Document:

Unassociated Document

STOCK
PURCHASE AGREEMENT

 

	
      1.
	
      SUBSCRIPTION:
      The undersigned, _____________,
      (the "Subscriber"), in consideration of ______________
      hereby purchases ______________
      (___________)
      shares of Common Stock (the "Shares") of TRIANGLE PETROLEUM CORPORATION, a
      Nevada corporation (the "Company") with its principle place of business in
      Calgary, Alberta, Canada. This agreement is subject to the following terms
      and conditions:

	
      
	
      a.
	
      No
      certificates for Shares shall be transferred to the undersigned until the
      entire consideration is received by the
Company.

	
      
	
      b.
	
      The
      Shares represented by this certificate must be held for a period of at
      least one (1) year and are deemed “restricted securities” as that term is
      defined in Rule 144 of the Securities Act of 1933. The Shares may only be
      resold in compliance with Regulation S of the Securities Act of 1933
      (Regs. 901-905).

	
      
	
      c.
	
      The
      parties hereto are relying exclusively upon Regulation S of the Securities
      Act of 1933 (Regs. 901-905) for the offer and sale of the Shares.
      

	
      2.
	
      REPRESENTATIONS
      AND WARRANTIES:
      The undersigned Subscriber hereby represents and warrants to the
      Company:

	
      
	
      a.
	
      The
      undersigned Subscriber understands that the Company's SHARES HAVE NOT BEEN
      APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE
      COMMISSION OR ANY STATE SECURITIES AGENCIES AND NO REGISTRATION STATEMENT
      HAS BEEN FILED WITH ANY REGULATORY AGENCY.

	
      
	
      b.
	
      The
      undersigned Subscriber is not an underwriter and would be acquiring the
      Company's Shares solely for investment for his or her own account and not
      with a view to, or for, resale in connection with any distribution with in
      the meaning of the federal securities act, the state securities acts or
      any other applicable state securities acts;

	
      
	
      c.
	
      The
      undersigned Subscriber is not a person in the United States of America and
      at the time the buy order was originated, the Subscriber was outside the
      United States of America. The undersigned Subscriber is not a citizen of
      the United States (a U.S. Person) as that term is defined in Reg. S of the
      Securities Act of 1933 and was not formed by a U. S. person principally
      for the purpose of investing in securities not registered under the
      Securities Act of 1933.

 

1

 

	
      
	
      d.
	
      The
      undersigned Subscriber understands the speculative nature and risks of
      investments associated with the Company, and confirms that the Shares
      would be suitable and consistent with his or her investment program and
      that his or her financial position enable him or her to bear the risks of
      this investment;

	
      
	
      e.
	
      To
      the extent that any federal, and/or state securities laws shall require,
      the Subscriber hereby agrees that any securities acquired pursuant to this
      Agreement shall be without preference as to
assets;

	
      
	
      f.
	
      The
      certificate for Shares will contain a legend that transfer is prohibited
      except in accordance with the provisions of Regulation
  S.

	
      
	
      g.
	
      The
      Subscriber has had the opportunity to ask questions of the Company and has
      received all information from the Company to the extent that the Company
      possessed such information, necessary to evaluate the merits and risks of
      any investment in the Company. Further, the Subscriber acknowledges
      receipt of: (1) all material books, records and financial statements of
      the Company; (2) all material contracts and documents relating to the
      proposed transaction; (3) all information filed with the United States
      Securities and Exchange Commission; and, (4) an opportunity to question
      the appropriate executive officers or
partners;

	
      
	
      h.
	
      The
      Subscriber has satisfied the suitability standards and securities laws
      imposed by government of
______________________;

	
      
	
      i.
	
      The
      Subscriber has adequate means of providing for his current needs and
      personal contingencies and has no need to sell the Shares in the
      foreseeable future (that is at the time of the investment, Subscriber can
      afford to hold the investment for an indefinite period of time);
      

2

 

	
      
	
      j.
	
      The
      Subscriber has sufficient knowledge and experience in financial matters to
      evaluate the merits and risks of this investment and further, the
      Subscriber is capable of reading and interpreting financial statements.
      Further, Subscriber is a “sophisticated investor” as that term is defined
      in applicable court cases and the rules, regulations and decisions of the
      United States Securities and Exchange
Commission.

