Document:

exv10w23

Exhibit 10.23

OMNIBUS AMENDMENT AGREEMENT

     THIS OMNIBUS AMENDMENT AGREEMENT, LIMITED CONSENT AND WAIVER (this “Amendment”) is
made and entered into as of November 5, 2010, and shall be effective as of November 5, 2010 (the
“Effective Date”) by and between SWISHER INTERNATIONAL, INC., a Nevada corporation
(“Swisher”), HB SERVICE, LLC, a Delaware limited liability company (“HB Service”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (as successor by merger to Wachovia Bank, National
Association) (the “Bank”) and the other Persons party hereto.

BACKGROUND STATEMENT

     A. Swisher and the Bank are parties to a Credit Agreement, dated as of November 14, 2005, as
amended by that certain First Amendment to Credit Agreement dated as of April 26, 2006, by that
certain Second Amendment and Waiver to Credit Agreement dated as of September 8, 2006, by that
certain Third Amendment and Waiver to Credit Agreement dated as of March 21, 2008, by that certain
Fourth Amendment and Waiver to Credit Agreement dated as of June 25, 2008, by that certain Fifth
Amendment and Waiver to Credit Agreement dated as of June 30, 2009, by that certain Sixth Amendment
to Credit Agreement, dated as of November 18, 2009, by that certain Omnibus Amendment Agreement,
Limited Consent and Waiver, dated as of August 13, 2010, and by that certain Omnibus Amendment
Agreement, Limited Consent and Waiver, dated as of October 28, 2010 (the “Swisher Credit
Agreement”), pursuant to which the Bank has made available to Swisher a revolving credit
facility in the aggregate principal amount of $10,000,000. As of the date hereof, the current
outstanding principal amount of the loans outstanding under the Swisher Credit Agreement is
$10,000,000, and pursuant to the terms of the Swisher Credit Agreement, the current Applicable
Margin (as defined in the Swisher Credit Agreement) is 2.85%. The obligations of Swisher under the
Swisher Credit Agreement have been guaranteed by (i) the Subsidiary Guarantors (as defined in the
Swisher Credit Agreement) pursuant to the Guaranty (as defined in the Swisher Credit Agreement),
(ii) HB Service and its subsidiaries pursuant to the HB Service Guaranty (as defined in the Swisher
Credit Agreement) and (iii) H. Wayne Huizenga (“Huizenga”) pursuant to the guaranty
agreement made by Huizenga in favor of the Bank, dated as of June 25, 2008 (as amended from time to
time, the “Huizenga Swisher Guaranty”), subject to the terms and conditions therein. The
obligations of Swisher under the Swisher Credit Agreement have been secured by a lien on the assets
of Swisher and the Subsidiary Guarantors and HB Service and it subsidiaries pursuant to the terms
of the Security Agreement and the HB Service Security Agreement (each as defined in the Swisher
Credit Agreement), respectively.

     B. HB Service and the Bank are parties to a Credit Agreement, dated as of June 25, 2008, as
amended by that certain First Amendment and Waiver to Credit Agreement dated as of June 30, 2009,
by that certain Second Amendment to Credit Agreement dated as of November 18, 2009, by that certain
Omnibus Amendment Agreement, Limited Consent and Waiver, dated as of August 13, 2010, and by that
certain Omnibus Amendment Agreement, Limited Consent and Waiver, dated as of October 28, 2010 (the
“HB Service Credit Agreement”), pursuant to which the Bank has made available to HB Service
a revolving credit facility in the aggregate principal amount of $15,000,000. As of the date
hereof, the current outstanding principal amount of the loans outstanding under the HB Service
Credit Agreement is $15,000,000, and
pursuant to the terms of the HB Service Credit Agreement, the current Applicable Margin (as
defined in the HB Service Credit Agreement) as of the date hereof is 1.50%. The obligations of HB
Service under the HB Service Credit Agreement have been guaranteed by Huizenga pursuant to the
guaranty agreement made by Huizenga in favor of the Bank, dated as of June 25, 2008 (as amended
from time to time, the “Huizenga HB Service Guaranty”).

 

 

     C. Swisher and HB Service have requested certain amendments to the Swisher Credit Agreement
and the HB Service Credit Agreement, and the Bank has agreed to make such amendments on the terms
and subject to the conditions set forth herein.

STATEMENT OF AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I

AMENDMENTS TO SWISHER CREDIT AGREEMENT

     1.1 Amendment to Article VI of the Swisher Credit Agreement (Financial Covenants).
Article VI of the Swisher Credit Agreement is hereby deleted in its entirety and replaced with the
following:

ARTICLE VI

FINANCIAL COVENANTS

6.1 Unencumbered Liquidity. The Borrower shall maintain, at
all times, unencumbered cash and Cash Equivalents in excess of
$15,000,000.

