, or any defect
\nin, such notice shall not affect the validity of such exchange. The Company
\nshall promptly mail a notice of any such exchange to all of the holders of the
\nRights so exchanged at their last addresses as they appear upon the registry
\nbooks of the Rights Agent. Any notice which is mailed in the manner herein
\nprovided shall be deemed given, whether or not the holder receives the notice.
\nEach such notice of exchange will state the method by which the exchange of the
\nshares of Common Stock for Rights will be effected and, in the event of any
\npartial exchange, the number of Rights which will be exchanged. Any partial
\nexchange shall be effected pro rata based on the number of Rights (other than
\nRights which have become void pursuant to the provisions of Section 11(a)(ii)
\nhereof) held by each holder of Rights.<\/p>\n
(c) The Company may at its option substitute, and, in the
\nevent that there shall not be sufficient shares of Common Stock issued but not
\noutstanding or authorized but unissued to permit an exchange of Rights for
\nCommon Stock as contemplated in accordance with this Section 24, the Company
\nshall substitute to the extent of such insufficiency, for each share of Common
\nStock that would otherwise be issuable upon exchange of a Right, a number of
\nshares of Preferred Stock or fraction thereof (or equivalent preferred shares,
\nas such term is defined in Section 11(b)) such that the current per share market
\nprice (determined pursuant to Section 11(d) hereof) of one share of Preferred
\nStock (or equivalent preferred share) multiplied by such number or fraction is
\nequal to the current per share market price of one share of Common Stock
\n(determined pursuant to Section 11(d) hereof) as of the date of such exchange.<\/p>\n
Section 25. Notice of Certain Events.<\/p>\n
(a) In case the Company shall at any time after the
\nearlier of the Distribution Date or the Stock Acquisition Date propose (i) to
\npay any dividend payable in stock of any class to the holders of its Preferred
\nStock or to make any other distribution to the holders of its Preferred Stock
\n(other than a regular quarterly cash dividend), (ii) to offer to the holders of
\nits Preferred Stock rights or warrants to subscribe for or to purchase any
\nadditional shares of Preferred Stock or shares of stock of any class or any
\nother securities, rights or options, (iii) to effect any reclassification of its
\nPreferred Stock (other than a reclassification involving only the subdivision or
\ncombination of outstanding<\/p>\n
28<\/p>\n
32<\/p>\n
Preferred Stock), (iv) to effect the liquidation, dissolution or winding up of
\nthe Company, or (v) to pay any dividend on the Common Stock payable in Common
\nStock or to effect a subdivision, combination or consolidation of the Common
\nStock (by reclassification or otherwise than by payment of dividends in Common
\nStock), then, in each such case, the Company shall give to each holder of a
\nRight Certificate, in accordance with Section 26 hereof, a notice of such
\nproposed action, which shall specify the record date for the purposes of such
\nstock dividend, or distribution of rights or warrants, or the date on which such
\nliquidation, dissolution or winding up is to take place and the date of
\nparticipation therein by the holders of the Common Stock and\/or Preferred Stock,
\nif any such date is to be fixed, and such notice shall be so given in the case
\nof any action covered by clause (i) or (ii) above at least 10 days prior to the
\nrecord date for determining holders of the Preferred Stock for purposes of such
\naction, and in the case of any such other action, at least 10 days prior to the
\ndate of the taking of such proposed action or the date of participation therein
\nby the holders of the Common Stock and\/or Preferred Stock, whichever shall be
\nthe earlier.<\/p>\n
(b) In case any event described in Section 11(a)(ii) or
\nSection 13 shall occur then the Company shall as soon as practicable thereafter
\ngive to each holder of a Right Certificate (or if occurring prior to the
\nDistribution Date, the holders of the Common Stock) in accordance with Section
\n26 hereof, a notice of the occurrence of such event, which notice shall describe
\nsuch event and the consequences of such event to holders of Rights under Section
\n11(a)(ii) and Section 13 hereof.<\/p>\n
Section 26. Notices. Notices or demands authorized by this
\nAgreement to be given or made by the Rights Agent or by the holder of any Right
\nCertificate to or on the Company shall be sufficiently given or made if sent by
\nfirst-class mail, postage prepaid, addressed (until another address is filed in
\nwriting with the Rights Agent) as follows:<\/p>\n
Harken Energy Corporation
\n 5605 N. MacArthur Boulevard, Suite 400
\n Irving, TX 75038
\n Attention: President<\/p>\n
Subject to the provisions of Section 21 hereof, any notice or demand authorized
\nby this Agreement to be given or made by the Company or by the holder of any
\nRight Certificate to or on the Rights Agent shall be sufficiently given or made
\nif sent by first-class mail, postage prepaid, addressed (until another address
\nis filed in writing with the Company) as follows:<\/p>\n
ChaseMellon Shareholder Services L.L.C.
