Filed by Bowne Pure Compliance





Exhibit 4.1




EXECUTION COPY




BRIGHAM EXPLORATION COMPANY




AND




AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, RIGHTS AGENT




RIGHTS AGREEMENT




DATED AS OF

December 10, 2008





 


 









 







TABLE OF CONTENTS




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







 


 









 







RIGHTS AGREEMENT




This RIGHTS AGREEMENT (this “Agreement”), dated as of December 10, 2008, is by and between
BRIGHAM EXPLORATION COMPANY, a Delaware corporation (the “Company”), and AMERICAN STOCK TRANSFER &
TRUST COMPANY, LLC, a New York limited liability trust company (the “Rights Agent”).



W I T N E S S E T H:




WHEREAS, on December 9, 2008, the Board of Directors of the Company (the “Board”) authorized
and declared a dividend distribution (the “Distribution”) of one preferred share purchase right (a
“Right”) for each share of the Common Stock, $.01 par value per share, of the Company outstanding
at the close of business on December 22, 2008 (the “Record Date”), and authorized the issuance of
one Right in respect of each share of Common Stock of the Company issued 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), each Right representing the right to purchase one
one-thousandth (1/1,000th) of one share of Series C Junior Participating Preferred Stock of the
Company having the rights and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth;



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



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



(a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such
term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Common Stock (as such term is hereinafter
defined) of the Company then outstanding, but shall not include any employee benefit plan of the
Company or any Subsidiary (as such term is hereinafter defined) of the Company, or any entity
organized, appointed or established pursuant to the terms of any such plan, the Company or any
Subsidiary of the Company. Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” as the result of an acquisition of Common Stock of the Company by the Company which, by
reducing the number of such shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Stock of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more
of the shares of Common Stock 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 Stock of the Company (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding shares of Common Stock in shares of Common Stock or pursuant
to a split or subdivision of the outstanding shares of Common Stock), then such Person shall be
deemed to be an “Acquiring Person.” Notwithstanding the foregoing, if the Board within 10 days
after the first
date on which the Company shall become aware that any Person, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of shares of Common Stock of the Company such
that such person (but for this sentence) would be an Acquiring Person, determines in good faith
that such Person has inadvertently exceeded the thresholds set forth in this definition of
Acquiring Person, and such Person divests as promptly as practicable a sufficient number of Common
Shares of the Company so that such Person would no longer be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this definition, then such Person shall not be deemed to be
an “Acquiring Person” for any purposes in this Agreement.


 


 









 





Notwithstanding anything contained in this Agreement to the contrary, for the period commencing on
the date hereof and ending on the date that Credit Suisse, together with its Affiliates and
Associates, is no longer the Beneficial Owner of 15% or more of the shares of Common Stock of the
Company then-outstanding, Credit Suisse shall not become an Acquiring Person unless and until
Credit Suisse, together with any of its Affiliates or Associates, becomes the Beneficial Owner of
17% or more of the shares of Common Stock of the Company then outstanding; provided,
however, that Credit Suisse, together with its Affiliates and Associates, shall not become
an Acquiring Person as the result of an acquisition of shares of Common Stock by the Company which,
by reducing the number of shares outstanding, increases the proportionate number of shares
beneficially owned by Credit Suisse, together with its Affiliates and Associates, to 17% or more of
the shares of Common Stock of the Company then outstanding, unless and until such time as (i)
Credit Suisse or any Affiliate or Associate of Credit Suisse shall purchase or otherwise become the
Beneficial Owner of any additional shares of Common Stock of the Company or (ii) any other Person
who is the Beneficial Owner of any shares of Common Stock of the Company shall become and Affiliate
or Associate of Credit Suisse.




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



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




(d) “Agreement” shall have the meaning set forth in the preamble hereto.



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




(i) which such Person, or any of such Person’s Affiliates or Associates,
beneficially owns, directly or indirectly;




(ii) which 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 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
under this clause (B) 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 of the Exchange Act and (2) is
not then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report);


 


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(iii) which 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 in clause (B) of subparagraph (ii) of this
paragraph (e)) or disposing of any securities of the Company; or




(iv) in respect of which such Person or any of such Person’s Affiliates or
Associates has a Synthetic Long Position (as hereinafter defined); provided,
however, that a Person will not be deemed the Beneficial Owner of, or to
beneficially own, any security if such beneficial ownership arises solely as a
result of such Person’s status as a “clearing agency,” as defined in Section
3(a)(23) of the Exchange Act; provided further, however, that nothing in this
Section 1 will cause a Person engaged in business as an underwriter of securities to
be the Beneficial Owner of, or to beneficially own, any securities acquired through
such Person’s participation in good faith in an underwriting syndicate until the
expiration of 40 calendar days after the date of such acquisition, or such later
date as the Board may determine in any specific case.



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 which such
Person would be deemed to own beneficially hereunder.




(f) “Board” shall have the meaning set forth in the recitals hereto.