     1.2 Amendments to Section 7.2 (Defined Terms) of the Swisher Credit Agreement.
Section 7.2 of the Swisher Credit Agreement is hereby amended by deleting clause (v) thereof and
replacing it with the following:

(v) Indebtedness of the Borrower and its Subsidiaries consisting of
seller notes on franchise and other acquisitions within the same
line of business of the Borrower and its Subsidiaries, and
including, without duplication, any standby letter of credit
obligations of the Borrower and its Subsidiaries in respect of
letters of credit issued on behalf of the Borrower and its
Subsidiaries to provide support for such seller notes,
provided that all such Indebtedness existing at any time
shall not exceed $25,000,000; and provided further
that Borrower shall deliver to the Bank a Schedule 7.2(v) with the
financial statements required to be
delivered by Sections 5.1(a) and 5.1(b) hereof, identifying all such
Indebtedness existing as of such date;

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     1.3 Amendments to Section 7.3 (Liens) of the Swisher Credit Agreement. Section 7.3 of
the Swisher Credit Agreement is hereby amended by (a) deleting the “and” at the end of clause
(viii) thereof, (b) re-numbering clause (ix) thereof as the new clause (x) and (c) inserting a new
clause (ix) as follows:

(ix) Liens in favor of the Bank securing obligations of the Borrower
and its Subsidiaries under any letter of credit issued by the Bank
outside of this Agreement; and

     1.4 Amendments to Section 7.5 (Restricted Investments) of the Swisher Credit
Agreement. Section 7.5 of the Swisher Credit Agreement is hereby amended by deleting clause
(xi) thereof and replacing it with the foregoing:

(xi) Investments consisting of the acquisition of capital stock or
substantially all the assets of Franchisees, or other Persons in the
same line of business as the Borrower and its Subsidiaries, in the
United States, Canada or Australia, provided that (i) with
respect to such acquisitions of all Persons that are not
Franchisees, the aggregate consideration paid with respect to all
such acquisitions from November 5, 2010 through the Revolving Credit
Termination Date (including the amount of cash paid, the value of
all Capital Stock of the Borrower or its Affiliates issued, the
amount of all Indebtedness incurred, assumed or acquired, the
maximum amount of contingent purchase price obligations and all
other amounts paid, or the fair market value of all property paid,
in connection with such acquisition) shall not exceed $25,000,000,
(ii) no Default or Event of Default has occurred and is continuing
as of the date of such acquisition, both immediately before and
after giving effect thereto (and the incurrence of any Indebtedness
in connection therewith), and (iii) in the case of an acquisition of
capital stock, the Borrower, or HB Service, as the case may be,
complies with Section 5.10;

ARTICLE II

AMENDMENTS TO HB SERVICE CREDIT AGREEMENT

     2.1 Amendment to Article VI of the HB Service Credit Agreement (Financial Covenants).
Article VI of the HB Service Credit Agreement is hereby deleted in its entirety and replaced with
the following:

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ARTICLE VI

FINANCIAL COVENANTS

6.1 Unencumbered Liquidity. Swisher shall maintain, at all
times, unencumbered cash and Cash Equivalents in excess of
$15,000,000.

     2.2 Amendments to Section 7.2 (Defined Terms) of the HB Service Credit Agreement.
Section 7.2 of the HB Service Credit Agreement is hereby amended by deleting clause (iv) thereof
and replacing it with the following:

(iv) Indebtedness consisting of seller notes on franchise and other
acquisitions within the same line of business of Swisher and its
Subsidiaries, and including, without duplication, any standby letter
of credit obligations in respect of letters of credit issued on
behalf of Swisher and its Subsidiaries to provide support for such
seller notes, provided that all such Indebtedness of Swisher
and its Subsidiaries existing at any time shall not exceed
$25,000,000; and provided further that Borrower
shall deliver to the Bank a Schedule 7.2(v) with the financial
statements required to be delivered by Sections 5.1(a) and 5.1(b)
hereof, identifying all such Indebtedness existing as of such date;

     2.3 Amendments to Section 7.3 (Liens) of the HB Service Credit Agreement. Section
7.3 of the HB Service Credit Agreement is hereby amended by (a) deleting the period at the end of
clause (viii) thereof and replacing it with “; and”, and (b) inserting a new clause (ix) as
follows:

(ix) Liens in favor of the Bank securing obligations of the Borrower
and its Subsidiaries under any letter of credit issued by the Bank.

     2.4 Amendments to Section 7.5 (Restricted Investments) of the HB Service Credit
Agreement. Section 7.5 of the HB Service Credit Agreement is hereby amended by (a) deleting
the “and” at the end of clause (vi) thereof, (b) re-numbering clause (vii) thereof as the new
clause (viii) and (c) inserting a new clause (vi) as follows:

(xi) Investments consisting of the acquisition of capital stock or
substantially all the assets of franchisees of Swisher or the
Borrower, or other Persons in the same line of business as Swisher
and its Subsidiaries, in the United States, Canada or Australia,
provided that (i) with respect to such acquisitions of all
Persons that are not franchisees of the Borrower or Swisher, the
aggregate consideration paid with respect to all such acquisitions
from November 5, 2010 through the Revolving Credit Termination Date
(including the amount of cash paid, the value of all Capital Stock
of the Borrower or its Affiliates issued, the amount of all
Indebtedness incurred, assumed or acquired, the maximum amount of
contingent purchase price obligations and all other amounts paid, or
the fair market value of all property paid, in connection
with such acquisition) shall not exceed $25,000,000, and (ii) no
Default or Event of Default has occurred and is continuing as of the
date of such acquisition, both immediately before and after giving
effect thereto (and the incurrence of any Indebtedness in connection
therewith); and

