<PAGE>

                                                                     Exhibit 4.1


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                         PATINA OIL & GAS CORPORATION


                                      and


                         MELLON INVESTOR SERVICES LLC


                               Rights Agreement


                           Dated as of May 25, 2001


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<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>           <C>                                                      <C>
Section 1.    Definitions............................................   1
Section 2.    Appointment of Rights Agent............................   4
Section 3.    Issue of Right Certificates............................   4
Section 4.    Form of Right Certificates.............................   6
Section 5.    Countersignature and Registration......................   6
Section 6.    Transfer, Split Up, Combination and Exchange of Right
              Certificates; Mutilated, Destroyed, Lost or Stolen
              Right Certificates.....................................   6
Section 7.    Exercise of Rights; Purchase Price; Expiration Date of
              Rights.................................................   7
Section 8.    Cancellation and Destruction of Right Certificates.....   8
Section 9.    Availability of Preferred Shares.......................   8
Section 10.   Preferred Shares Record Date...........................   9
Section 11.   Adjustment of Purchase Price, Number of Shares or
              Number of Rights.......................................   9
Section 12.   Certificate of Adjusted Purchase Price or Number of
              Shares.................................................  15
Section 13.   Consolidation, Merger or Sale or Transfer of Assets or
              Earning Power..........................................  15
Section 14.   Fractional Rights and Fractional Shares................  16
Section 15.   Rights of Action.......................................  17
Section 16.   Agreement of Right Holders.............................  17
Section 17.   Right Certificate Holder Not Deemed a Stockholder......  17
Section 18.   Concerning the Rights Agent............................  18
Section 19.   Merger or Consolidation or Change of Name of Rights
              Agent..................................................  18
Section 20.   Duties of Rights Agent.................................  19
Section 21.   Change of Rights Agent.................................  21
Section 22.   Issuance of New Right Certificates.....................  21
Section 23.   Redemption.............................................  21
Section 24.   Exchange...............................................  22
Section 25.   Notice of Certain Events...............................  23
Section 26.   Notices................................................  24
Section 27.   Supplements and Amendments.............................  24
Section 28.   Determinations and Actions by the Board of Directors...  25
Section 29.   Successors.............................................  25
Section 30.   Benefits of this Agreement.............................  25
Section 31.   Severability...........................................  25
Section 32.   Governing Law..........................................  26
Section 33.   Counterparts...........................................  26
Section 34.   Descriptive Headings...................................  26


Exhibit A     -    Form of Certificate of Designations
Exhibit B     -    Form of Right Certificate
Exhibit C     -    Summary of Rights to Purchase Preferred Shares
</TABLE>

                                      -i-
<PAGE>

     Agreement, dated as of May 25, 2001, between Patina Oil & Gas Corporation,
a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New
Jersey limited liability company, as rights agent (the "Rights Agent").

     The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on June 12, 2001 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).

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

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

       (a)  "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the Common Shares of the Company then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company or (iii) any
employee benefit plan of the Company or any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of Common Shares of the Company outstanding, increases the
proportionate number of Common Shares of the Company beneficially owned by such
Person to 15% or more of the Common Shares of the Company then outstanding;
provided, however, that, if a Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.

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

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

                                      -1-
<PAGE>

       (d)   A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities which:

            (i)     such Person or any of such Person's Affiliates or Associates
     beneficially owns, directly or indirectly, within the meaning of the
     General Rules and Regulations promulgated with respect to either Section 13
     or Section 16 of the Exchange Act;

            (ii)    such Person or any of such Person's Affiliates or Associates
     has (A) the right to acquire (whether such right is exercisable immediately
     or only after the passage of time) pursuant to any agreement, arrangement
     or understanding (other than customary agreements with and between
     underwriters and selling group members with respect to a bona fide public
     offering of securities), or upon the exercise of conversion rights,
     exchange rights, rights (other than these Rights), warrants or options, or
     otherwise; provided, however, that a Person shall not be deemed the
     Beneficial Owner of, or to beneficially own, securities tendered pursuant
     to a tender or exchange offer made by or on behalf of such Person or any of
     such Person's Affiliates or Associates until such tendered securities are
     accepted for purchase or exchange; or (B) the right to vote pursuant to any
     agreement, arrangement or understanding; provided, however, that a Person
     shall not be deemed the Beneficial Owner of, or to beneficially own, any
     security if the agreement, arrangement or understanding to vote such
     security (1) arises solely from a revocable proxy or consent given to such
     Person in response to a public proxy or consent solicitation made pursuant
     to, and in accordance with, the applicable rules and regulations
     promulgated under the Exchange Act and (2) is not also then reportable on
     Schedule 13D under the Exchange Act (or any comparable or successor
     report); or