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



(h) “close of business” on any given date shall mean 5:00 P.M., Austin, Texas time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Austin,
Texas time, on the next succeeding Business Day.


 


3









 





(i) “Common Stock” when used with reference to the Company shall mean the Common Stock, $.01
par value per share (or as such par value may be changed from time to time), of the Company and,
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.




(j) “Company” shall have the meaning set forth in the preamble hereto.




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




(l) “Distribution” shall have the meaning set forth in the recitals hereto.




(m) “Distribution Date” shall have the meaning set forth in Section 3(b) hereof.



(n) “Exchange Act” shall have the meaning set forth in the definition of “Affiliate” set forth
above.




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




(p) “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.




(q) “Flip-In Event” shall have the meaning set forth in Section 11(a)(ii) hereof.




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




(s) “Flip-Over Event” shall have the meaning set forth in Section 13(a) hereof.




(t) “NASDAQ” shall have the meaning set forth in Section 11(d)(i) hereof.



(u) “Person” shall mean any individual, firm, limited liability company, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.



(v) “Preferred Stock” shall mean the Series C Junior Participating Preferred Stock of the
Company having the rights and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A.




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


 


4









 





(x) “Purchase Price” with respect to each Right shall mean $24.00, as such amount may from
time to time be adjusted as provided herein, and shall be payable in lawful money of the United
States of America. Any references herein to the Purchase Price shall mean the Purchase Price as in
effect at the time in question.




(y) “Record Date” shall have the meaning set forth in the recitals hereto.




(z) “Redemption Date” shall have the meaning set forth in Section 7(a) hereof.




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




(bb) “Right” shall have the meaning set forth in the recitals hereto.




(cc) “Rights Agent” shall have the meaning set forth in the preamble hereto.




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




(ee) “Security” shall have the meaning set forth in Section 11(d)(i) hereof.



(ff) “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.




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



(hh) “Subsidiary” of a 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.




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



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




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




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



 


5









 






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




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




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




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



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




(kk) “Trading Day” shall have the meaning set forth in Section 11(d)(i) hereof.



Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.




Section 3. Issue of Right Certificates.



(a) One Right shall be associated with each share of Common Stock outstanding on the Record
Date, and each additional share of Common Stock that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date;
provided, however, that, if the number of outstanding Rights are combined into a smaller number of
outstanding Rights pursuant to Section 11 hereof, the appropriate fractional Right determined
pursuant to such Section shall thereafter be associated with each such share of Common Stock.


 


6









 





(b) Until the earlier of (i) the tenth day after the Shares Acquisition Date (or, if the Share
Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth
day following the Record Date) or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement of, or first public announcement of the intent to commence, by
any Person (other than the Company, any Subsidiary of the Company, or any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan), a tender or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (including any such date which is after the date
of this Agreement and prior to the issuance of the Rights; the earlier of the dates in subsections
(i) and (ii) hereof being herein referred to as the “Distribution Date”), (x) the Rights will be
evidenced by the certificates for the Common Stock registered in the names of the holders thereof
(which certificates shall be deemed also 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 the Common Stock. 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, send), by first class, insured,
postage-prepaid mail, to each record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto, evidencing one Right for each share of
the Common Stock so held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.



(c) The Company will make available, as promptly as practicable following the Record Date, a
copy of a Summary of Rights, in substantially the form attached as Exhibit C, to any holder
of Rights who may so request from time to time prior to the Final Expiration Date. With respect to
certificates for the Common Stock outstanding as of the Record Date, or issued subsequent to the
Record Date, until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof. Until the earlier of the Distribution Date or the
Final Expiration Date, the surrender for transfer of any certificate representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.



(d) Certificates for the Common Stock issued after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date and 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 a Rights Agreement between BRIGHAM EXPLORATION COMPANY and AMERICAN
STOCK TRANSFER & TRUST COMPANY, LLC (the “Rights Agent”), dated as of December 10,
2008 (the “Rights 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
BRIGHAM EXPLORATION COMPANY. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Rights Agent will mail to the holder
of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as set forth in
the Rights Agreement, Rights issued to any Person who becomes an Acquiring Person or
their Affiliates or Associates (as such terms are defined in the Rights Agreement)
and any subsequent holder of such Rights are null, void and nontransferable.


 


7









 





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




Section 4. Form of Right Certificates.



(a) The Right Certificates (and the forms of election to purchase 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 and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange or automated
quotations system on which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right Certificates, in each case, on their face
shall entitle the holders thereof to purchase such number of shares of the Preferred Stock as shall
be set forth therein at the price per share set forth therein (the “Purchase Price”), but the
number of such shares and the Purchase Price shall be subject to adjustment as provided herein.



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




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


 


8









 






Section 5. Countersignature and Registration.



(a) The Right Certificates shall be executed on behalf of the Company in the manner provided
in the Bylaws of the Company for Common Stock Certificates. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of the 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, issued and delivered with the same force and effect as though
the person 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 person 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 Rights Agreement any such person
was not such an officer.



(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal offices, 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.