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

     Each of Swisher and HB Service hereby represents and warrants that:

     3.1 Representations in Credit Agreement. The representations and warranties of
Swisher set forth in the Swisher Credit Agreement and of HB Service set forth in the HB Service
Credit Agreement are true and correct in all material respects as of the date hereof, except to the
extent such representations and warranties relate solely to or are specifically expressed as of a
particular date or period.

     3.2 Compliance with Credit Agreement. After giving effect to this Amendment, each of
HB Service and Swisher is in compliance with all covenants, terms and provisions set forth in the
HB Service Credit Agreement and the Swisher Credit Agreement, respectively, to be observed or
performed by it.

     3.3 Due Authorization. This Amendment has been duly authorized, validly executed and
delivered by one or more authorized officers of Swisher, HB Service and each of their respective
subsidiaries and each of this Amendment, the HB Service Credit Agreement and the Swisher Credit
Agreement, constitutes the legal, valid and binding obligation of HB Service and Swisher, to the
extent each is a party thereto, enforceable against it in accordance with its terms and each of the
other Credit Documents (as defined in each of the HB Service Credit Agreement and the Swisher
Credit Agreement) constitutes the legal, valid and binding obligation of Swisher, HB Service, and
each of their respective Subsidiaries, to the extent party thereto, enforceable against each such
party in accordance with its terms.

     3.4 No Event of Default. No Default or Event of Default under the HB Service Credit
Agreement or the Swisher Credit Agreement has occurred or is continuing (after giving effect to
this Amendment).

     3.5 Continuing Security Interests. All obligations of Swisher, the Subsidiary
Guarantors and HB Service and its Subsidiaries under the Swisher Credit Agreement and the other
Credit Documents (as defined in the Swisher Credit Agreement) continue to be or will be secured by
the Bank’s security interests in all of the collateral granted under the Swisher Credit Agreement
and the Security Documents (as defined in the Swisher Credit Agreement), and nothing herein will
affect the validity, enforceability, perfection or priority of such security interests.

     3.6 No Defenses. Neither Swisher nor HB Service has any right of setoff,
counterclaim, or defense to payment of its respective liabilities or obligations under the Swisher
Credit Agreement or HB Service Credit Agreement, respectively. The Bank hereby expressly
reserves all rights and remedies it may have against Swisher, HB Service and all other Persons (as
defined in both the Swisher Credit Agreement and the HB Service Credit Agreement) who may be or may
hereafter become secondarily liable for the repayment of the obligations thereunder.

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ARTICLE IV

CONDITIONS TO EFFECTIVENESS

     This Amendment shall become effective as of the Effective Date upon the satisfaction of each
of the following conditions precedent:

     (a) The Bank shall have received a duly executed counterpart of this Amendment from each of
Swisher, the Subsidiary Guarantors (as defined in the Swisher Credit Agreement), HB Service and
each of its subsidiaries and Huizenga (collectively, the “Amendment Parties”);

     (b) Swisher and HB Service shall have paid all reasonable out-of-pocket costs and expenses of
the Bank in connection with the preparation, negotiation, execution and delivery of this Amendment
(including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Bank with respect thereto); and

     (c) The Bank shall have received such other documents, certificates, opinions, instruments and
other evidence as the Bank may reasonably request, all in a form and substance satisfactory to the
Bank and its counsel.

ARTICLE V

ACKNOWLEDGEMENTS; REPRESENTATIONS

     5.1 Amendment Parties. Each of the Amendment Parties hereby approves and consents to
the transactions contemplated by this Amendment and the Proposed Transaction, confirms and agrees
that, after giving effect to this Amendment, each of the Swisher Credit Agreement, the HB Service
Credit Agreement and the other Credit Documents (as defined in each of the Swisher Credit Agreement
and the HB Service Credit Agreement) to which it is a party, remains in full force and effect and
enforceable against it in accordance with its terms and shall not be discharged, diminished,
limited or otherwise affected in any respect, and represents and warrants to the Bank that it has
no knowledge of any claims, counterclaims, offsets, or defenses to or with respect to its
obligations under the Credit Documents (as defined in each of the Swisher Credit Agreement and the
HB Service Credit Agreement), or if it has any such claims, counterclaims, offsets, or defenses to
such Credit Documents or any transaction related to such Credit Documents, the same are hereby
waived, relinquished, and released in consideration of the execution of this Amendment.
Furthermore, each of Amendment Parties acknowledges and agrees that its obligations under the
Credit Documents (as defined in each of the Swisher Credit Agreement and the HB Service Credit
Agreement) shall not be discharged, limited or otherwise affected by reason of the Bank’s actions
with respect to any other Amendment Party, or with respect to, or in adding or releasing, any other
guarantor of the obligations of Swisher