            (iii)   are beneficially owned, directly or indirectly, by any other
     Person with which such Person or any of such Person's Affiliates or
     Associates has any agreement, arrangement or understanding (other than
     customary agreements with and between underwriters and selling group
     members with respect to a bona fide public offering of securities) for the
     purpose of acquiring, holding, voting (except to the extent contemplated by
     the proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities
     of the Company.

     Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person would be
deemed to own beneficially hereunder.

       (e)  "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in Texas, or the State in which the
Rights Agent is located, are authorized or obligated by law or executive order
to close.

       (f)  "Close of Business" on any given date shall mean 5:00 P.M., Central
time, on such date; provided, however, that, if such date is not a Business Day,
it shall mean 5:00 P.M., Central time, on the next succeeding Business Day.

                                      -2-
<PAGE>

       (g)  "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $0.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.

       (h)  "Company" shall have the meaning set forth in the first paragraph
hereof.

       (i)  "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.

       (j)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

       (k)  "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.

       (l)  "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.

       (m)  "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.

       (n)  "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.

       (o)  "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit A.

       (p)  "Purchase Price" shall have the meaning set forth in Section 4
hereof.

       (q)  "Record Date" shall have the meaning set forth in the second
paragraph hereof.

       (r)  "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.

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

       (t)  "Right" shall have the meaning set forth in the second paragraph
hereof.

       (u)  "Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.

       (v)  "Rights Agent" shall have the meaning set forth in the first
paragraph hereof.

       (w)  "Security" shall have the meaning set forth in Section 11(d).

                                      -3-
<PAGE>

       (x)  "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.

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

       (z)  "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.

       (aa) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.

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

     Section 3.  Issue of Right Certificates. (a) Until the earlier of (i) the
tenth day after the Shares Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares of the Company for or pursuant
to the terms of any such plan) of, or after the date of the first public
announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares of the Company for
or pursuant to the terms of any such plan) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares of the Company aggregating 15% or more of the
then outstanding Common Shares of the Company (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares of the Company registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares of the Company. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested and upon receipt of a list of stockholders of Common Shares
together with such stockholders addresses, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a "Right Certificate"), evidencing one Right for each
Common

                                      -4-
<PAGE>

Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.

       (b)  On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares of the
Company outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares of the Company outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Shares of the Company represented thereby.

       (c)  Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:

       This certificate also evidences and entitles the holder hereof to certain
       rights as set forth in an Agreement between Patina Oil & Gas Corporation
       and Mellon Investor Services LLC, dated as of May 25, 2001, as it may be
       amended from time to time (the "Agreement"), the terms of which are
       hereby incorporated herein by reference and a copy of which is on file at
       the principal executive offices of Patina Oil & Gas Corporation. Under
       certain circumstances, as set forth in the Agreement, such Rights (as
       defined in the Agreement) will be evidenced by separate certificates and
       will no longer be evidenced by this certificate. Patina Oil & Gas
       Corporation will mail to the holder of this certificate a copy of the
       Agreement without charge after receipt of a written request therefor. As
       set forth in the Agreement, Rights beneficially owned by any Person (as
       defined in the Agreement) who becomes an Acquiring Person (as defined in
       the Agreement) become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares of the Company
represented thereby.  In the event that the Company purchases or acquires any
Common Shares of the Company after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares of the Company shall be
deemed cancelled and

                                      -5-
<PAGE>

retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares of the Company which are no longer
outstanding.

     Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto, and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate, which do
not affect the rights, duties or responsibilities of the Rights Agent and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any applicable rule or regulation made
pursuant thereto or with any applicable rule or regulation of any stock exchange
or the National Association of Securities Dealers, Inc., or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the price per one one-
thousandth of a Preferred Share set forth therein (the "Purchase Price"), but
the number of such one one-thousandths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.

     Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents or its Treasurer,
either manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested by the Secretary or
an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the individual who
signed such Right Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company by any
individual who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such individual was
not such an officer.

     Following the Distribution Date and receipt by the Rights Agent of all
relevant information, the Rights Agent will keep or cause to be kept, at its
office, books for registration and transfer of the Right Certificates issued
hereunder.  Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the date of each of the Right Certificates.

     Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to

                                      -6-
<PAGE>

Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the registered holder
to purchase a like number of one one-thousandths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent. Thereupon the Rights Agent shall countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates. The Rights Agent shall have no duty or obligation under this
Section 6 unless and until it is satisfied that all such taxes and/or
governmental charges have been paid in full.

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

     Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in part, at
any time after the Distribution Date, upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price for each one one-thousandth of a Preferred Share
as to which the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on June 12, 2011 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.

       (b)  The Purchase Price for each one one-thousandth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $120.00, and
shall be subject to adjustment from time to time as provided in Section 11 or 13
hereof, and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

       (c)  Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B)

                                      -7-
<PAGE>

requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent of the Preferred Shares with such
depositary agent) and the Company hereby directs such depositary agent to comply
with such request; (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof; (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.

       (d)  In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 6
and Section 14 hereof.

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

     Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7 hereof.
The Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.

     The Company further covenants and agrees that it will pay when due and
payable any and all taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares upon
the exercise of Rights.  The Company shall not, however, be required to pay any
tax or charge which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares in a name other
than that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Preferred Shares upon the exercise of any

                                      -8-
<PAGE>

Rights until any such tax or charge shall have been paid (any such tax or charge
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax or charge is due.

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

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

            (a)  (i)    In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.

                 (ii)   Subject to Section 24 hereof, in the event any Person
     becomes an Acquiring Person, each holder of a Right shall thereafter have a
     right to receive, upon exercise thereof at a price equal to the then
     current Purchase Price multiplied by the number of one one-thousandths of a
     Preferred Share for which a Right is then exercisable, in accordance with
     the terms of this Agreement and in lieu of Preferred Shares, such number of
     Common Shares of the Company as shall equal the result

                                      -9-
<PAGE>

     obtained by (A) multiplying the then current Purchase Price by the number
     of one one-thousandths of a Preferred Share for which a Right is then
     exercisable and dividing that product by (B) 50% of the then current per
     share market price of the Common Shares of the Company (determined pursuant
     to Section 11(d) hereof) on the date of the occurrence of such event. In
     the event that any Person shall become an Acquiring Person and the Rights
     shall then be outstanding, the Company shall not take any action which
     would eliminate or diminish the benefits intended to be afforded by the
     Rights.

     From and after the occurrence of such event, any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be null and void, and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement.  No Right Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose Rights would be
null and void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be null and void pursuant to the preceding sentence
shall be cancelled.

                    (iii)   In the event that there shall not be sufficient
     Common Shares issued but not outstanding or authorized but unissued to
     permit the exercise in full of the Rights in accordance with subparagraph
     (ii) above, the Company shall take all such action as may be necessary to
     authorize additional Common Shares for issuance upon exercise of the
     Rights. In the event the Company shall, after good faith effort, be unable
     to take all such action as may be necessary to authorize such additional
     Common Shares, the Company shall substitute, for each Common Share that
     would otherwise be issuable upon exercise of a Right, a number of Preferred
     Shares or fraction thereof such that the current per share market price of
     one Preferred Share multiplied by such number or fraction is equal to the
     current per share market price of one Common Share as of the date of
     issuance of such Preferred Shares or fraction thereof.