(a) Subject to the provisions of Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and 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 null, void and nontransferable
pursuant to Section 7(e) hereof or that have been exchanged pursuant to 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 shares of the Preferred Stock 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 principal office of the Rights Agent. Thereupon, the Rights Agent shall, subject
to Section 7(e) and Section 14 hereof, 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 governmental charge that
may be imposed in connection with any transfer, split up, combination or exchange of Right
Certificates.



(b) 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 the case of
loss, theft or destruction, of indemnity or security reasonably 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 owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.


 


9









 






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



(a) Subject to Section 7(e) hereof and except as otherwise provided herein (including Section
24 hereof), each Right shall entitle the registered holder thereof, upon exercise thereof as
provided herein, to purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earliest of (i) 5:00 P.M. Austin, Texas time on December 10, 2009 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”) and (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, one one-thousandth of one share of Preferred Stock, subject to adjustment from
time to time as provided in Section 11 or 13 hereof.



(b) 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 offices of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-thousandth of one share of
the Preferred Stock as to which the Rights are exercised, at or prior to the earliest of (i) the
Final Expiration Date, (ii) the Redemption Date or (iii) the time at which such Rights are
exchanged as provided for in Section 24 hereof.



(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 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 in cash, or by certified check or
cashier’s check payable to the order of the Company, the Rights Agent shall thereupon (i) (A)
promptly requisition from any transfer agent of the Preferred Stock of the Company certificates for
the number of shares of the Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such request, (ii) when
appropriate, promptly 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)
after receipt of such certificates or depositary receipts, promptly 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 his duly authorized assigns, subject to the provisions of Section 14 hereof.


 


10









 





(e) Notwithstanding anything in this Agreement to the contrary, any Rights that are at any
time beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of any such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after such Acquiring Person becomes such or (iii) a transferee of any such
Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from such Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer that the Board has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise.
The Company shall notify the Rights Agent when this Section 7(e) applies and shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but neither the Company nor the Rights Agent shall have any liability to any holder
of Rights Certificates or other Person as a result of the Company’s failure to make any
determinations with respect to an Acquiring Person or any of its Affiliates, Associates or
transferees hereunder.



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



(g) The Company may temporarily suspend, for a period of time not to exceed 90 calendar days
after the Distribution Date, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act, on appropriate form, with respect to the
securities purchasable upon exercise of the Rights and permit such registration statement to become
effective; provided, however, that no such suspension shall remain effective after, and the Rights
shall without any further action by the Company or any other Person become
exercisable immediately upon, the effectiveness of such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and shall issue a further public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision herein to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite qualification under the Blue
Sky or securities laws of such jurisdiction shall not have been obtained or the exercise of the
Rights shall not be permitted under applicable law.


 


11









 





Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination
or exchange shall, and any Rights Certificate representing Rights that have become null, void and
nontransferable pursuant to Section 7(e) hereof surrendered or presented for any purpose 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 Rights 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. Reservation and Availability of Shares of Preferred Stock.



(a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preferred Stock or its authorized and issued Preferred Stock held in
its treasury, the number of shares of the Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7 hereof.



(b) So long as the Preferred Stock issuable upon the exercise of Rights may be listed on any
national securities exchange or automated quotations system, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted for trading on such exchange or automated quotations system upon
official notice of issuance upon such exercise.



(c) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all shares of the Preferred Stock delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.



(d) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any shares of the Preferred Stock upon the exercise of
Rights. The Company shall not, however, be required (a) to pay any transfer tax
which may be payable in respect of any transfer involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates for the Preferred Stock in a name other
than that of the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (b) to issue or deliver any certificates for shares of the Preferred Stock upon the
exercise of any Rights until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been established to the
Company’s satisfaction that no such tax is due.


 


12









 





Section 10. Preferred Stock Record Date. Each person in whose name any certificate for shares of the Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of the
Preferred Stock 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 transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock 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 Stock 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 stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as provided herein.



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




(a) (i) In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Stock payable in Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares of Preferred Stock or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as otherwise provided in this
Section 11(a), 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 Stock transfer books of the Company
were open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision,
combination or reclassification; 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 Preferred Stock issuable upon exercise of one Right. If
an event occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).


 


13









 






(ii) Subject to Section 24 of this Agreement, in the event any Person becomes
an Acquiring Person (a “Flip-In Event”), each holder of a Right, except as provided
in Section 7(e) hereof, 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 share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock (such number of shares of
Common Stock being referred to herein as the “Adjustment Shares”) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number of
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of the Company’s Common Stock (determined pursuant to Section 11(d)
hereof) on the date of the occurrence of such event; provided, however, that if the
transaction that would otherwise give rise to the adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii). 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.