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under the Swisher Credit Agreement or HB Service under the HB Service Credit Agreement, in
each case without the necessity of giving notice to or obtaining the consent of the Guarantor.
Without limiting the generality of the foregoing, Huizenga hereby specifically reaffirms all of his
obligations and covenants under each of the Swisher Huizenga Guaranty and the HB Service Huizenga
Guaranty and agrees that none of such obligations and covenants shall be affected by the execution
and delivery of this Amendment and the consummation of the Proposed Transaction. The
acknowledgements and confirmations by each of the Amendment Parties herein is made and delivered to
induce the Bank to enter into this Amendment and continue to extend credit to Swisher, HB Service
and the other Amendment Parties, and each of the Amendment Parties acknowledges that the Bank would
not enter into this Amendment and continue to extend such credit in the absence of the
acknowledgement and confirmation contained herein.

     5.2 Swisher Guarantors. Each of the Subsidiary Guarantors, HB Service and each of its
Subsidiaries and H. Wayne Huizenga (collectively, the “Swisher Guarantors”) further
represents that it has knowledge of Swisher’s, HB Service’s and the other Amendment Parties’
financial condition and affairs and that it has adequate means to obtain from Swisher, HB Service
and the other Amendment Parties on an ongoing basis information relating thereto and to Swisher’s,
HB Service’s and the other Amendment Parties’ ability to pay and perform their respective
obligations under the Credit Documents (as defined in each of the Swisher Credit Agreement and the
HB Service Credit Agreement), and agrees to assume the responsibility for keeping, and to keep, so
informed for so long as the guaranty of each such Swisher Guarantor remains in effect. Each
Swisher Guarantor agrees that the Bank shall have no obligation to investigate the financial
condition or affairs of Swisher, HB Service or any of the Amendment Parties for the benefit of any
Swisher Guarantor nor to advise any Swisher Guarantor of any fact respecting, or any change in, the
financial condition or affairs of Swisher, HB Service or any of the Amendment Parties that might
become known to the Bank at any time, whether or not the Bank knows or believes or has reason to
know or believe that any such fact or change is unknown to any Swisher Guarantor, or might (or
does) materially increase the risk of any Swisher Guarantor as guarantor, or might (or would)
affect the willingness of any Swisher Guarantor to continue as a guarantor of the obligations of
Swisher or HB Service, as the case may be, under the Credit Documents (as defined in each of the
Swisher Credit Agreement and the HB Service Credit Agreement). These representations and
agreements by each of the Swisher Guarantors are made and delivered to induce the Bank to enter
into this Amendment and continue to extend credit to Swisher, HB Service and the other Amendment
Parties under the Credit Documents (as defined in each of the Swisher Credit Agreement and the HB
Service Credit Agreement), and each of the Swisher Guarantors acknowledges that the Bank would not
enter into this Amendment and continue to extend such credit in the absence of the representations
and agreements contained herein.

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ARTICLE VI

GENERAL

     6.1 Full Force and Effect. This Amendment is limited as specified and, except as
specifically set forth herein, shall not constitute a modification, acceptance or waiver of any
other provision of any of the Credit Documents (as defined in each of the Swisher Credit
Agreement and the HB Service Credit Agreement). Each of the Swisher Credit Agreement and the HB
Service Credit Agreement, as amended by the amendments set forth herein, shall continue to be in
full force and effect in accordance with the provisions thereof after giving effect to such
amendments. Any reference to the Swisher Credit Agreement in any of the Security Documents or
other Credit Documents (each as defined in the Swisher Credit Agreement) shall mean the Swisher
Credit Agreement as amended by the Amendment and as may be further amended, modified, restated, or
supplemented from time to time. Any reference to the HB Service Credit Agreement in any of the
Credit Documents (as defined in the HB Service Credit Agreement) shall mean the HB Service Credit
Agreement as amended by the Amendment and as may be further amended, modified, restated, or
supplemented from time to time. This Amendment shall be a Credit Document under (and as defined
in) each of the Swisher Credit Agreement and the HB Service Credit Agreement.

     6.2 Applicable Law. This Amendment shall be governed by and construed in accordance
with the internal laws and judicial decisions of the State of North Carolina.

     6.3 Counterparts; Execution. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when taken together
shall constitute but one instrument. The exchange of copies of this Amendment and of signature
pages by facsimile transmission shall constitute effective execution and delivery of this Amendment
and such copies may be used in lieu of the original Amendment for all purposes. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Amendment.

     6.4 Expenses. Each of Swisher and HB Service, jointly and severally, agrees to pay on
demand all reasonable out-of-pocket expenses incurred by the Bank in connection with the
preparation, execution and delivery of this Amendment, including, without limitation, all
reasonable attorneys’ fees.

     6.5 Further Assurances. Each of the Amendment Parties shall execute and deliver to
the Bank such documents, certificates, and opinions as the Bank may reasonably request to effect
the amendments contemplated by this Amendment and, with respect to the Swisher Credit Agreement, to
continue the existence, perfection and first priority of the Bank’s security interests in the
collateral securing the obligations under the Credit Documents (as defined in the Swisher Credit
Agreement).