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

                                      -10-
<PAGE>

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

       (c)  In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then-current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
then-current per share market price of the Preferred Shares on such record date;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed;
and, in the event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

       (d)  (i)  For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that, in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or Securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per

                                      -11-
<PAGE>

share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, reported at or prior to 4:00 P.M.
Central time or, in case no such sale takes place on such day, the average of
the bid and asked prices, regular way, reported as of 4:00 P.M. Central time, in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price reported at or prior to 4:00 P.M. Central time
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported as of 4:00 P.M. Central time by NASDAQ or
such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business, or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

            (ii)    For the purpose of any computation hereunder, the "current
     per share market price" of the Preferred Shares shall be determined in
     accordance with the method set forth in Section 11(d)(i). If the Preferred
     Shares are not publicly traded, the "current per share market price" of the
     Preferred Shares shall be conclusively deemed to be the current per share
     market price of the Common Shares as determined pursuant to Section
     11(d)(i) hereof (appropriately adjusted to reflect any stock split, stock
     dividend or similar transaction occurring after the date hereof),
     multiplied by one hundred. If neither the Common Shares nor the Preferred
     Shares are publicly held or so listed or traded, "current per share market
     price" shall mean the fair value per share as determined in good faith by
     the Board of Directors of the Company, whose determination shall be
     described in a statement filed with the Rights Agent and shall be binding
     on the Rights Agent for all purposes.

       (e)  No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.

       (f)  If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a

                                      -12-
<PAGE>

manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c) hereof,
inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with respect to
the Preferred Shares shall apply on like terms to any such other shares.

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

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

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

                                      -13-
<PAGE>

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

       (k)  Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-thousandth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.

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

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

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

                                      -14-
<PAGE>

11(n) shall be made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.

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

     Section 13.  Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.  In the event, directly or indirectly, at any time after a Person has
become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one one-
thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares of the Company thereafter deliverable upon
the exercise of the Rights.  The Company shall not consummate any such
consolidation, merger, sale or transfer unless, prior thereto, the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing.  The Company shall not enter into any transaction of the
kind referred to in this

                                      -15-
<PAGE>

Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

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

            (b)     The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one one-
thousandth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-thousandth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.

                                      -16-
<PAGE>

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

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

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

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

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

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

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

                                      -17-
<PAGE>

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

     Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder,
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the preparation, delivery,
administration, execution and amendment of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense incurred
without gross negligence, bad faith or willful misconduct as finally determined
by a court of competent jurisdiction on the part of the Rights Agent, for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The
indemnity and compensation provided herein shall survive the termination of this
Agreement, the termination and the expiration of the Rights and the resignation
or removal of the Rights Agent. The costs and expenses incurred in enforcing
this right of indemnification shall be paid by the Company. Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage. Any liability
of the Rights Agent under this Rights Agreement will be limited to the amount of
fees paid by the Company to the Rights Agent

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

     Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the shareholder service business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign

                                      -18-
<PAGE>

such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and, in all such cases, such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

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

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

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

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

            (c)  The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct (as finally determined by a court of competent jurisdiction).

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

            (e)  The Rights Agent shall not have any liability for, nor be under
any responsibility in respect of, the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights

                                      -19-
<PAGE>

(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.

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

       (g)  The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
such advice or instructions shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith in accordance with the
advice or instructions of any such officer or for any delay in acting while
waiting for that advice or those instructions.

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

       (i)  The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company, any holders of Rights or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct (as finally determined by a court of
competent jurisdiction) in the selection and continued employment thereof.

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

       (k)  If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify

                                      -20-
<PAGE>

the holder is not an Acquiring Person (or an Affiliate or Associate thereof),
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

     Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (which holder
shall, with such notice, submit such holder's Right Certificate for inspection
by the Company), then the registered holder of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a Person organized and doing business under the laws of the
United States or of any State of the United States, so long as such Person is
(i) authorized to do business, is in good standing, and is authorized under such
laws to exercise shareholder services and is subject to supervision or
examination by federal or state authority and has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $50 million, or (ii)
is an Affiliate of the Person described in clause (i). After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares or Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

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

     Section 23. Redemption. (a) The Board of Directors of the Company may, at
its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right,

                                      -21-
<PAGE>

appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The redemption of the Rights
by the Board of Directors of the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company, in
its sole discretion, may establish.

            (b)  Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption with notice thereof to the Rights
Agent; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days after
such action of the Board of Directors of the Company ordering the redemption of
the Rights, the Company shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than those specifically set
forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.

     Section 24. Exchange. (a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.

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

                                      -22-
<PAGE>

holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected, and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.