(iii) In the event that the number of shares of Common Stock that are
authorized by the Company’s Certificate of Incorporation, as amended, but not
outstanding or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the Company shall: (A)
determine the excess of the value of the Adjustment Shares issuable upon the
exercise of a Right (the “Current Value”) over the Purchase Price (such excess, the
“Spread”), and (B) with respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) shares of Common Stock of the same or a
different class or other equity securities of the Company (including, without
limitation, preferred shares or units of preferred shares that the Board has deemed
(based, among other things, on the dividend and liquidation rights of such preferred
 shares) to have substantially the same economic value as shares of Common Stock
(such preferred shares, hereinafter referred to as “common share equivalents”)), (4)
debt securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the
Board; provided , however , if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Flip-In Event and (y) the date
on which the Company’s right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the “Flip-In Trigger Date”), then
the Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Flip-In Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such period,
as it may be extended, the “Substitution Period”). To the extent that the Company
determines that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and
may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on the
Flip-In Trigger Date and the value of any “common share equivalent” shall be deemed
to have the same value as the shares of Common Stock on such date.


 


14









 





(b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Stock (or shares having the
same rights, privileges and preferences as the Preferred Stock (“equivalent preferred stock”)) or
securities convertible into Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less than the current per
share market price of the Preferred Stock (as determined pursuant to 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 shares of Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially convertible); 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 Preferred Stock issuable upon exercise of one Right.
In case such subscription price may be paid in 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, whose determination shall be described in a statement filed with the Rights Agent. Shares
of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.


 


15









 





(c) In case the Company shall fix a record date for the making of a distribution to all
holders of Preferred Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of indebtedness or
assets (other than (i) a regular periodic cash dividend the record date for which occurs at a time
when there is no Acquiring Person or (ii) a regular periodic cash dividend, the record date for
which occurs at a time when there is an Acquiring Person, at a rate not in excess of 125% of the
rate of the last cash dividend theretofore paid or (iii) a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price
to be in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the Preferred Stock (as determined pursuant to Section 11(d)) on
such record date, less the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock and the denominator of which shall be such current per
share market price of the Preferred Stock; 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 Preferred Stock issuable 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 market price per
share” of any security (a “Security”) 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 (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current market price per share of the
Security is determined during the 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 shares of such Security, or (B) any
sub-division, 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 sub-division, combination or
reclassification, then, and in each such case, the current market
price per share shall be appropriately adjusted to take into account ex- dividend
trading. The closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the 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 or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported on the Nasdaq Stock
Market (“NASDAQ”) or such other system then in use, or, if on any such date the
Security is not quoted by 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. 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.


 


16









 






(ii) For the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth
above for Common Stock in clause (i) of this Section 11(d). If the Preferred Stock
is not publicly traded or if the current market price per share of Preferred Stock
cannot be determined in the manner provided above, the “current market price” per
share of Preferred Stock shall be conclusively deemed to be the current market price
per share of Common Stock (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof), multiplied by one
thousand. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, “current market price” shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent.



(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 ten-thousandth of a share of Common Stock or
other share (other than Preferred Stock) or one-millionth of a share of Preferred stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of (A) one year from the date of the
transaction which mandates such adjustment or (B) 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), the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital stock of
the Company other than shares of the Preferred Stock, 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 manner and on terms as nearly equivalent as practicable to the provisions with respect to the
shares contained in Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the shares of the Preferred Stock shall apply on like terms to any such
other shares.



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


 


17









 





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



(i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of the Preferred Stock 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 share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest one-millionth)
obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after the adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment to be made 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.



(j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of the Preferred Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per
one one-thousandth of a share of Preferred Stock and the number of one one-thousandths of a 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 shares of the Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock at such adjusted Purchase Price.


 


18









 





(l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the shares of the Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares 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 Stock, issuance wholly
for cash of any shares of the Preferred Stock at less than the current market price, issuance
wholly for cash of any shares of the Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, dividends on the Preferred Stock payable in
Preferred Stock or issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Stock 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 Stock payable in
Common Stock or (ii) effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into a greater or
lesser number of shares of Common Stock, then in any such case (i) the number of one
one-thousandths of a share of Preferred Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one one- thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Stock outstanding immediately
before such event and the denominator of which is the number of Common Stock outstanding
immediately after such event, and (ii) each share of Common Stock outstanding immediately after
such event shall have issued with respect to it that number of Rights which each share of Common
Stock outstanding immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a dividend is declared
or paid or such a subdivision, combination or consolidation is effected. If an event occurs which
would require an adjustment under Section 11(a)(ii) and this Section 11(n), the adjustments
provided for in this Section 11(n) shall be in addition and prior to any adjustment required
pursuant to Section 11(a)(ii).



Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock and the Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof.