     6.6 Headings. The headings of this Amendment are for the purposes of reference only
and shall not affect the construction of this Amendment.

[The remainder of this page is left blank intentionally.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment Agreement, Limited
Consent and Waiver to be executed and delivered by their duly authorized officers all as of the
date first above written.

	 	 	 	 	 
	 	SWISHER INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	HB SERVICE, LLC

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Pages Continued on the Following Page]

 

 

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Cavan J. Harris
 	 
	 	 	Cavan J. Harris 	 
	 	 	Senior Vice President 	 
	 

[Signature Pages Continued on the Following Page]

 

 

	 	 	 	 	 
	 	GUARANTORS:

SWISHER HYGIENE FRANCHISE CORP.

SWISHER PEST CONTROL CORP.

SWISHER MAIDS, INC.

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	SHFC BUFFALO, LLC

SHFC MINNEAPOLIS, LLC

SHFC OKLAHOMA, LLC

SHFC OPERATIONS, LLC

SHFC ARIZONA, LLC

SHFC TEXAS, LLC

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Pages Continued on the Following Page]

 

 

	 	 	 	 	 
	 	SERVICE BALTIMORE, LLC

SERVICE BEVERLY HILLS, LLC

SERVICE BIRMINGHAM, LLC

SERVICE CALIFORNIA, LLC

SERVICE CAROLINA, LLC

SERVICE CENTRAL FL, LLC

SERVICE CHARLOTTE LLC

SERVICE CHATTANOOGA, LLC

SERVICE CINCINNATI, LLC

SERVICE COLUMBIA, LLC

SERVICE COLUMBUS, LLC

SERVICE DC, LLC

SERVICE DENVER, LLC

SERVICE FCS, LLC

SERVICE FLORIDA, LLC

SERVICE FRESNO, LLC

SERVICE GAINESVILLE, LLC

SERVICE GOLD COAST, LLC

SERVICE GREENSBORO, LLC

SERVICE GREENVILLE, LLC

SERVICE GULF COAST, LLC

SERVICE HOUSTON, LLC

SERVICE INDIANAPOLIS, LLC

SERVICE LAS VEGAS, LLC

SERVICE LOUISVILLE, LLC

SERVICE MEMPHIS, LLC

SERVICE MIDATLANTIC, LLC

SERVICE MIDWEST, LLC

SERVICE NASHVILLE, LLC

SERVICE NEW ORLEANS, LLC

SERVICE NEW YORK, LLC

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	SERVICE NORTH, LLC

SERVICE NORTH-CENTRAL, LLC

SERVICE OKLAHOMA CITY, LLC

SERVICE PHILADELPHIA, LLC

SERVICE PHOENIX, LLC

SERVICE RALEIGH, LLC

SERVICE SALT LAKE CITY, LLC

SERVICE SEATTLE, LLC

SERVICE SOUTH, LLC

SERVICE ST. LOUIS, LLC

SERVICE TALLAHASSEE, LLC

SERVICE TAMPA, LLC

SERVICE TRI-CITIES, LLC

SERVICE VIRGINIA, LLC

SERVICE WEST COAST, LLC

 	 
	 	By:  	/s/ Hugh H. Cooper
 	 
	 	 	Name:  	Hugh H. Cooper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Pages Continued on the Following Page]

 

 

	 	 	 	 	 
	 	 	 
	 	                                          /s/ H. Wayne Huizenga
 	 
	 	H. WAYNE HUIZENGAexv4w2

Exhibit 4.2

CERTIFICATE OF DESIGNATION,

RIGHTS AND PREFERENCES

OF THE

SERIES B PREFERRED STOCK

OF

BENTON OIL AND GAS COMPANY

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

     BENTON OIL AND GAS COMPANY, a corporation organized and existing under the General Corporation
Law of the State of Delaware (the “Corporation”), does hereby certify that pursuant to the
authority conferred upon the Board of Directors of the Corporation by Article 4 of the Certificate
of Incorporation, as amended, of the Corporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, its Board of Directors, at a meeting
duly called and held on April 28, 1995, adopted, the following resolution creating a series of
authorized but unissued Preferred Stock, $.01 par value, designated as Series B Preferred Stock:

     RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of Incorporation, the
Board of Directors hereby creates a series of Preferred Stock of the Corporation and hereby fixes
the designation and the amount thereof and the powers, preferences and relative participating,
optional or other special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof, as follows:

     1. Designation and Amount. The shares of such series shall be designated as
“Series B Preferred Stock,” par value $.01 per share, and the number of shares constituting such
series shall be 500,000. Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than that of the shares then outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.