            (c)  In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.

            (d)  The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events. (a) In case the Company shall, at any
time after the Distribution Date, propose (i) to pay any dividend payable in
stock of any class to the holders of the Preferred Shares or to make any other
distribution to the holders of the Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of the Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of the Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate and the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such

                                      -23-
<PAGE>

notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and, in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.

            (b)  In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall, as soon as practicable thereafter, give to each
holder of a Right Certificate and the Rights Agent, in accordance with Section
26 hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.

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

            Patina Oil & Gas Corporation
            1625 Broadway, Suite 2000
            Denver, CO 80202

            Attention: General Counsel

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

            Mellon Investor Services LLC
            600 North Pearl, Suite 1010
            Dallas, TX 75201

            Attention: Mona Vorhees

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

     Section 27. Supplements and Amendments. The Company may and the Rights
Agent shall, if the Company so directs, pursuant to the terms hereof, from time
to time supplement or amend this Agreement without the approval of any holders
of Right Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that, from and after such time as any Person becomes
an Acquiring Person, this Agreement shall not be amended in any manner which
would adversely affect the interests

                                      -24-
<PAGE>

of the holders of Rights. Without limiting the foregoing, the Company may at any
time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in Section 1(a) and 3(a) hereof to
not less than 10% (the "Reduced Threshold"); provided, however, that no Person
who beneficially owns a number of Common Shares equal to or greater than the
Reduced Threshold shall become an Acquiring Person unless such Person shall,
after the public announcement of the Reduced Threshold, increase its beneficial
ownership of the then outstanding Common Shares (other than as a result of an
acquisition of Common Shares by the Company) to an amount equal to or greater
than the greater of (x) the Reduced Threshold or (y) the sum of (i) the lowest
beneficial ownership of such Person as a percentage of the outstanding Common
Shares as of any date on or after the date of the public announcement of such
Reduced Threshold plus (ii) .001%.

     Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of the Section 27, the Rights Agent shall execute such supplement
or amendment.  Notwithstanding anything in this Agreement to the contrary, the
Rights Agent shall not be obligated to enter into any supplement or amendment
which affects the rights, duties obligations or immunities of the Rights Agent
under this Agreement.

     Section 28. Determinations and Actions by the Board of Directors. The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a decision to
redeem or not redeem the Rights or to amend or not amend this Agreement). All
such actions, calculations, interpretations and determinations that are done or
made by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties. The Rights Agent is authorized and
protected in assuming that all such actions, calculations, interpretations and
determinations of the Board of Directors have been made in good faith.

     Section 29. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.

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

     Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this

                                      -25-
<PAGE>

Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

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

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

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

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

                              PATINA OIL & GAS CORPORATION

                              By: /s/ Thomas J. Edelman
                                  ---------------------------------------
                              Name:  Thomas J. Edelman
                              Title: Chairman of the Board and Chief
                                      Executive Officer


                              MELLON INVESTOR SERVICES LLC

                              By: /s/ Mona Vorhees
                                  ---------------------------------------
                              Name:  Mona Vorhees
                              Title: Assistant Vice President

                                      -26-
<PAGE>

                                                                       Exhibit A


                                      FORM
                                       of
                          CERTIFICATE OF DESIGNATIONS
                                       of
                 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       of
                          PATINA OIL & GAS CORPORATION


                        (Pursuant to Section 151 of the
                       Delaware General Corporation Law)

                     -------------------------------------

     Patina Oil & Gas Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on May 25, 2001:

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share, of the Corporation (the "Preferred Stock"), and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:

     Series A Junior Participating Preferred Stock:

     Section 1.     Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 25,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

     Section 2.     Dividends and Distributions.