 


19









 






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



(a) In the event that, following the Distribution Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person, (y) any Person shall
consolidate with 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
Stock 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 (z) 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 more than 50% 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 (any such event described in clauses (x), (y) or (z) being referred to
herein as in “Flip-Over Event”), 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 the then-current Purchase Price multiplied by the
number of one one-thousandths of a share of Preferred Stock for which a right is then exercisable,
in accordance with the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of validly issued, fully paid, non-assessable and freely tradable Common Stock of
the Principal Party (as hereinafter defined) (including the Company as successor thereto or as the
surviving corporation), unencumbered and not subject to any liens, encumbrances, rights of call or
first refusal or other adverse claims, as shall be equal to the result obtained by (A) multiplying
the then current Purchase Price by the then number of one one-thousandths of share of Preferred
Stock for which a Right is exercisable immediately prior to the first occurrence of a Flip-Over
Event (or, if a Flip-In Event has occurred prior to the first occurrence of a Flip-Over Event,
multiplying the number of such one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Flip-Over Event times the Purchase
Price in effect immediately prior to such first occurrence), and dividing that product by (B) 50%
of the current market price per share of the Common Stock of such Principal Party (determined in
the manner described in Section 11(d)) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the Principal Party 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 Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal Party following the
first occurrence of a Flip-Over Event; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9) 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 shares of its Common Stock thereafter deliverable upon the exercise of the Rights; and (v)
the provisions of Section 11(a)(i) hereof shall be of no effect following the first occurrence of
any Flip-Over Event.


 


20









 






(b) “Principal Party” shall mean




	 	(1)	 	In the case of any transaction described in (x)
or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to the
merger or consolidation; and

	 
	 	(2)	 	in the case of any transaction described in (z)
of the first sentence in this Section 13(a), the Person that is the
other party to such transaction or, if more than one, the Person that
is the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction;






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



(c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale or transfer of assets mentioned in paragraph (a)
of this Section 13, the Principal Party will




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




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


 


21









 





The Company shall not enter into any transaction of the kind referred to in this 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 on the 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. If on any such date no such market
maker is making a market in the Rights the fair market value of the Rights on such date as
determined in good faith by the Board shall be used.



(b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the Company, be 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 shares of Preferred Stock. In lieu of fractional shares that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company may 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 a share of the
Preferred Stock. For purposes of this Section 14(b), the current market value of a share of the
Preferred Stock shall be the closing price of a share of the Preferred Stock (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.


 


22









 





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



Section 15. Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such 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 Stock;



(b) after the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal 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 Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated Common Stock
certificates 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 Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any 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 affecting stockholders (except as provided in Section 25), 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.


 


23









 






Section 18. Concerning the Rights Agent.



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



(b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement; or other paper or document 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 of counsel as set forth in Section 20 hereof.
In no case shall the Rights Agent be liable for special, indirect, incidental or consequential
loss or damage of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the possibility of such loss or damage.




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



(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of Section 21. 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 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.


 


24









 





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



(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof 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 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 to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such certificate.



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



(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the 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 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 Rights (including any Rights becoming null,
void and nontransferable pursuant to Section 7(e) 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
shares of the Preferred Stock to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of the Preferred Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable.


 


25









 





(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 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 it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions.



(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
interested 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 legal entity.



(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 resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.



(j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates that the Rights are beneficially owned
by 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.



(k) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any
holders of shares of Preferred Stock or other securities for interest or earnings on any monies
held by the Rights Agent pursuant to this Agreement, except as otherwise specifically agreed in a
separate writing by the Company and the Rights Agent.


 


26









 





(l) The Rights Agent shall not be required to take notice or be deemed to have notice of any
event or condition hereunder, including, but not limited to, a Distribution Date, a Redemption
Date, any adjustment of the Purchase Price of the Preferred Stock, the existence of an Acquiring
Person or any other event or condition that may require action by the Rights Agent,
unless the Rights Agent shall be specifically notified in writing of such event or condition
by the Company, and all notices or other instruments required by this Agreement to be delivered to
the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in
Section 26 hereof, and in the absence of such notice so delivered, the Rights Agent may
conclusively assume no such event or condition exists.



Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon 30 days’ notice in writing mailed to the Company and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified mail, and to the
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 Stock and the Preferred
Stock by registered or certified mail, and to the holders of the Rights Certificates by first class
mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of 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 (who shall, with such notice, submit his 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 (or
an affiliate of such Person) organized and doing business under the laws of the United States or of
the State of Texas or New York, in good standing, having a principal office in the State of Texas
or the State of New York, which is authorized under such laws to exercise corporate trust powers or
stock transfer powers and is subject to supervision or examination by federal or state authority
and which has at the time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock or Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, 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, at its option, may issue new Right Certificates evidencing Rights in such form as may be
approved by its Board to reflect any adjustment or change in the Purchase Price per share 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.


 


27









 






Section 23. Redemption.



(a) The Board may, at its option, at any time prior to 5:00 P.M., Austin, Texas time, on the
earlier of (x) the Distribution Date or (y) the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at a redemption price of $.01 per Right, 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”).



(b) Immediately upon the action of the Board 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; 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 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 Stock. 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 that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the repurchase of Common Stock prior to the Distribution Date.




Section 24. Exchange.



(a) The Board 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 and nontransferable pursuant to the provisions of Section 7(e)
hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board 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 Person holding shares of Common Stock 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 voting power of the shares of Common Stock then
outstanding.


 


28









 





(b) Immediately upon the action of the Board 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 shares of Common Stock 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 by first class mail to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which the exchange of
Common Stock for Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become null and void and transferable pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.