     2. Dividends and Distributions.

          (A) Subject to the prior and superior rights of the holders of any shares of any
series of Preferred Stock ranking prior and superior to the shares of Series B Preferred Stock with
respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the
holders of shares of Common Stock, par value $.01 per share (the “Common Stock”), of the
Corporation, shall be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of
Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per

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share amount of all cash dividends, and 100 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 B Preferred Stock. In the
event the Corporation shall at any time after May 19, 1995 (the “Rights Declaration Date”) (i)
declare or pay any dividend on Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision, combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) 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 B 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 B
Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series B Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

          (C) Dividends shall begin to accrue and be cumulative on outstanding shares of
Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series B 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 B 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 B 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 B Preferred
Stock entitled to receive payment of a dividend or distribution declared thereon, which record date
shall be not more than 30 days prior to the date fixed for the payment thereof.

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

          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) 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 B 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,

2

 

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 set forth herein or as required by law, the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of shareholders of the Corporation.

          (C) Except as otherwise set forth herein or as required by law, the holders of
Series B 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 the holders of Common Stock as set
forth herein) for taking any corporation action.

     4. Certain Restrictions.

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

          (i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B 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 B Preferred Stock, except dividends paid ratably on the Series B 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.

          (iii) redeem or purchase or otherwise acquire for consideration shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) with the
Series B 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 B Preferred Stock; or

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

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

     5. Reacquired Shares. Any shares of Series B 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

3

 

of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.

     6. Liquidation. Dissolution or Winding Up.

          (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of Common Stock or of other
stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock
shall have received, per share, the greater of $100.00 or 100 times (subject to adjustment as
hereinafter set forth) the aggregate amount to be distributed per share of Common Stock, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment (the “Series B Liquidation Preference”).

          (B) In the event that upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, there are not sufficient assets remaining to permit payment in full
of the Series B Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity (either as to dividends or upon, liquidation,
dissolution or winding up) with the Series B Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity stock in proportion to the amount to which the
holders of all such shares are entitled to receive upon such liquidation, dissolution or winding
up.

          (C) In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, by reclassification or otherwise, then in each such case the aggregate amount to which
holders of Series B Preferred Stock were entitled immediately prior to such event 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.

     7. Consolidation. Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series B 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 100 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 after the Rights Declaration
Date declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) 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 B 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.

     8. Redemption. The shares of Series B Preferred Stock shall not be
redeemable.

4

 

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

     10. Fractional Shares. Series B Preferred Stock may be issued in fractions
(including, but not limited to, one hundredths) of a share which shall entitle the holder, in
proportion to such holder’s fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of holders of Series B
Preferred Stock.

     11. Amendment. The Certificate of Incorporation and the Bylaws of the
Corporation shall not be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series B Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares
of Series B Preferred Stock, voting separately as a class.

     IN WITNESS WHEREOF, Benton Oil and Gas Company has caused this Certificate of
Designation, Rights and Preferences of the Series B Preferred Stock to be duly signed by its
President and attested to by its Secretary and has caused its corporate seal to be affixed hereto
this 28th day of April, 1995.

	 	 	 	 	 
	 	BENTON OIL AND GAS COMPANY

 	 
	 	By:  	 	 
	 	 	A.E. Benton, Chairman of the Board, 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	Attest:

 	 
	
 	 
	Toni L. Jackson, Secretary 	 
	 	 	 
	 

5

 

EXHIBIT B

[Form of Rights Certificate]

			
	 	 	 
	Certificate No. R-                     

Rights
	 	                    

NOT EXERCISABLE AFTER APRIL 28, 2015 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE THIRD AMENDED AND RESTATED RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE THIRD AMENDED AND RESTATED RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE THIRD
AMENDED AND RESTATED RIGHTS AGREEMENT.] 1

RIGHTS CERTIFICATE

HARVEST NATURAL RESOURCES, INC.

     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 Third Amended and Restated Rights Agreement, dated as of August 23, 2007 (the
“Rights Agreement”), between Harvest Natural Resources, Inc., a Delaware corporation (the
“Company”), and Wells Fargo Bank, N. A. (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 the
Expiration Date (as such term is defined in the Rights Agreement) at the office of the Rights
Agent, or its successors as Rights Agent, designated for such purpose, one one-hundredth of a
fully-paid non-assessable share of Series B Preferred Stock, $.01 par value (the “Preferred
Shares”), of the Company (or other securities or property, as provided in the Rights Agreement), at
a purchase price of $60 per one one-hundredth of a Preferred Share (the “Purchase Price”), upon
presentation and surrender of this Rights Certificate with the appropriate Form of Election to
Purchase and Certificate duly executed. The number of Rights evidenced by this Rights Certificate
(and the number of Preferred Shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of the close of
business on August 23, 2007, based on the Preferred Shares as constituted at such date.

     As provided in the Rights Agreement, the Purchase Price and the number of Preferred Shares (or
other securities or property which may be purchased upon the exercise of the Rights evidenced by
this Rights Certificate) are subject to modification and adjustment upon the happening of certain
events.

     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights,

 

			
	1	 	The portion of the legend in brackets shall
be inserted only if applicable.

6

 

limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and are also available upon
written request to the Company.

     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may, but are not required to, be redeemed by the Company at a redemption price of $.01 per Right.