\n 2323 Bryan Street, Suite 2300
\n Dallas, Texas 75201
\n Attention: Barbara J. Robbins<\/p>\n
Notices or demands authorized by this Agreement to be given or made by the
\nCompany or the Rights Agent to the holder of any Right Certificate shall be
\nsufficiently given or made if sent by first-class mail, postage prepaid,
\naddressed to such holder at the address of such holder as shown on the registry
\nbooks of the Company.<\/p>\n
29<\/p>\n
33<\/p>\n
Section 27. Supplements and Amendments. Except as provided
\nin the penultimate sentence of this Section 27, for so long as the Rights are
\nthen redeemable, the Company may in its sole and absolute discretion, and the
\nRights Agent shall if the Company so directs, supplement or amend any provision
\nof this Agreement in any respect without the approval of any holders of the
\nRights. At any time when the Rights are no longer redeemable, except as provided
\nin the penultimate sentence of this Section 27, the Company may, and the Rights
\nAgent shall, if the Company so directs, supplement or amend this Agreement
\nwithout the approval of any holders of Rights in order to (i) cure any
\nambiguity, (ii) correct or supplement any provision contained herein which may
\nbe defective or inconsistent with any other provision herein, (iii) shorten or
\nlengthen any time period hereunder, or (iv) change or supplement the provisions
\nhereunder in any manner which the Company may deem necessary or desirable;
\nprovided that no such supplement or amendment shall adversely affect the
\ninterests of the holders of Rights as such (other than an Acquiring Person or an
\nAffiliate or Associate of an Acquiring Person), and no such amendment may cause
\nthe Rights again to become redeemable or cause the Agreement again to become
\namendable other than in accordance with this sentence. Notwithstanding anything
\ncontained in this Agreement to the contrary, no supplement or amendment shall be
\nmade which changes the Redemption Price. Upon the delivery of a certificate from
\nan appropriate officer of the Company which states that the proposed supplement
\nor amendment is in compliance with the terms of this Section 27, the Rights
\nAgent shall execute such supplement or amendment.<\/p>\n
Section 28. Successors. All the covenants and provisions of
\nthis Agreement by or for the benefit of the Company or the Rights Agent shall
\nbind and inure to the benefit of their respective successors and assigns
\nhereunder.<\/p>\n
Section 29. Benefits of this Agreement. Nothing in this
\nAgreement shall be construed to give to any Person other than the Company, the
\nRights Agent and the registered holders of the Right Certificates (and, prior to
\nthe Distribution Date, the Common Stock) any legal or equitable right, remedy or
\nclaim under this Agreement; but this Agreement shall be for the sole and
\nexclusive benefit of the Company, the Rights Agent and the registered holders of
\nthe Right Certificates (and, prior to the Distribution Date, the Common Stock).<\/p>\n
Section 30. Determinations and Actions by the Board of
\nDirectors. The Board of Directors of the Company shall have the exclusive power
\nand authority to administer this Agreement and to exercise the rights and powers
\nspecifically granted to the Board of Directors of the Company or to the Company,
\nor as may be necessary or advisable in the administration of this Agreement,
\nincluding, without limitation, the right and power to (i) interpret the
\nprovisions of this Agreement and (ii) make all determinations deemed necessary
\nor advisable for the administration of this Agreement (including, without
\nlimitation, a determination to redeem or not redeem the Rights or to amend this
\nAgreement). All such actions, calculations, interpretations and determinations
\n(including, for purposes of clause (y) below, all omissions with respect to the
\nforegoing) that are done or made by the Board of Directors of the Company in
\ngood faith, shall (x) be final, conclusive and binding on the Company, the
\nRights Agent, the holders of the Rights, as such, and all other parties, and (y)
\nnot subject the Board of Directors to any liability to the holders of the
\nRights.<\/p>\n
Section 31. Severability. If any term, provision, covenant
\nor restriction of this Agreement is held by a court of competent jurisdiction or
\nother authority to be invalid, void or<\/p>\n
30<\/p>\n
34<\/p>\n
unenforceable, the remainder of the terms, provisions, covenants and
\nrestrictions of this Agreement shall remain in full force and effect and shall
\nin no way be affected, impaired or invalidated.<\/p>\n
Section 32. Governing Law. This Agreement and each Right
\nCertificate issued hereunder shall be deemed to be a contract made under the
\nlaws of the State of Delaware and for all purposes shall be governed by and
\nconstrued in accordance with the laws of such State applicable to contracts to
\nbe made and performed entirely within such State.<\/p>\n
Section 33. Counterparts. This Agreement may be executed
\nin any number of counterparts and each of such counterparts shall for all
\npurposes be deemed to be an original, and all such counterparts shall together
\nconstitute but one and the same instrument.<\/p>\n
Section 34. Descriptive Headings. Descriptive headings of
\nthe several Sections of this Agreement are inserted for convenience only and
\nshall not control or affect the meaning or construction of any of the provisions
\nhereof.<\/p>\n
31<\/p>\n
35<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this
\nAgreement to be duly executed, all as of the day and year first above written.<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
By: \/s\/ Bruce N. Huff
\n ————————————-
\n Bruce N. Huff,
\n President and Chief Operating
\n Officer<\/p>\n
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
\n as Rights Agent<\/p>\n
By: \/s\/ Margaret W. Grubb
\n ————————————-
\n Margaret W. Grubb,
\n Assistant Vice President<\/p>\n
32<\/p>\n
36<\/p>\n
Exhibit A<\/p>\n
FORM OF
\n CERTIFICATE OF DESIGNATION<\/p>\n
of<\/p>\n
SERIES E JUNIOR PARTICIPATING PREFERRED STOCK<\/p>\n