            (A)     Subject to the rights of the holders of any shares of any
     series of Preferred Stock (or any similar stock) ranking prior and superior
     to the Series A Preferred Stock with respect to dividends, the holders of
     shares of Series A Preferred Stock, in preference to the holders of Common
     Stock, par value $0.01 per share (the "Common Stock"), of the Corporation,
     and of any other junior stock, shall be entitled to receive, when, as and
     if declared by the Board of Directors out of funds legally available for
     the purpose, quarterly dividends payable in cash on the first day of March,
     June, September and December in each year (each such date being referred to
     herein as a "Quarterly Dividend

                                      A-1
<PAGE>

     Payment Date"), commencing on the first Quarterly Dividend Payment Date
     after the first issuance of a share or fraction of a share of Series A
     Preferred Stock, in an amount per share (rounded to the nearest cent) equal
     to the greater of (a) $1 or (b) subject to the provision for adjustment
     hereinafter set forth, 1,000 times the aggregate per share amount of all
     cash dividends, and 1,000 times the aggregate per share amount (payable in
     kind) of all non-cash dividends or other distributions, other than a
     dividend payable in shares of Common Stock or a subdivision of the
     outstanding shares of Common Stock (by reclassification or otherwise),
     declared on the Common Stock since the immediately preceding Quarterly
     Dividend Payment Date or, with respect to the first Quarterly Dividend
     Payment Date, since the first issuance of any share or fraction of a share
     of Series A Preferred Stock. In the event the Corporation shall at any time
     declare or pay any dividend on the Common Stock payable in shares of Common
     Stock, or effect a subdivision or combination or consolidation of the
     outstanding shares of Common Stock (by reclassification or otherwise than
     by payment of a dividend in shares of Common Stock) into a greater or
     lesser number of shares of Common Stock, then in each such case the amount
     to which holders of shares of Series A Preferred Stock were entitled
     immediately prior to such event under clause (b) of the preceding sentence
     shall be adjusted by multiplying such amount by a fraction, the numerator
     of which is the number of shares of Common Stock outstanding immediately
     after such event and the denominator of which is the number of shares of
     Common Stock that were outstanding immediately prior to such event.

            (B)     The Corporation shall declare a dividend or distribution on
     the Series A Preferred Stock as provided in paragraph (A) of this Section
     immediately after it declares a dividend or distribution on the Common
     Stock (other than a dividend payable in shares of Common Stock); provided
     that, in the event no dividend or distribution shall have been declared on
     the Common Stock during the period between any Quarterly Dividend Payment
     Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
     $1 per share on the Series A Preferred Stock shall nevertheless be payable
     on such subsequent Quarterly Dividend Payment Date.

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

                                      A-2
<PAGE>

     declared thereon, which record date shall be not more than 60 days prior to
     the date fixed for the payment thereof.

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

            (A)     Subject to the provision for adjustment hereinafter set
     forth, each share of Series A Preferred Stock shall entitle the holder
     thereof to 1,000 votes on all matters submitted to a vote of the
     stockholders of the Corporation. In the event the Corporation shall at any
     time declare or pay any dividend on the Common Stock payable in shares of
     Common Stock, or effect a subdivision or combination or consolidation of
     the outstanding shares of Common Stock (by reclassification or otherwise
     than by payment of a dividend in shares of Common Stock) into a greater or
     lesser number of shares of Common Stock, then in each such case the number
     of votes per share to which holders of shares of Series A Preferred Stock
     were entitled immediately prior to such event shall be adjusted by
     multiplying such number by a fraction, the numerator of which is the number
     of shares of Common Stock outstanding immediately after such event and the
     denominator of which is the number of shares of Common Stock that were
     outstanding immediately prior to such event.

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

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

     Section 4.     Certain Restrictions.

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

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

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

                                      A-3
<PAGE>

            dividends are payable or in arrears in proportion to the total
            amounts to which the holders of all such shares are then entitled;

                     (iii) redeem or purchase or otherwise acquire for
            consideration shares of any stock ranking junior (either as to
            dividends or upon liquidation, dissolution or winding up) to the
            Series A Preferred Stock, provided that the Corporation may at any
            time redeem, purchase or otherwise acquire shares of any such junior
            stock in exchange for shares of any stock of the Corporation ranking
            junior (either as to dividends or upon dissolution, liquidation or
            winding up) to the Series A Preferred Stock; or

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

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

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

     Section 6.     Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the

                                      A-4
<PAGE>

Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     Section 7.     Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

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

     Section 9.     Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock.

     Section 10.    Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.

                                      A-5
<PAGE>

     IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its Chairman of the Board this ___ day of May, 2001.