	
      
	
      k.
      
	
      The
      offer and sale of the Shares referred to herein is being made outside the
      United States within the meaning of and in full compliance with Regulation
      S.

	
      
	
      l.
	
      The
      Subscriber is not a U. S. person within the meaning of Regulation S and is
      not acquiring the Shares for the account or benefit of any U. S. person;
      and,

	
      
	
      m.
	
      The
      Subscriber agrees to resell such Shares only in accordance with the
      provisions of Regulation S, pursuant to registration under the Securities
      Act of 1933, as amended, or pursuant to an available exemption from
      registration.

3. STATUS
OF PURCHASER:

	
      |_|
	
      I
      am not a member of, or an associate or affiliate of a member of the
      National Association of Securities Dealers.

	
      |_|
	
      I
      am a member of, or an associate or affiliate of a member of the National
      Association of Securities Dealers. Attached is a copy of an agreement
      signed by the principal of the firm with which I am affiliated agreeing to
      my participation in this investment.

	
      4.
	
      MISCELLANEOUS:
      This Stock Purchase Agreement shall be binding upon the parties hereto,
      their heirs, executors, successors, and legal representatives. The law of
      the state of Nevada, United States of America shall govern the rights of
      the parties to this Agreement and the exclusive jurisdiction and venue of
      any action brought in connection with this agreement will be the federal
      and/or state courts of the State of Nevada.

The
undersigned Subscriber hereby declares and affirms that he/she/they have read
the within and foregoing Stock Purchase Agreement, is familiar with the contents
thereof and agrees to abide by the terms and conditions set forth therein, and
knows the statements therein to be true and correct.

 

3

IN
WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
this ________ day of
________, 2005
at 

 

 

	 		 
	 	 	
       SUBSCRIBER(S)

       

	 	 	
      

    
	 	 	 
      

      
	 	   (Additional
      Party if necessary)
		 	 	
	 	 	 	 
		 	
      

    
	 	  Address
	 	 	
      
      

      

       

	 	 	
      

    
	 	  Area Code and Telephone
      Number
	 	 	 	 
	
       

      ACCEPTED BY
    SELLER:
	 	 	
	 	 	 	 

	TRIANGLE PETROLEUM
      CORPORATION	 	 	 
	 	 	 	 
	 	 	 	 
	By:
      	 	 	
	
      

    	 	 	

 

4Unassociated Document

Exhibit
4.1

Teton
Petroleum Company

AND

COMPUTERSHARE
INVESTOR SERVICES, LLC.,

as
Rights Agent

RIGHTS
AGREEMENT

Dated
as of June 3, 2005

 

TABLE
OF CONTENTS

 

	 RIGHTS
      AGREEMENT	
      1

	 	
      1.
	
      Certain
      Definitions
	
      1

	 	
      2.
	
      Appointment
      of Rights Agent.
	
      6

	 	
      3.
	
      Issuance
      of Right Certificates.
	
      6

	 	
      4.
	
      Form
      of Rights Certificates.
	
      8

	 	
      5.
	
      Countersignature
      and Registration.
	
      9

	 	
      6.
	
      Transfer.
	
      9

	 	
      7.
	
      Exercise
      of Rights; Purchase Price; Expiration Date of
    Rights.
	
      10

	 	
      8.
	
      Cancellation
      and Destruction of Rights Certificates.
	
      12

	 	
      9.
	
      Reservation
      and Availability of Shares of Preferred Stock.
	
      12

	 	
      10.
	
      Preferred
      Stock Record Date.
	
      13

	 	
      11.
	
      Adjustments
      to Number and Kind of Shares.
	
      14

	 	
      12.
	
      Certification
      of Adjustments.
	
      23

	 	
      13.
	
      Consolidation,
      Merger or Sale or Transfer of Assets or Earning
      Power.
	
      24

	 	
      14.
	
      Fractional
      Rights and Fractional Shares.
	
      27

	 	
      15.
	
      Rights
      of Action.
	
      28

	 	
      16.
	
      Agreement
      of Right Holders.
	
      29

	 	
      17.
	