of<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
Pursuant to Section 151 of the General Corporation Law
\n of the State of Delaware<\/p>\n
Harken Energy Corporation, a corporation organized and
\nexisting under the General Corporation Law of the State of Delaware, in
\naccordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:<\/p>\n
That pursuant to the authority vested in the Board of
\nDirectors in accordance with the provisions of the Certificate of Incorporation
\nof the said Corporation, the said Board of Directors on April 6, 1998 adopted
\nthe following resolution creating a series of 175,000 shares of Preferred Stock
\ndesignated as “Series E Junior Participating Preferred Stock”:<\/p>\n
RESOLVED, that pursuant to the authority
\n vested in the Board of Directors of this Corporation in
\n accordance with the provisions of the Certificate of
\n Incorporation, a series of Preferred Stock, par value $1.00
\n per share, of the Corporation be and hereby is created, and
\n that the designation and number of shares thereof and the
\n voting and other powers, preferences and relative,
\n participating, optional or other rights of the shares of such
\n series and the qualifications, limitations and restrictions
\n thereof are as follows:<\/p>\n
Series E Junior Participating Preferred Stock<\/p>\n
1. Designation and Amount. There shall be a series of
\nPreferred Stock that shall be designated as “Series E Junior Participating
\nPreferred Stock,” and the number of shares constituting such series shall be
\n175,000. Such number of shares may be increased or decreased by resolution of
\nthe Board of Directors; provided, however, that no decrease shall reduce the
\nnumber of shares of Series E Junior Participating Preferred Stock to less than
\nthe number of shares then issued and outstanding plus the number of shares
\nissuable upon exercise of outstanding rights, options or warrants or upon
\nconversion of outstanding securities issued by the Corporation.<\/p>\n
A-1<\/p>\n
37<\/p>\n
2. Dividends and Distribution.<\/p>\n
(A) Subject to the prior and superior rights of
\nthe holders of any shares of any class or series of stock of the Corporation
\nranking prior and superior to the shares of Series E Junior Participating
\nPreferred Stock with respect to dividends, the holders of shares of Series E
\nJunior Participating Preferred Stock, in preference to the holders of shares of
\nany class or series of stock of the Corporation ranking junior to the Series E
\nJunior Participating Preferred Stock in respect thereof, shall be entitled to
\nreceive, when, as and if declared by the Board of Directors out of funds legally
\navailable for the purpose, quarterly dividends payable in cash on the last day
\nof March, June, September and December, in each year (each such date being
\nreferred to herein as a “Quarterly Dividend Payment Date”), commencing on the
\nfirst Quarterly Dividend Payment Date after the first issuance of a share or
\nfraction of a share of Series E Junior Participating Preferred Stock, in an
\namount per share (rounded to the nearest cent) equal to the greater of (a)
\n$10.00 or (b) the Adjustment Number (as defined below) times the aggregate per
\nshare amount of all cash dividends, and the Adjustment Number times the
\naggregate per share amount (payable in kind) of all non-cash dividends or other
\ndistributions other than a dividend payable in shares of Common Stock or a
\nsubdivision of the outstanding shares of Common Stock (by reclassification or
\notherwise), declared on the Common Stock, par value $.01 per share, of the
\nCorporation (the “Common Stock”) since the immediately preceding Quarterly
\nDividend Payment Date, or, with respect to the first Quarterly Dividend Payment
\nDate, since the first issuance of any share or fraction of a share of Series E
\nJunior Participating Preferred Stock. The “Adjustment Number” shall initially be
\n1000. In the event the Corporation shall at any time after April 6, 1998 (the
\n“Rights Declaration Date”) (i) declare and pay any dividend on Common Stock
\npayable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
\nor (iii) combine the outstanding Common Stock into a smaller number of shares,
\nthen in each such case the Adjustment Number in effect immediately prior to such
\nevent shall be adjusted by multiplying such Adjustment Number by a fraction the
\nnumerator of which is the number of shares of Common Stock outstanding
\nimmediately after such event and the denominator of which is the number of
\nshares of Common Stock that were outstanding immediately prior to such event.<\/p>\n
(B) The Corporation shall declare a dividend or
\ndistribution on the Series E Junior Participating Preferred Stock as provided in
\nparagraph (A) above immediately after it declares a dividend or distribution on
\nthe Common Stock (other than a dividend payable in shares of Common Stock).<\/p>\n
(C) Dividends shall begin to accrue and be <\/p>\n
cumulative on outstanding shares of Series E Junior Participating Preferred
\nStock from the Quarterly Dividend Payment Date next preceding the date of issue
\nof such shares of Series E Junior Participating Preferred Stock, unless the date
\nof issue of such shares is prior to the record date for the first Quarterly
\nDividend Payment Date, in which case dividends on such shares shall begin to
\naccrue from the date of issue of such shares, or unless the date of issue is a
\nQuarterly Dividend Payment Date or is a date after the record date for the
\ndetermination of holders of shares of Series E Junior Participating Preferred
\nStock entitled to receive a quarterly dividend and before such Quarterly
\nDividend Payment Date, in either of which events such dividends shall begin to
\naccrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
\nunpaid dividends shall not bear interest. Dividends paid on the shares of Series
\nE Junior Participating Preferred Stock in an amount less than the total amount
\nof such<\/p>\n
A-2<\/p>\n
38<\/p>\n
dividends at the time accrued and payable on such shares shall be allocated pro
\nrata on a share-by-share basis among all such shares at the time outstanding.