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

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

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

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

	 	 	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	 	 	HARVEST NATURAL RESOURCES, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 
	Title:
	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	Countersigned:	 	 	 	 	 	 
	WELLS FARGO BANK, N. A.,	 	 	 	 	 	 
	as Rights Agent	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	Authorized Signatory	 	 	 	 	 	 

7

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificates.)

     FOR VALUE RECEIVED,
                                        
hereby sells, assigns and transfers unto

 

 

      

(Please print name and address of transferee)

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

	 	 	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 	 	 
	Signature(s) Guaranteed:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

8

 

CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

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

     (2) after due inquiry and to the best knowledge of the undersigned, the undersigned [ ] did [
] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature

NOTICE

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

9

 

FORM OF ELECTION TO PURCHASE

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

TO: HARVEST NATURAL RESOURCES, INC.

     The
undersigned hereby irrevocably elects to exercise
                      
                              Rights represented by this
Rights Certificate to purchase the Preferred Shares (or such other securities of the Company)
issuable upon the exercise of such Rights and requests that certificate for such Preferred Shares
(or other securities of the Company) be issued in the name of:

 

 

 

(Please print name and address)

 

(Please insert social security or other identifying number)

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

 

 

 

(Please print name and address)

 

(Please insert social security or other identifying number)

	 	 	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 	 	 
	Signature(s) Guaranteed:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

10

 

CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and

     (2) after due inquiry and to the best knowledge of the undersigned, the undersigned [ ] did [
] did not acquire the Rights evidenced by this Rights Certificate from any Person who, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

	 	 	 	 	 	 	 	 	 

	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Signature	 	 

NOTICE

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

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

11

 

EXHIBIT
C

HARVEST NATURAL RESOURCES, INC.

Summary of Preferred Share Purchase Rights

     On April 28, 1995, the Board of Directors of Harvest Natural Resources, Inc. (the
“Company”) declared a dividend distribution of one preferred share purchase right (the “Right”) for
each outstanding share of common stock, $.01 par value, of the Company (the “Common Shares”) to
shareholders of record as of the close of business on May 19, 1995 (the “Record Date”). The Board
of Directors of the Company further declared that one Right be distributed with each Common Share
issued after the Record Date but prior to the Distribution Date (as defined below) or the earlier
expiration, exchange, redemption or termination of the Rights. On September 16, 2003, the Board of
Directors of the Company approved an amendment and restatement of the rights agreement governing
the Rights. Effective March 31, 2005, the Board of Directors of the Company approved a second
amendment and restatement of the rights agreement governing the Rights, which, among other things,
extended the term of the original Rights Agreement to April 28, 2015. Effective August 23,
2007, the Board of Directors of the Company approved a third amendment and restatement of the
rights agreement governing the Rights (the “Third Amended and Restated Rights Agreement”). Under
the Third Amended and Restated Rights Agreement, and except as set forth below, each Right entitles
the registered holder to purchase from the Company one one-hundredth of a share of Series B
Preferred Stock, $.01 par value, of the Company (the “Preferred Shares”) at a price of $60 per one
one-hundredth of a Preferred Share (the “Purchase Price”), subject to adjustment. The description
and terms of the Rights are set forth in the Third Amended and Restated Rights Agreement, between
the Company and Wells Fargo Bank, N. A., as Rights Agent (the “Rights Agent”).

     Initially, the Rights will be attached to the Common Shares then outstanding, and no separate
certificates evidencing the rights (“Rights Certificates”) will be issued. The Rights will separate
from the Common Shares, Rights Certificates will be issued and the Rights will become exercisable
upon the earlier to occur of (i) 10 days following the first date (the “Shares Acquisition Date”)
of a public announcement that a person or group of affiliated or associated persons (an “Acquiring
Person”) has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Shares of the Company (with certain exceptions), or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior to such time as any
person or group becomes an Acquiring Person) following the commencement or announcement of an
intention to make a tender offer or exchange offer for Common Shares of the Company the
consummation of which would result in the beneficial ownership by a person or group of affiliated
or associated persons of 15% or more of such outstanding Common Shares (the earlier of such dates
being referred to as the “Distribution Date”). However, a person or group of affiliated or
associated persons will not be deemed to be an “Acquiring Person” (i) as a result of share
purchases by the Company reducing the number of Common Shares outstanding (provided such person or
group does not acquire additional Common Shares), (ii) if such person or group inadvertently became
an Acquiring Person and so notifies the Board of Directors within five business days and within two
business days after such notice divests itself of enough Common Shares so as to no longer have the
beneficial ownership of 15% of the outstanding Common Shares, or (iii) if within ten business days
after the Company learns
that such person or group may have become an Acquiring Person, the Board of Directors
determines that such person or group should not be deemed an Acquiring Person.