      Rights
      Certificate Holder Not Deemed a Stockholder.
	
      30

	 	
      18.
	
      Concerning
      the Rights Agent.
	
      30

	 	
      19.
	
      Merger
      or Consolidation or Changed Name of Rights Agent.
	
      31

	 	
      20.
	
      Duties
      of Rights Agent.
	
      31

	 	
      21.
	
      Change
      of Rights Agent.
	
      34

	 	
      22.
	
      Issuance
      of New Right Certificates.
	
      34

	 	
      23.
	
      Redemption.
	
      35

	 	
      24.
	
      Exchange
      of Rights for Common Stock.
	
      36

	 	
      25.
	
      Notice
      of Proposed Actions.
	
      37

	 	
      26.
	
      Notices.
	
      38

	 	
      27.
	
      Supplements
      and Amendments.
	
      39

	 	
      28.
	
      Successors.
	
      39

	 	
      29.
	
      Benefits
      of this Rights Agreement.
	
      39

	 	
      30.
	
      Determinations
      and Actions by the Board of Directors.
	
      40

	 	
      31.
	
      Governing
      Law.
	
      40

	 	
      32.
	
      Counterparts.
	
      40

	 	
      33.
	
      Descriptive
      Headings.
	
      40

	 	
      34.
	
      Severability.
	
      40

	 	
       
	
       
	
       

	 EXHIBIT
      A	
      A-1

       

	 EXHIBIT
      B	
      B-1

       

	 EXHIBIT
      C	
      C-1

       

 

RIGHTS
AGREEMENT

 

This
Rights Agreement (“Rights Agreement”), is dated as of June 3, 2005, between
Teton Petroleum Company, a Delaware corporation (the “Company”), and
Computershare Investor Services, LLC., a Delaware limited liability company as
rights agent (the “Rights Agent”).

 

W
I T N E S S E T H:

WHEREAS,
the Board of Directors of the Company on June 2, 2005 (i) authorized the
issuance and declared a dividend of one right (“Right”) for each share of the
common stock, par value $0.001 per share, of the Company outstanding as of the
Close of Business (as such term is hereinafter defined) on June 14, 2005 (the
“Record Date”), each Right representing the right to purchase one one-hundredth
of a share of Series C Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A upon the terms and subject to the conditions hereinafter set
forth, and (ii) further authorized the issuance of one Right with respect to
each share of Common Stock of the Company that shall become outstanding between
the Record Date, and the Distribution Date (as such term is hereinafter
defined);

 

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

 

1.  Certain
Definitions

 

For
purposes of this Rights Agreement the following terms shall 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 fifteen percent (15%)
or more of the outstanding Common Stock of the Company, without the prior
approval of the Company’s Board of Directors; provided, however, that in no
event shall a Person who or which, together with all Affiliates and Associates
of such Person, is the Beneficial Owner of less than 15% of the Company’s
outstanding Common Stock, become an Acquiring Person solely as a result of a
reduction of the number of shares of outstanding Common Stock, including
repurchases of outstanding shares of Common Stock by the Company, which
reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such Person, provided, further, that if a Person shall
become the Beneficial Owner of 15% or more of the Company’s outstanding Common
Stock then outstanding solely by reason of a reduction of the number of shares
of outstanding Common Stock, and shall thereafter become the Beneficial Owner of
any additional shares of Common Stock of the Company, then such Person shall be
deemed to be an Acquiring Person unless upon the consummation of the acquisition
of such additional shares of Common Stock such person does not own 15% or more
of the shares of Common Stock then outstanding. An Acquiring Person shall not
include an Exempt Person (as such term is hereinafter defined). Notwithstanding
the foregoing, if (i) either (X) the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an Acquiring Person or (B) such Person
was aware of the extent of its Beneficial Ownership but had no actual knowledge
of the consequences of such Beneficial Ownership under this Rights Agreement)
and without any intention of changing or influencing control of the Company, or
(Y) within two Business Days of being requested by the Company to advise the
Company regarding same, such Person certifies in writing that such Person
acquired Beneficial Ownership of 15% or more of the Company’s outstanding Common
Stock inadvertently or without knowledge of the terms of the Rights, and (ii)
such Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an “Acquiring Person” for any
purposes of this Rights Agreement. Notwithstanding the foregoing, any person who
beneficially owned 15% but less than 20% of the outstanding Common Stock as of
the effective date of this Rights Agreement will not be deemed to be an
“Acquiring Person” unless such person acquires 20% or more of the outstanding
Common Shares of the Company.