\nThe Board of Directors may fix a record date for the determination of holders of
\nshares of Series E Junior Participating Preferred Stock entitled to receive
\npayment of a dividend or distribution declared thereon, which record date shall
\nbe no more than 60 days prior to the date fixed for the payment thereof.<\/p>\n
3. Voting Rights. The holders of shares of Series E
\nJunior Participating Preferred Stock shall have the following voting rights:<\/p>\n
(A) Each share of Series E Junior Participating
\nPreferred Stock shall entitle the holder thereof to a number of votes equal to
\nthe Adjustment Number on all matters submitted to a vote of the stockholders of
\nthe Corporation.<\/p>\n
(B) Except as required by law and by Section 10
\nhereof, holders of Series E Junior Participating Preferred Stock shall have no
\nspecial voting rights and their consent shall not be required (except to the
\nextent they are entitled to vote with holders of Common Stock as set forth
\nherein) for taking any corporate action.<\/p>\n
4. Certain Restrictions.<\/p>\n
(A) Whenever quarterly dividends or other dividends
\nor distributions payable on the Series E Junior Participating Preferred Stock as
\nprovided in Section 2 are in arrears, thereafter and until all accrued and
\nunpaid dividends and distributions, whether or not declared, on shares of Series
\nE Junior Participating Preferred Stock outstanding shall have been paid in full,
\nthe Corporation shall not:<\/p>\n
(i) declare or pay dividends on, make any
\nother distributions on, or redeem or purchase or otherwise acquire for
\nconsideration any shares of stock ranking junior (either as to dividends or upon
\nliquidation, dissolution or winding up) to the Series E Junior Participating
\nPreferred Stock;<\/p>\n
(ii) declare or pay dividends on or make any
\nother distributions on any shares of stock ranking on a parity (either as to
\ndividends or upon liquidation, dissolution or winding up) with the Series E
\nJunior Participating Preferred Stock, except dividends paid ratably on the
\nSeries E Junior Participating Preferred Stock and all such parity stock on which
\ndividends are payable or in arrears in proportion to the total amounts to which
\nthe holders of all such shares are then entitled; or<\/p>\n
(iii) purchase or otherwise acquire for
\nconsideration any shares of Series E Junior Participating Preferred Stock, or
\nany shares of stock ranking on a parity with the Series E Junior Participating
\nPreferred Stock, except in accordance with a purchase offer made in writing or
\nby publication (as determined by the Board of Directors) to all holders of
\nSeries E Junior Participating Preferred Stock, or to such holders and holders of
\nany such shares ranking on a parity therewith, upon such terms as the Board of
\nDirectors, after consideration of the respective annual dividend rates and other
\nrelative rights and preferences of the respective series and classes, shall<\/p>\n
A-3<\/p>\n
39<\/p>\n
determine in good faith will result in fair and equitable treatment among the
\nrespective series or classes.<\/p>\n
(B) The Corporation shall not permit any subsidiary
\nof the Corporation to purchase or otherwise acquire for consideration any shares
\nof stock of the Corporation unless the Corporation could, under paragraph (A) of
\nthis Section 4, purchase or otherwise acquire such shares at such time and in
\nsuch manner.<\/p>\n
5. Reacquired Shares. Any shares of Series E Junior
\nParticipating Preferred Stock purchased or otherwise acquired by the Corporation
\nin any manner whatsoever shall be retired promptly after the acquisition
\nthereof. All such shares shall upon their retirement become authorized but
\nunissued shares of Preferred Stock and may be reissued as part of a new series
\nof Preferred Stock to be created by resolution or resolutions of the Board of
\nDirectors, subject to any conditions and restrictions on issuance set forth
\nherein.<\/p>\n
6. Liquidation, Dissolution or Winding Up.<\/p>\n
(A) Upon any liquidation, dissolution or winding up
\nof the Corporation, voluntary or otherwise, no distribution shall be made to the
\nholders of shares of stock ranking junior (either as to dividends or upon
\nliquidation, dissolution or winding up) to the Series E Junior Participating
\nPreferred Stock unless, prior thereto, the holders of shares of Series E Junior
\nParticipating Preferred Stock shall have received an amount per share (the
\n“Series E Liquidation Preference”) equal to the greater of (i) $1,000.00 plus an
\namount equal to accrued and unpaid dividends and distributions thereon, whether
\nor not declared, to the date of such payment, or (ii) the Adjustment Number
\ntimes the per share amount of all cash and other property to be distributed in
\nrespect of the Common Stock upon such liquidation, dissolution or winding up of
\nthe Corporation.<\/p>\n
(B) In the event, however, that there are not
\nsufficient assets available to permit payment in full of the Series E
\nLiquidation Preference and the liquidation preferences of all other classes and
\nseries of stock of the Corporation, if any, that rank on a parity with the
\nSeries E Junior Participating Preferred Stock in respect thereof, then the
\nassets available for such distribution shall be distributed ratably to the
\nholders of the Series E Junior Participating Preferred Stock and the holders of
\nsuch parity shares in proportion to their respective liquidation preferences.<\/p>\n
(C) Neither the merger or consolidation of the
\nCorporation into or with another corporation nor the merger or consolidation of