     Until the Distribution Date, the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding on or after the Record Date, by such Common Share
certificates with a copy of this Summary of Rights attached thereto. The Third Amended and
Restated Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the
Common

12

 

Shares. Until the Distribution Date (or earlier
redemption, exchange, expiration or termination of the Rights), new Common Share certificates
issued after the date of the Third Amended and Restated Rights Agreement upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Third Amended and Restated
Rights Agreement by reference. Until the Distribution Date (or earlier redemption, exchange,
expiration or termination of the Rights), the surrender for transfer of any certificates for Common
Shares outstanding on or after the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate Rights Certificates will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date, and such separate Rights
Certificates alone will evidence the Rights.

     The Rights are not exercisable until the Distribution Date. The Rights will expire at the
close of business on April 28, 2015, unless earlier redeemed, exchanged or terminated as provided
below.

     The Purchase Price payable, and the number of Preferred Shares 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 Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for Preferred Shares, certain convertible securities or securities having
the same or more favorable rights, privileges and preferences to the Preferred Shares at less than
the current market price of the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).

     In the event that a Person becomes an Acquiring Person (other than pursuant to a tender offer
or exchange offer for all outstanding Common Shares at a price and on terms determined by at least
a majority of the members of the Company’s Board of Directors who are not officers of the Company
and are not Acquiring Persons or affiliates or associates thereof to be both adequate and otherwise
in the best interests of the Company and its shareholders (a “Permitted Offer”)), then proper
provision will be made so that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person or affiliates or associates thereof) will thereafter have the right to receive,
upon exercise, that number of Common Shares of the Company having a market value of two times the
exercise price of the Right. In the event that the Company does not have a sufficient number of
Common Shares available, the Company may, among other things, instead substitute cash, assets or
other securities for the Common Shares into which the Rights would have otherwise been exercisable.

     In the event that, after the Shares Acquisition Date, the Company consolidates or merges with
another entity (whether or not the Company is the surviving corporation) or the Company sells or
otherwise transfers 50% or more of its consolidated assets or earnings power, proper provision will
be made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person
or affiliates or associates thereof) will thereafter have the right to receive, upon exercise, that
number of Common Shares of either the Company, in the event that the Company is the surviving
corporation of a merger or consolidation, or of the acquiring company (or, in the event there is
more than one acquiring company, the acquiring company receiving the greatest portion of the assets
or earning power transferred), which at the time of such transaction would have a market value of
two times the exercise price of the Right (unless the transaction satisfies certain conditions, and
is consummated with a person pursuant to a Permitted Offer, in which case the Rights will
terminate).

     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 Preferred
Shares

13

 

will be issued (other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, 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
Shares on the last trading date prior to the date of exercise.

     At any time prior to the earliest to occur of: (i) the tenth day following the Shares
Acquisition Date or (ii) the Expiration Date, 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 ordering redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to receive the Redemption
Price.

     Subject to applicable law, the Board of Directors, at its option, may, at any time after a
person or group becomes an Acquiring Person but prior to the acquisition by such person or group of
50% or more of the outstanding Common Shares, exchange all or part of the then outstanding Rights
(other than Rights beneficially owned by an Acquiring Person or affiliates or associates thereof)
for Common Shares at an exchange ratio of one Common Share per Right, subject to adjustment.

     The Preferred Shares purchasable upon exercise of the Rights will not be redeemable and will
be, in ranking as to dividend and liquidation preferences, senior to the Common Shares, but junior
to any other series of preferred stock the Company may issue (unless otherwise provided in the
terms of such preferred stock). Each Preferred Share will have a preferential quarterly dividend in
an amount equal to 100 times the dividend declared on each Common Share but in no event less than
$10.00. In the event of liquidation, the holders of Preferred Shares will be entitled to a
preferred liquidation payment equal to the greater of $100.00 or 100 times the payment made per
each Common Share. Each Preferred Share will have 100 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times the amount and type of
consideration received per Common Share. The rights of the Preferred Shares as to dividends,
liquidation and voting, and in the event of mergers and consolidations, are protected by customary
antidilution provisions. Fractional Preferred Shares
will be issuable; however, the Company may elect to distribute depositary receipts in lieu of
such fractional shares. In lieu of fractional shares (other than fractions that are multiples of
one one-hundredth of a share), an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of exercise.

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

     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 at any time to cure any ambiguity or to correct or supplement
any defective or inconsistent provisions and may, prior to the Distribution Date, be amended to
change or supplement any other provision in any manner that the Company may deem necessary or
desirable. After the Distribution Date, the terms of the Rights may be amended (other than to cure
ambiguities or to correct or supplement defective or inconsistent provisions) only so long as the
amendment does not adversely affect the interests of the holders of the Rights (other than the
Acquiring Person).

     The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a
person or group that attempts to acquire the Company without conditioning the offer on a
substantial number of Rights being acquired. The Rights should not interfere with any merger or
other business combination approved by the Board of Directors of the Company because the Board of
Directors may, at its option, at any time prior to ten days after the Shares Acquisition Date,
redeem all but not less than all the then outstanding Rights at the Redemption Price.

14

 

     A copy of the Third Amended and Restated Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to an amendment to a Registration Statement on Form 8-A. A
copy of the Third Amended and Restated Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Third Amended and Restated Rights Agreement, which is hereby
incorporated herein by reference.

15

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