 

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

 

(c)  A Person
shall be deemed the “Beneficial Owner” of 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, directly or
indirectly, 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), whether or not in writing, or upon the exercise of
conversion rights, exchange rights, rights (other than the 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, to dispose of, or has “beneficial ownership”
of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, or any comparable or successor rule), including pursuant
to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to “beneficially own”, any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or

 

2

(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 (whether or not in writing) for the purpose of
acquiring, holding, voting except as described in the proviso to clause (B) of
subparagraph (ii) of this Section 1(c) or disposing of any securities of the
Company; provided, however, that no Person who is an officer, director or
employee of an Exempt Person shall be deemed, solely by reason of such Person’s
status or authority as such, to be the Beneficial Owner of, to have “beneficial
ownership” of or to “beneficially own” any securities that are “beneficially
owned” (as defined in this Section 1(c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director
or employee of an Exempt Person.

 

For all
purposes of this Rights Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including any calculation for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date
hereof.

 

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

 

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

 

(f)  “Common
Stock” when used with reference to the Company shall mean the common stock, par
value $0.001 per share, of the Company. “Common Stock” when used with reference
to any Person other than the Company which shall be organized in corporate form
shall mean the capital stock or other equity security with the greatest per
share voting power of such Person or, if such Person is a Subsidiary of or is
controlled by another Person, the Person which ultimately controls such
first-mentioned Person. “Common Stock” when used with reference to any Person
other than the Company which shall not be organized in corporate form shall mean
units of beneficial interest which shall represent the right to participate in
profits, losses, deductions and credits of such Person and which shall be
entitled to exercise the greatest voting power per unit of such
Person.

 

3

(g)   “Common
Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
hereof.

 

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

 

(i)  “Current
Market Price” shall have the meaning set forth in Section 11(d)
hereof.

 

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

 

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

 

(l)  “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(m)  “Exempt
Person” shall mean the Company or any Subsidiary of the Company, including,
without limitation, in its fiduciary capacity, any employee benefit plan or
employee or director stock plan of the Company or of any Subsidiary of the
Company, or any Person, organized, appointed, established or holding Common
Stock for or pursuant to the terms of any such plan or any Person funding other
employee benefits for employees of the Company or any Subsidiary of the
Company.

 

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

 

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

 

(p)  “Flip-In
Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B) or
11(a)(ii)(C) hereof.

 

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

 

(r)  “Flip-Over
Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a)
hereof.

 

(s)  “NASDAQ”
shall have the meaning set forth in Section 9(b) hereof. 

 

(t)  “Person”
shall mean any individual, firm, corporation, partnership, trust, limited
liability company or other entity, and shall include any successor (by merger or
otherwise) thereof or thereto.

 

4

(u)  “Preferred
Stock” shall mean the Series C Preferred Stock, $0.001 par value, of the Company
having the rights, powers and preferences set forth in Exhibit A hereto, and, to
the extent that there is not a sufficient number of shares of Series C Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, $0.001 par value, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series C Preferred
Stock.

 

(v)  “Preferred
Stock Equivalent” shall have the meaning set forth in Section 11(b)
hereof.

 

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

 

(x)  “Purchase
Price” shall have the meaning set forth in Section 4(a) hereof.

 

(y)  “Record
Date” shall have the meaning set forth in the Recitals within this Rights
Agreement.

 

(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) hereof.

 

(bb)  “Rights
Certificate” shall have the meaning set forth in Section 3(a)
hereof.

 

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

 

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

 

(ee)  “Stock
Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such or such
earlier date as a majority of the directors shall become aware of the existence
of an Acquiring Person.

 

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

 

(gg)  “Subsidiary”
of a Person shall mean any corporation or other entity of which securities or
other ownership interests having ordinary voting power sufficient to elect a
majority of the board of directors or other persons performing similar functions
are beneficially owned, directly or indirectly, by such Person and any
corporation or other entity that is otherwise controlled by such
Person.