\nany other corporation into or with the Corporation shall be deemed to be a
\nliquidation, dissolution or winding up of the Corporation within the meaning of
\nthis Section 6.<\/p>\n
7. Consolidation, Merger, Etc. In case the Corporation
\nshall enter into any consolidation, merger, combination or other transaction in
\nwhich the outstanding shares of Common Stock are exchanged for or changed into
\nother stock or securities, cash and\/or any other property, then in any such case
\neach share of Series E Junior Participating Preferred Stock shall at the same
\ntime be similarly exchanged or changed in an amount per share equal to the
\nAdjustment Number<\/p>\n
A-4<\/p>\n
40<\/p>\n
times the aggregate amount of stock, securities, cash and\/or any other property
\n(payable in kind), as the case may be, into which or for which each share of
\nCommon Stock is changed or exchanged.<\/p>\n
8. No Redemption. Shares of Series E Junior
\nParticipating Preferred Stock shall not be subject to redemption by the Company.<\/p>\n
9. Ranking. The Series E Junior Participating Preferred
\nStock shall rank junior to all other series of the Preferred Stock as to the
\npayment of dividends and as to the distribution of assets upon liquidation,
\ndissolution or winding up, unless the terms of any such series shall provide
\notherwise, and shall rank senior to the Common Stock as to such matters.<\/p>\n
10. Amendment. At any time that any shares of Series E
\nJunior Participating Preferred Stock are outstanding, the Certificate of
\nIncorporation of the Corporation shall not be amended in any manner which would
\nmaterially alter or change the powers, preferences or special rights of the
\nSeries E Junior Participating Preferred Stock so as to affect them adversely
\nwithout the affirmative vote of the holders of two-thirds of the outstanding
\nshares of Series E Junior Participating Preferred Stock, voting separately as a
\nclass.<\/p>\n
11. Fractional Shares. Series E Junior Participating
\nPreferred Stock may be issued in fractions of a share that shall entitle the
\nholder, in proportion to such holder’s fractional shares, to exercise voting
\nrights, receive dividends, participate in distributions and to have the benefit
\nof all other rights of holders of Series E Junior Participating Preferred Stock.<\/p>\n
IN WITNESS WHEREOF, the undersigned has executed this
\nCertificate this __ day of April, 1998.<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
By:
\n ——————————–
\n Bruce N. Huff
\n President and Chief Operating
\n Officer<\/p>\n
A-5<\/p>\n
41<\/p>\n
Exhibit B<\/p>\n
Form of Right Certificate<\/p>\n
Certificate No. R-______<\/p>\n
NOT EXERCISABLE AFTER APRIL 6, 2008 OR EARLIER IF
\n REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
\n REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
\n TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
\n CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
\n RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
\n BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
\n AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME
\n NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.<\/p>\n
RIGHT CERTIFICATE<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
This certifies that ____________________________ or registered
\nassigns, is the registered owner of the number of Rights set forth above, each
\nof which entitles the owner thereof, subject to the terms, provisions and
\nconditions of the Rights Agreement, dated as of April 6, 1998, as the same may
\nbe amended from time to time (the “Rights Agreement”), between Harken Energy
\nCorporation, a Delaware corporation (the “Company”), and ChaseMellon Shareholder
\nServices L.L.C., as Rights Agent (the “Rights Agent”), to purchase from the
\nCompany at any time after the Distribution Date (as such term is defined in the
\nRights Agreement) and prior to 5:00 P.M., New York City time, on April 6, 2008
\nat the office or agency of the Rights Agent designated for such purpose, or of
\nits successor as Rights Agent, one one-thousandth of a fully paid non-assessable
\nshare of Series E Junior Participating Preferred Stock, par value $1.00 per
\nshare (the “Preferred Stock”), of the Company at a purchase price of $35.00 per
\none one-thousandth of a share of Preferred Stock (the “Purchase Price”), upon
\npresentation and surrender of this Right Certificate with the Form of Election
\nto Purchase duly executed. The number of Rights evidenced by this Rights
\nCertificate (and the number of one one-thousandths of a share of Preferred Stock
\nwhich may be purchased upon exercise hereof) set forth above, and the Purchase
\nPrice set forth above, are the number and Purchase Price as of April 6, 1998,
\nbased on the Preferred Stock as constituted at such date. As provided in the
\nRights Agreement, the Purchase Price, the number of one one-thousandths of a
\nshare of Preferred Stock (or other securities or property) which may be
\npurchased upon the exercise of the Rights and the number of Rights evidenced by
\nthis Right Certificate are subject to modification and adjustment upon the
\nhappening of certain events.<\/p>\n
B-1<\/p>\n
42<\/p>\n
This Right Certificate is subject to all of the terms,
\nprovisions and conditions of the Rights Agreement, which terms, provisions and
\nconditions are hereby incorporated herein by reference and made a part hereof
\nand to which Rights Agreement reference is hereby made for a full description of
\nthe rights, limitations of rights, obligations, duties and immunities hereunder
\nof the Rights Agent, the Company and the holders of the Right Certificates.