                                    _______________________________
                                         Chairman of the Board

                                      A-6
<PAGE>

                                                                       Exhibit B

                           FORM OF RIGHT CERTIFICATE

Certificate No. R-                                                  _____ Rights

          NOT EXERCISABLE AFTER JUNE 12, 2011 OR EARLIER IF REDEMPTION OR
          EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
          RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. RIGHTS
          BENFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN SECTION 1 OF THE
          RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE
          NULL AND VOID.

                               Right Certificate

                         PATINA OIL & GAS CORPORATION

     This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Agreement, dated as of May 25, 2001 (the "Agreement"), between Patina Oil & Gas
Corporation, a Delaware corporation (the "Company"), and Mellon Investor
Services LLC (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Agreement) and prior
to 5:00 P.M., Central time, on June 12, 2011 at the principal office of the
Rights Agent, or at the office of its successor as Rights Agent, one one-
thousandth of a fully paid non-assessable share of Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company (the "Preferred
Shares"), at a purchase price of $120 per one one-thousandth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.  The number of
Rights evidenced by this Right Certificate (and the number of one one-
thousandths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of June 12, 2001, based on the Preferred Shares as constituted
at such date.  As provided in the Agreement, the Purchase Price and the number
of one one-thousandths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

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

     This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right

                                      B-1
<PAGE>

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

     Subject to the provisions of the Agreement, the Rights evidenced by this
Right Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for Preferred Shares
or shares of the Company's Common Stock, par value $0.01 per share.

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

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

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

     WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.  Dated as of __________, ____.


                                    PATINA OIL & GAS CORPORATION

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


Countersigned:

MELLON INVESTOR SERVICES LLC

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

                                      B-2
<PAGE>

                   Form of Reverse Side of Right Certificate




























                                      B-3
<PAGE>

                               FORM OF ASSIGNMENT

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

     FOR VALUE RECEIVED ________________________________ hereby sells, assigns
and transfers unto ___________________________________________________________

--------------------------------------------------------------------------------
                 (Please print name and address of transferee)

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

Dated: ___________________

                                            ___________________
                                            Signature


Signature Guaranteed:

     Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.


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



                                            ___________________
                                            Signature


            Form of Reverse Side of Right Certificate -- continued

                                      B-4
<PAGE>

                          FORM OF ELECTION TO PURCHASE

                 (To be executed if holder desires to exercise
                 Rights represented by the Right Certificate.)

To:  PATINA OIL & GAS CORPORATION

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

Please insert social security
or other identifying number


--------------------------------------------------------------------------------
(Please print name and address)


--------------------------------------------------------------------------------

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

Please insert social security
or other identifying number


--------------------------------------------------------------------------------
                        (Please print name and address)


--------------------------------------------------------------------------------


Dated:  __________________



                                            ___________________
                                            Signature


Signature Guaranteed:

     Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.


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

                                            ___________________
                                            Signature

                                      B-5
<PAGE>

                                    NOTICE

     The signature in the Form of Assignment or Form of Election to Purchase, as
the case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.

     In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Agreement) and such Assignment or Election
to Purchase will not be honored.

                                      B-6
<PAGE>

                                                                       Exhibit C

                         SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES

Introduction

     On May 25, 2001, the Board of Directors of our Company, Patina Oil & Gas
Corporation, a Delaware corporation, declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$0.01 per share.  The dividend is payable on June 12, 2001 to the stockholders
of record on June 12, 2001.

     Our Board has adopted this Rights Agreement to protect stockholders from
coercive or otherwise unfair takeover tactics.  In general terms, it works by
imposing a significant penalty upon any person or group which acquires 15% or
more of our outstanding common stock without the approval of our Board.  The
Rights Agreement should not interfere with any merger or other business
combination approved by our Board.

     For those interested in the specific terms of the Rights Agreement as made
between our Company and Mellon Investor Services LLC, as the Rights Agent, on
May 25, 2001, we provide the following summary description.  Please note,
however, that this description is only a summary, and is not complete, and
should be read together with the entire Rights Agreement, which has been filed
with the Securities and Exchange Commission as an exhibit to a Registration
Statement on Form 8-A dated May 25, 2001.  A copy of the agreement is available
free of charge from our Company.