(c) In the event that there shall not be sufficient Common Stock 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
shares of Common Stock for issuance upon exchange of the Rights. In the event the Company shall,
after good faith effort, be unable to take all such action as may be necessary to authorize such
additional shares of Common Stock, the Company shall substitute, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or
fraction thereof such that the current per share market price of one share of Preferred Stock
multiplied by such number or fraction is equal to the current per share market price of one share
of Common Stock as of the date of issuance of such shares of Preferred Stock or fraction thereof.



(d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares, the Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock. For purposes of this
paragraph (d), the current market value of a whole share of Common Stock shall be the closing price
of a share of Common Stock (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. In case the Company shall propose at any time following the Distribution Date (a) to pay any
dividend payable in stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular periodic cash dividend at
a rate not in excess of 125% of the rate of the last cash dividend theretofore paid), or (b) to
offer to the holders of its Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of the Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (c) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding Preferred Stock), or (d) 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
more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a whole) to, any other
Person, (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to declare
or pay any dividend on the shares of Common Stock payable in shares of Common Stock or to the
effect a subdivision, combination or consolidation of the shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common Stock), then, in
each such case, the Company shall give to each holder of a Right Certificate, in accordance with
Section 26, a notice of such proposed action, which shall specify the record date for the purposes
of such stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the holders of the Common Stock and/or the
Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (a) or (b) above at least ten days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the Common Stock and/or the Preferred Stock, whichever
shall be the earlier. In case a Flip-In Event shall occur, then, the Company shall as soon as
practicable thereafter give to each holder of a Right, in accordance with Section 26, a notice of
the occurrence of such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii).


 


29









 





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:




Brigham Exploration Company

6300 Bridgepoint Parkway

Building Two, Suite 500

Austin, Texas 78730

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:




American Stock Transfer & Trust Company, LLC

59 Maiden Lane

New York, New York 10038

Attention: Corporate Trust



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 and the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, or
(ii) to correct or supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or supplement the provisions hereunder in any
manner 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 the Distribution Date, this Agreement shall not be changed or supplemented in any manner
which would adversely affect the interests of the holders of Right Certificates in any way (other
than pursuant to clauses (i) and (ii) above). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or
amendment.


 


30









 





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



Section 29. 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 registered holders of the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock).



Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.



Section 31. 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 Delaware 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 32. 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 33. 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.



[Signature page follows.]


 


31









 





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



	 	 	 	 	 
	 	BRIGHAM EXPLORATION COMPANY

 	 
	 	By:  	/s/ Ben M. Brigham
 	 
	 	 	Name:  	Ben M. Brigham 	 
	 	 	Title:  	Chief Executive Officer, President & Chairman 	 



	 	 	 	 	 
	Attest:	 	 
	 
	 	 	 	 
	By:

	 	/s/ David T. Brigham	 	 
	 

	 	 

Title: Executive Vice President —
          Land & Administration
	 	 






	 	 	 	 	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 	 
	 	By:  	/s/ Herbert J. Lemmer
 	 
	 	 	Name:  	Herbert J. Lemmer 	 
	 	 	Title:  	Vice President 	 



	 	 	 	 	 
	Attest:	 	 
	 
	 	 	 	 
	By:

	 	/s/ Susan Silber	 	 
	 

	 	 

Title: Assistant Secretary
	 	 







 














 




Exhibit A




CERTIFICATE OF DESIGNATIONS

of

SERIES C JUNIOR PARTICIPATING PREFERRED STOCK

of

BRIGHAM EXPLORATION COMPANY





It is hereby certified that:



1. The name of the corporation (hereinafter called the “Corporation”) is Brigham Exploration
Company.



2. The following resolution was duly adopted on December 9, 2008 by the Board of Directors of
the Corporation pursuant to Section 151 of the General Corporation Law of the State of Delaware and
in accordance with Article FOURTH of the Corporation’s Certificate of Incorporation, as amended:



RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
the Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the
provisions of the Corporation’s Certificate of Incorporation, as amended (the “Certificate of
Incorporation”), the Board of Directors hereby creates a series of Preferred Stock of the
Corporation and hereby states the designation and number of shares, and fixes the relative rights
and preferences thereof (in addition to the provisions set forth in the Certificate of
Incorporation which are applicable to the Preferred Stock of all classes and series) as follows:



SERIES C JUNIOR PARTICIPATING PREFERRED STOCK




I. Designation and Amount. The shares of such series shall be designated as “Series C Junior
Participating Preferred Stock” (the “Series C Preferred Stock”) and the number of shares
constituting such series shall be 50,000. 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 C Preferred Stock to a number less than that of the 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 C Preferred Stock.


 


 









 






II. Dividends and Distributions.




(A) Subject to the prior and superior rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to the shares of Series C Preferred Stock and
with respect to dividends, the holders of shares of Series C Preferred Stock, in preference
to the holders of Common Stock, par value $.01 per share (or as such par value may be
changed from time to time), of the Corporation (the “Common Stock”) 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 last
day of January, April, July and October in each year (each such date being referred to
herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series C Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to: 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 C 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 C 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 C 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).