\nCopies of the Rights Agreement are on file at the principal executive offices of
\nthe Company and the above-mentioned office or agency of the Rights Agent. The
\nCompany will mail to the holder of this Right Certificate a copy of the Rights
\nAgreement without charge after receipt of a written request therefor.<\/p>\n
This Right Certificate, with or without other Right
\nCertificates, upon surrender at the office or agency of the Rights Agent
\ndesignated for such purpose, may be exchanged for another Right Certificate or
\nRight Certificates of like tenor and date evidencing Rights entitling the holder
\nto purchase a like aggregate number of shares of Preferred Stock as the Rights
\nevidenced by the Right Certificate or Right Certificates surrendered shall have
\nentitled such holder to purchase. If this Right Certificate shall be exercised
\nin part, the holder shall be entitled to receive upon surrender hereof another
\nRight Certificate or Right Certificates for the number of whole Rights not
\nexercised.<\/p>\n
Subject to the provisions of the Rights Agreement, the Rights
\nevidenced by this Certificate (i) may be redeemed by the Company at a redemption
\nprice of $.01 per Right or (ii) may be exchanged in whole or in part for shares
\nof the Company’s Common Stock, par value $.01 per share, or shares of Preferred
\nStock.<\/p>\n
No fractional shares of Preferred Stock or Common Stock will
\nbe issued upon the exercise or exchange of any Right or Rights evidenced hereby
\n(other than fractions of Preferred Stock which are integral multiples of one
\none-thousandth of a share of Preferred Stock, which may, at the election of the
\nCompany, be evidenced by depository receipts), but in lieu thereof a cash
\npayment will be made, as provided in the Rights Agreement.<\/p>\n
No holder of this Right Certificate, as such, shall be
\nentitled to vote or receive dividends or be deemed for any purpose the holder of
\nthe Preferred Stock or of any other securities of the Company which may at any
\ntime be issuable on the exercise or exchange hereof, nor shall anything
\ncontained in the Rights Agreement or herein be construed to confer upon the
\nholder hereof, as such, any of the rights of a stockholder of the Company or any
\nright to vote for the election of directors or upon any matter submitted to
\nstockholders at any meeting thereof, or to give or withhold consent to any
\ncorporate action, or to receive notice of meetings or other actions affecting
\nstockholders (except as provided in the Rights Agreement) or to receive
\ndividends or subscription rights, or otherwise, until the Right or Rights
\nevidenced by this Right Certificate shall have been exercised or exchanged as
\nprovided in the Rights Agreement.<\/p>\n
This Right Certificate shall not be valid or obligatory for
\nany purpose until it shall have been countersigned by the Rights Agent.<\/p>\n
B-2<\/p>\n
43<\/p>\n
WITNESS the facsimile signature of the proper officers of the
\nCompany and its corporate seal. Dated as of _____ __, ____.<\/p>\n
HARKEN ENERGY CORPORATION<\/p>\n
By:
\n ———————————— <\/p>\n
ATTEST:<\/p>\n
———————————— <\/p>\n
Countersigned:<\/p>\n
CHASEMELLON SHAREHOLDER SERVICES L.L.C., as Rights Agent<\/p>\n
By:
\n ——————————— <\/p>\n
B-3<\/p>\n
44<\/p>\n
Form of Reverse Side of Right Certificate<\/p>\n
FORM OF ASSIGNMENT<\/p>\n
(To be executed by the registered holder if such
\n holder desires to transfer the Right Certificate)<\/p>\n
FOR VALUE RECEIVED __________________________ hereby sells,
\nassigns and transfers unto
\n___________________________________________________________________ (Please
\nprint name and address of transferee) _________________________________________
\nRights represented by this Right Certificate, together with all right, title and
\ninterest therein, and does hereby irrevocably constitute and appoint
\n_____________________ Attorney, to transfer said Rights on the books of the
\nwithin-named Company, with full power of substitution.<\/p>\n
Dated:
\n ———————————— <\/p>\n
————————————
\n Signature<\/p>\n
Signature Guaranteed:<\/p>\n
Signatures must be guaranteed by a bank, trust company,
\nbroker, dealer or other eligible institution participating in a recognized
\nsignature guarantee medallion program.<\/p>\n
……………………………………………………………………..
\n (To be completed)<\/p>\n
The undersigned hereby certifies that the Rights evidenced by
\nthis Right Certificate are not beneficially owned by, were not acquired by the
\nundersigned from, and are not being assigned to an Acquiring Person or an
\nAffiliate or Associate thereof (as defined in the Rights Agreement).<\/p>\n
————————————
\n Signature<\/p>\n
B-4<\/p>\n
45<\/p>\n
Form of Reverse Side of Right Certificate – continued<\/p>\n
FORM OF ELECTION TO PURCHASE<\/p>\n
(To be executed if holder desires to exercise
\n Rights represented by the Rights Certificate)<\/p>\n
To HARKEN ENERGY CORPORATION:<\/p>\n
The undersigned hereby irrevocably elects to exercise ________
\nRights represented by this Right Certificate to purchase the shares of Preferred
\nStock (or other securities or property) issuable upon the exercise of such
\nRights and requests that certificates for such shares of Preferred Stock (or
\nsuch other securities) be issued in the name of:<\/p>\n
——————————————————————————–
\n (Please print name and address)<\/p>\n