The Rights.  Our Board authorized the issuance of a Right with respect to each
outstanding share of common stock on May 25, 2001.  The Rights will initially
trade with, and will be inseparable from, the common stock.  The Rights are
evidenced only by certificates that represent shares of common stock.  New
Rights will accompany any new shares of common stock we issue after June 12,
2001 until the Distribution Date described below.

Exercise Price.  Each Right will allow its holder to purchase from our Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock
("Preferred Share") for $120.00, once the Rights become exercisable.  This
portion of a Preferred Share will give the stockholder approximately the same
dividend, voting, and liquidation rights as would one share of common stock.
Prior to exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.

Exercisability.  The Rights will not be exercisable until

 .    10 days after the public announcement that a person or group has become an
     "Acquiring Person" by obtaining beneficial ownership of 15% or more of our
     outstanding common stock, or, if earlier,

 .    10 business days (or a later date determined by our Board before any person
     or group becomes an Acquiring Person) after a person or group begins a
     tender or exchange offer which, if completed, would result in that person
     or group becoming an Acquiring Person.

                                      C-1
<PAGE>

     We refer to the date when the Rights become exercisable as the
"Distribution Date."  Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of Rights.  After that date, the Rights will separate from the common
stock and be evidenced by book-entry credits or by Rights certificates that we
will mail to all eligible holders of common stock.  Any Rights held by an
Acquiring Person are void and may not be exercised.

     Our Board may reduce the threshold at which a person or group becomes an
Acquiring Person from 15% to not less than 10% of the outstanding common stock.

Consequences of a Person or Group Becoming an Acquiring Person.

 .  Flip In. If a person or group becomes an Acquiring Person, all holders of
   Rights except the Acquiring Person may purchase a certain number of our
   shares of our common stock, with such purchase price based on the market
   price of the common stock prior to such acquisition.

 .  Flip Over. If our Company is later acquired in a merger or similar
   transaction after the Rights Distribution Date, all holders of Rights except
   the Acquiring Person may purchase a certain number of shares of the acquiring
   corporation, with such purchase price based on the market price of the
   acquiring corporation's stock, prior to such merger.

Preferred Share Provisions.

Each one one-thousandth of a Preferred Share, if issued:

 .  will not be redeemable.

 .  will entitle holders to quarterly dividend payments of $.01 per share, or an
   amount equal to the dividend paid on one share of common stock, whichever is
   greater.

 .  will entitle holders upon liquidation either to receive $1 per share or an
   amount equal to the payment made on one share of common stock, whichever is
   greater.

 .  will have the same voting power as one share of common stock.

 .  if shares of our common stock are exchanged via merger, consolidation, or a
   similar transaction, will entitle holders to a per share payment equal to the
   payment made on one share of common stock.

The value of one one-thousandth interest in a Preferred Share should approximate
the value of one share of common stock.

Expiration.  The Rights will expire on June 12, 2011.

Redemption.  Our Board may redeem the Rights for $.01 per Right at any time
before any person or group becomes an Acquiring Person.  If our Board redeems
any Rights, it must redeem all of the Rights.  Once the Rights are redeemed, the
only right of the holders of Rights will be to

                                      C-2
<PAGE>

receive the redemption price of $.01 per Right. The redemption price will be
adjusted if we have a stock split or stock dividends of our common stock.

Exchange.  After a person or group becomes an Acquiring Person, but before an
Acquiring Person owns 50% or more of our outstanding common stock, our Board may
extinguish the Rights by exchanging one share of common stock or an equivalent
security for each Right, other than Rights held by the Acquiring Person.

Anti-Dilution Provisions.  Our Board may adjust the purchase price of the
Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, a reclassification of the Preferred Shares or common stock.  No
adjustments to the Exercise Price of less than 1% will be made.

Amendments.  The terms of the Rights Agreement may be amended by our Board
without the consent of the holders of the Rights.  However, our Board may not
amend the Rights Agreement to lower the threshold at which a person or group
becomes an Acquiring Person to below 10% of our outstanding common stock.  In
addition, the Board may not cause a person or group to become an Acquiring
Person by lowering this threshold below the percentage interest that such person
or group already owns.  After a person or group becomes an Acquiring Person, our
Board may not amend the agreement in a way that adversely affects holders of the
Rights.

                                      C-3