(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series C Preferred Stock, unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C 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 C 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 C Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment thereof.


 


2









 





III. Voting Rights. The holders of shares of Series C Preferred Stock shall have the
following voting rights:




(A) Subject to the provision for adjustment hereinafter set forth, each share of Series
C 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 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 C 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 the Certificate of Incorporation, in any
other Certificate of Designations creating a series of Preferred Stock, or by law, the
holders of shares of Series C 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, holders of Series C 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.




IV. Certain Restrictions.




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




(i) declare or pay dividends on 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 C Preferred Stock;




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


 


3









 






(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 C 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 C
Preferred Stock; or




(iv) redeem or purchase or otherwise acquire for consideration any shares of
Series C Preferred Stock, or any shares of stock ranking on a parity with the Series
C 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 IV, purchase or otherwise acquire
such shares at such time and in such manner.



V. Reacquired Shares. Any shares of Series C 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.



VI. 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 C
Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock-shall have
received 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 C 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 Common Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or
pay any dividend on 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 C 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.


 


4









 





VII. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in any such case the
shares of Series C Preferred Stock shall at the same time be similarly exchanged or changed in 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 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 C 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.




VIII. No Redemption. The shares of Series C Preferred Stock shall not be redeemable.



IX. Rank. The Series C Preferred Stock shall rank, with respect to the payment of dividends
and the distribution of assets, junior to (i) the Series A Preferred Stock and (ii) all other
series of the Preferred Stock unless the terms of any such series shall provide otherwise.



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



3. The Certificate of Incorporation of the Corporation is amended so that the designation and
number of shares of the class and series acted upon in the foregoing resolution, and the relative
rights and preferences of such class and series, are as stated in the resolution.


 


5









 





IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation
by its undersigned officer as of December 10, 2008.



	 	 	 	 	 
	 	BRIGHAM EXPLORATION COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	Ben M. Brigham 	 
	 	 	Title:  	Chief Executive Officer, President &
Chairman 	 




	 	 	 	 	 
	ATTEST:	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 

Title:  

	 	 





 


6









 





Exhibit B




[Form of Right Certificate]




			
	 	 	 
	Certificate No. R-
	 	                     Rights







NOT EXERCISABLE AFTER DECEMBER 10, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT, AT THE OPTION OF THE COMPANY, TO REDEMPTION AT $.01 PER RIGHT OR TO
EXCHANGE, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERSM ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID AND
NONTRANSFERABLE.



Right Certificate




BRIGHAM EXPLORATION COMPANY




This certifies that                                          or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of December 10, 2008 (the “Rights
Agreement”) between BRIGHAM EXPLORATION COMPANY, a Delaware corporation (the “Company”), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, a New York limited liability trust company (the
“Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. Austin, Texas time on December 10, 2009
at the office of the Rights Agent, or its successors as Rights Agent, one one-thousandth of one
fully paid and non-assessable share of the Series C Junior Participating Preferred Stock (the
“Preferred Stock”) of the Company, at a purchase price of $24.00 per one one-thousandth of one
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 share of Preferred Stock which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as of December 10, 2008, based on the shares of the Preferred
Stock of the Company as constituted at such date.



As provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths
of a share of the Preferred Stock 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 Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and the above-mentioned
office 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 shares of the Preferred Stock as the Rights evidenced by the Right 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 Rights Agreement, the Rights evidenced by this Certificate
may, but are not required to, be (i) redeemed by the Company at its option at a redemption price of
$.01 per Right or (ii) may be exchanged by the Company in whole or in part for shares of Preferred
Stock or Common Stock, $.01 par value, of the Company.



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



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



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


 


2









 






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



Dated as of                                         .



	 	 	 	 	 
	ATTEST: 	BRIGHAM EXPLORATION COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	Ben M. Brigham 	 
	 	 	Title:  	Chief Executive Officer, President
& Chairman 	 



Countersigned:




	 	 	 	 	 
	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signature
	 	 






 


3









 





[Form of Reverse Side of Right Certificate]




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 must conform in all respects to the name
of holder as written upon the face of this Right
Certificate, without alteration or enlargement or
any change whatsoever.)







Signature Guaranteed:



Signatures must be guaranteed by a bank, trust company, broker, dealer or other eligible
institution participating in a recognized signature guarantee medallion program.



 

(to be completed if applicable)




The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by, were not acquired by the undersigned from, and are not being sold, assigned
or transferred to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).



	 	 	 
	 

	 	 






 


4









 





FORM OF ELECTION TO PURCHASE




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




			
	TO:	 	BRIGHAM EXPLORATION COMPANY






The undersigned hereby irrevocably elects to exercise                                                              Rights repres
ented by this Right Certificate
to purchase the shares of the Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such 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 must conform in all respects to the name
of holder as written on the face of this Right
Certificate, without alteration or enlargement or any
change whatsoever.)