——————————————————————————–<\/p>\n
If such number of Rights shall not be all the Rights evidenced by this Right
\nCertificate, a new Right Certificate for the balance remaining of such Rights
\nshall be registered in the name of and delivered to:<\/p>\n
Please insert social security
\nor other identifying number<\/p>\n
——————————————————————————–
\n (Please print name and address)<\/p>\n
——————————————————————————–<\/p>\n
Dated:
\n —————————-<\/p>\n
————————————
\n Signature<\/p>\n
(Signature must conform to holder specified on Right Certificate)<\/p>\n
Signature Guaranteed:<\/p>\n
Signature must be guaranteed by a bank, trust company, broker,
\ndealer or other eligible institution participating in a recognized signature
\nguarantee medallion program.<\/p>\n
B-5<\/p>\n
46<\/p>\n
Form of Reverse Side of Right Certificate – continued<\/p>\n
——————————————————————————–
\n (To be completed)<\/p>\n
The undersigned certifies that the Rights evidenced by this
\nRight Certificate are not beneficially owned by, and were not acquired by the
\nundersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
\ndefined in the Rights Agreement).<\/p>\n
————————————
\n Signature<\/p>\n
——————————————————————————–<\/p>\n
NOTICE<\/p>\n
The signature in the Form of Assignment or Form of Election to
\nPurchase, as the case may be, must conform to the name as written upon the face
\nof this Right Certificate in every particular, without alteration or enlargement
\nor any change whatsoever.<\/p>\n
In the event the certification set forth above in the Form of
\nAssignment or the Form of Election to Purchase, as the case may be, is not
\ncompleted, such Assignment or Election to Purchase will not be honored.<\/p>\n
B-6<\/p>\n
47<\/p>\n
Exhibit C<\/p>\n
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
\n AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
\n WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
\n RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
\n BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.<\/p>\n
SUMMARY OF RIGHTS TO PURCHASE
\n SHARES OF PREFERRED STOCK OF
\n HARKEN ENERGY CORPORATION<\/p>\n
On April 6, 1998, the Board of Directors of Harken Energy
\nCorporation (the “Company”) declared a dividend of one preferred share purchase
\nright (a “Right”) for each outstanding share of common stock, par value $.01 per
\nshare, of the Company (the “Common Stock”). The dividend is payable on April 17,
\n1998 (the “Record Date”) to the stockholders of record on that date. Each Right
\nentitles the registered holder to purchase from the Company one one-thousandth
\nof a share of Series E Junior Participating Preferred Stock, par value $1.00 per
\nshare, of the Company (the “Preferred Stock”) at a price of $35.00 per one
\none-thousandth of a share of Preferred Stock (the “Purchase Price”), subject to
\nadjustment. The description and terms of the Rights are set forth in a Rights
\nAgreement dated as of April 6, 1998, as the same may be amended from time to
\ntime (the “Rights Agreement”), between the Company and ChaseMellon Shareholder
\nServices L.L.C., as Rights Agent (the “Rights Agent”).<\/p>\n
Until the earlier to occur of (i) 10 days following a public
\nannouncement that a person or group of affiliated or associated persons (with
\ncertain exceptions, an “Acquiring Person”) has acquired beneficial ownership of
\n15% or more of the outstanding shares of Common Stock or (ii) 10 business days
\n(or such later date as may be determined by action of the Board of Directors
\nprior to such time as any person or group of affiliated persons becomes an
\nAcquiring Person) following the commencement of, or announcement of an intention
\nto make, a tender offer or exchange offer the consummation of which would result
\nin the beneficial ownership by a person or group of 15% or more of the
\noutstanding shares of Common Stock (the earlier of such dates being called the
\n“Distribution Date”), the Rights will be evidenced, with respect to any of the
\nCommon Stock certificates outstanding as of the Record Date, by such Common
\nStock certificate together with a copy of this Summary of Rights.<\/p>\n
The Rights Agreement provides that, until the Distribution
\nDate (or earlier expiration of the Rights), the Rights will be transferred with
\nand only with the Common Stock. Until the Distribution Date (or earlier
\nexpiration of the Rights), new Common Stock certificates issued after the Record
\nDate upon transfer or new issuances of Common Stock will contain a notation
\nincorporating the Rights Agreement by reference. Until the Distribution Date (or
\nearlier expiration of the Rights), the surrender for transfer of any
\ncertificates for shares of Common Stock outstanding<\/p>\n
C-1<\/p>\n
48<\/p>\n
as of the Record Date, even without such notation or a copy of this Summary of
\nRights, will also constitute the transfer of the Rights associated with the
\nshares of Common Stock represented by such certificate. As soon as practicable
\nfollowing the Distribution Date, separate certificates evidencing the Rights
\n(“Right Certificates”) will be mailed to holders of record of the Common Stock
\nas of the close of business on the Distribution Date and such separate Right
\nCertificates alone will evidence the Rights.<\/p>\n
The Rights are not exercisable until the Distribution Date.