 


5









 





Signature Guaranteed:




Signatures must be guaranteed by a bank, trust company, broker, dealer or other eligible
institution participating in a recognized signature guarantee medallion program.



 

(to be completed if applicable)




The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by, were not acquired by the undersigned from, and are not being sold, assigned
or transferred to, an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).



	 	 	 
	 

	 	 
	 

	 	Signature






 


6









 





Exhibit C




SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK




On December 9, 2008, the Board of Directors of BRIGHAM EXPLORATION COMPANY (the “Company”)
declared a dividend distribution of one preferred stock purchase right (a “Right”) for each
outstanding share of Common Stock, $0.01 par value per share (the “Common Stock”), of the Company.
The distribution is payable to the stockholders of record on December 22, 2008. Each Right
entitles the registered holder to purchase from the Company one one-thousandth of a share of the
Company’s Series C Junior Participating Preferred Stock (the “Preferred Stock”) at a price of
$24.00 per one one-thousandth of a share of Preferred Stock (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the
“Rights Agreement”) between the Company and American Stock Transfer & Trust Company, LLC, as Rights
Agent (the “Rights Agent”).



Until the earlier to occur of (i) the tenth day following a public announcement that a person
or group of affiliated or associated persons (an “Acquiring Person”) acquired beneficial ownership
of 15% or more of the outstanding shares of the Common Stock,
including through derivatives, (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 prior to such time as any person or group of affiliated or associated persons becomes an
Acquiring Person) after the commencement of, or announcement of an intention to commence, a tender
offer or exchange offer the consummation which would result in any person becoming an Acquiring
Person (the earlier of such dates being called the “Distribution Date”), the Rights will be
evidenced, with respect to any of the Common Stock outstanding as of December 22, 2008, by such
Common Stock certificate containing a notation incorporating the Rights Agreement by reference.



The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferred with and only with the Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any of the Common Stock certificates outstanding as of December 22, 2008, will also
constitute the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.



 


 









 





The Rights are not exercisable until the Distribution Date. The Rights will expire on
December 10, 2009, (the “Final Expiration Date”), unless the Final Expiration Date is extended or
unless earlier redeemed or exchanged by the Company, in each case, as described below.



Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable.
Each share of Preferred Stock will be entitled to an aggregate dividend of 1,000 times the dividend
declared on one share of the Common Stock. In the event of liquidation, the
holders of the Preferred Stock will be entitled to receive an aggregate liquidation payment
equal to 1,000 times the payment made on one share of Common Stock. Each share of Preferred Stock
will have 1,000 votes voting together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount received per one share of Common
Stock. The Rights are protected by customary anti-dilution provisions. Because of the nature of
the Preferred Stock dividend, liquidation and voting rights, the value of the one one-thousandth
interest in a share of Preferred Stock purchasable upon exercise of each Right should approximate
the value of one share of Common Stock.



The Purchase Price payable, and the number of shares of the Preferred Stock or other
securities or property issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for shares of the Preferred Stock or convertible securities
at less than the then-current market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic
cash dividends out of earnings or retained earnings at a rate not in excess of 125% of the rate of
the last cash dividend theretofore paid or dividends payable in the Preferred Stock) or of
subscription rights or warrants (other than those referred to above).



The number of outstanding Rights and the number of one one-thousandths of a share of Preferred
Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations as of the Common Stock occurring, in any such case,
prior to the Distribution Date.



In the event that the Company is acquired in a merger or other business combination
transaction or that 50% or more of its assets or earning power are sold after a person or group has
become an Acquiring Person, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value of two times the exercise price of the Right. Subject
to certain exchange rights that may be exercised by the Board, in the event that any person or
group of affiliated or associated person becomes an Acquiring Person, proper provision will be made
so that each holder of a Right, other than Rights that were or are beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon
exercise that number of shares of the Common Stock having a market value of two times the exercise
price of the Right.



With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock will be issued (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date prior to the date of exercise.


 


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At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding shares of Common Stock, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by such person or group
which will have become void) in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a Preferred Share per Right (subject to adjustment) (the “Exchange
Right”). Notwithstanding the above, the Board of Directors may not exercise the Exchange Rights
after any person, together with any associate or affiliate of such person, has become the
beneficial owner of 50% or more of the voting power of the shares of Common Stock.



At any time prior to 5:00 P.M. Austin, Texas time on the earlier of (i) the Distribution Date
or (ii) the Final Expiration Date, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the “Redemption Price”).



Immediately upon the action of the Board of Directors of the Company electing to redeem or
exchange the Rights, the Company shall make announcement thereof, and upon such election, the right
to exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price, or the shares of Common Stock or Preferred Stock exchangeable for the
Rights, as applicable.



The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights, except that from and after the Distribution Date, no such
amendment may adversely affect the interests of the holders of the Rights.



Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends.



A copy of the Rights Agreement is available free of charge from the Rights Agent, American
Stock Transfer & Trust Company, LLC. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.




 


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