\nThe Rights will expire on April 6, 2008 (the “Final Expiration Date”), unless
\nthe Final Expiration Date is advanced or extended or unless the Rights are
\nearlier redeemed or exchanged by the Company, in each case as described below.<\/p>\n
The Purchase Price payable, and the number of shares of
\nPreferred Stock or other securities or property issuable, upon exercise of the
\nRights is subject to adjustment from time to time to prevent dilution (i) in the
\nevent of a stock dividend on, or a subdivision, combination or reclassification
\nof, the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock
\nof certain rights or warrants to subscribe for or purchase Preferred Stock at a
\nprice, or securities convertible into Preferred Stock with a conversion price,
\nless than the then-current market price of the Preferred Stock or (iii) upon the
\ndistribution to holders of the Preferred Stock of evidences of indebtedness or
\nassets (excluding regular periodic cash dividends or dividends payable in
\nPreferred Stock) or of subscription rights or warrants (other than those
\nreferred to above).<\/p>\n
The number of outstanding Rights is subject to adjustment in
\nthe event of a stock dividend on the Common Stock payable in shares of Common
\nStock or subdivisions, consolidations or combinations of the Common Stock
\noccurring, in any such case, prior to the Distribution Date.<\/p>\n
Shares of Preferred Stock purchasable upon exercise of the
\nRights will not be redeemable. Each share of Preferred Stock will be entitled,
\nwhen, as and if declared, to a minimum preferential quarterly dividend payment
\nof $10.00 per share but will be entitled to an aggregate dividend of 1000 times
\nthe dividend declared per share of Common Stock. In the event of liquidation,
\ndissolution or winding up of the Company, the holders of the Preferred Stock
\nwill be entitled to a minimum preferential payment of $1,000.00 per share (plus
\nany accrued but unpaid dividends) but will be entitled to an aggregate payment
\nof 1000 times the payment made per share of Common Stock. Each share of
\nPreferred Stock will have 1000 votes, voting together with the Common Stock.
\nFinally, in the event of any merger, consolidation or other transaction in which
\noutstanding shares of Common Stock are converted or exchanged, each share of
\nPreferred Stock will be entitled to receive 1000 times the amount received per
\nshare of Common Stock. These rights are protected by customary antidilution
\nprovisions.<\/p>\n
Because of the nature of the Preferred Stock’s dividend,
\nliquidation and voting rights, the value of the one one-thousandth interest in a
\nshare of Preferred Stock purchasable upon exercise of each Right should
\napproximate the value of one share of Common Stock.<\/p>\n
C-2<\/p>\n
49<\/p>\n
In the event that any person or group of affiliated or
\nassociated persons becomes an Acquiring Person, each holder of a Right, other
\nthan Rights beneficially owned by the Acquiring Person (which will thereupon
\nbecome void), will thereafter have the right to receive upon exercise of a Right
\nthat number of shares of Common Stock having a market value of two times the
\nexercise price of the Right.<\/p>\n
In the event that, after a person or group has become an
\nAcquiring Person, the Company is acquired in a merger or other business
\ncombination transaction or 50% or more of its consolidated assets or earning
\npower are sold, proper provisions will be made so that each holder of a Right
\n(other than Rights beneficially owned by an Acquiring Person which will have
\nbecome void) will thereafter have the right to receive upon the exercise of a
\nRight that number of shares of common stock of the person with whom the Company
\nhas engaged in the foregoing transaction (or its parent) that at the time of
\nsuch transaction have a market value of two times the exercise price of the
\nRight.<\/p>\n
At any time after any person or group becomes an Acquiring
\nPerson and prior to the earlier of one of the events described in the previous
\nparagraph or the acquisition by such Acquiring Person of 50% or more of the
\noutstanding shares of Common Stock, the Board of Directors of the Company may
\nexchange the Rights (other than Rights owned by such Acquiring Person which will
\nhave become void), in whole or in part, for shares of Common Stock or Preferred
\nStock (or a series of the Company’s preferred stock having equivalent rights,
\npreferences and privileges), at an exchange ratio of one share of Common Stock,
\nor a fractional share of Preferred Stock (or other preferred stock) equivalent
\nin value thereto, per Right.<\/p>\n
With certain exceptions, no adjustment in the Purchase Price
\nwill be required until cumulative adjustments require an adjustment of at least
\n1% in such Purchase Price. No fractional shares of Preferred Stock or Common
\nStock will be issued (other than fractions of Preferred Stock which are integral
\nmultiples of one one-thousandth of a share of Preferred Stock, which may, at the
\nelection of the Company, be evidenced by depositary receipts), and in lieu
\nthereof an adjustment in cash will be made based on the current market price of
\nthe Preferred Stock or the Common Stock.<\/p>\n
At any time prior to the time an Acquiring Person becomes
\nsuch, the Board of Directors of the Company may redeem the Rights in whole, but
\nnot in part, at a price of $.01 per Right (the “Redemption Price”). The
\nredemption of the Rights may be made effective at such time, on such basis and
\nwith such conditions as the Board of Directors in its sole discretion may
\nestablish. Immediately upon any redemption of the Rights, the right to exercise
\nthe Rights will terminate and the only right of the holders of Rights will be to
\nreceive the Redemption Price.<\/p>\n
For so long as the Rights are then redeemable, the Company
\nmay, except with respect to the redemption price, amend the Rights Agreement in
\nany manner. After the Rights are no longer redeemable, the Company may, except
\nwith respect to the redemption price, amend the Rights Agreement in any manner
\nthat does not adversely affect the interests of holders of the Rights.<\/p>\n
C-3<\/p>\n
50<\/p>\n
Until a Right is exercised or exchanged, the holder thereof,
\nas such, will have no rights as a stockholder of the Company, including, without
\nlimitation, the right to vote or to receive dividends.<\/p>\n
A copy of the Rights Agreement has been filed with the
\nSecurities and Exchange Commission as an Exhibit to a Registration Statement on
\nForm 8-A dated April 6, 1998. A copy of the Rights Agreement is available free
\nof charge from the Company. This summary description of the Rights does not
\npurport to be complete and is qualified in its entirety by reference to the
\nRights Agreement, as the same may be amended from time to time, which is hereby
\nincorporated herein by reference.<\/p>\n
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