 

5

(hh)  “Summary
of Rights” shall have the meaning set forth in Section 3(b) hereof.

 

(ii)  “Trading
Day” shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business
Day.

 

(jj)  “Triggering
Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B) or
11(a)(ii)(C) or Section 13 hereof.

 

(kk)  “Voting
Power” shall mean the voting power of all securities of the Company then
outstanding and generally entitled to vote for the election of directors of the
Company.

 

Any
determination required by the definitions contained in this Section 1 shall be
made by the Board of Directors of the Company in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights. Notwithstanding anything contained herein to the contrary, the Rights
Agent is entitled always to assume that the Company’s Board of Directors acted
in good faith and shall be fully protected and incur no liability in reliance
thereon.

 

2.  Appointment
of Rights Agent. 

 

The
Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint a co-Rights
Agent as it may deem necessary or desirable. In the event the Company appoints
one or more co-Rights Agent(s), the respective duties of the Rights Agent and
any co-Rights Agent shall be as the Company shall determine. The Rights Agent
shall have not duty to supervise, and in no event shall be liable for, the acts
or omissions of any such co-Rights Agent.

 

3.  Issuance
of Right Certificates.

 

(a)  Until the
earlier of (i) the Stock Acquisition Date (or, if the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or (ii)
close of Business the tenth Business Day (or such later date as may be
determined by action of the Company’s Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public announcement
of the intent of any Person (other than an Exempt Person) to commence (which
intention to commence remains in effect for five business days after such
announcement), a tender or exchange offer upon the successful consummation of
which such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the outstanding Common Stock (irrespective of
whether any shares are actually purchased pursuant to any such offer) (including
any such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the “Distribution Date”), (x) the Rights will be evidenced (subject to the
provisions of Section 3(c) hereof) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock and not by separate
Right Certificates, and (y) each Right will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date and receipt by
the Rights Agent of a list of the record holders of the Common Stock, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Company, to the address of such holder shown on such
records, a Right certificate in substantially the form of Exhibit B hereto (a
“Right Certificate”) evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date the Rights will be evidenced solely
by such Right Certificates.

 

6

(b)  On the
Record Date, or as soon as practicable thereafter, the Company will send a copy
of a Summary of Rights to Purchase Preferred Stock, substantially in the form
attached hereto as Exhibit C (a “Summary of Rights”), by first-class, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business
on the Record Date, at the address of such holder shown on the records of the
Company.

 

(c)  Rights
shall be issued in respect of all shares of Common Stock that are issued (either
as an original issuance or from the Company’s treasury) after the Record Date
prior to the earlier of the Distribution Date or the Expiration Date. With
respect to certificates representing such shares of Common Stock, the Rights
will be evidenced by such certificates for Common Stock registered in the names
of the holders thereof together with the Summary of Rights. Until the
Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date
(with or without a copy of the Summary of Rights attached thereto), shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby.

 

(d)  Certificates
issued for Common Stock (including, without limitation, certificates issued upon
transfer or exchange of Common Stock) after the Record Date but prior to the
earlier of the Distribution Date or the 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 the Rights Agreement between Teton Petroleum Company and
Computershare Investor Services, LLC., as Rights Agent, dated as of June 3,
2005, as the same may be amended from time to time (the “Rights Agreement”), the
terms of which are incorporated herein by reference and a copy of which is on
file at the principal executive office of Teton Petroleum 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. Teton Petroleum Company will mail to the holder of this certificate
a copy of the Rights Agreement without charge after receipt by it of a written
request therefor. Under certain circumstances as provided in the Rights
Agreement, Rights issued to, beneficially owned by or transferred to any Person
who is or becomes an Acquiring Person (as such terms are defined in the Rights
Agreement) or an Associate or Affiliate (as such terms are defined in the Rights
Agreement) thereof and certain transferees thereof will be null and void and
will no longer be transferable.

 

7

With
respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock no longer outstanding.

 

Notwithstanding
this subsection (d), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder
of the Rights.

 

4.  Form
of Rights Certificates.

 

(a)  The
Rights Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof), when, as and if issued, shall
be substantially in the form set forth in 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 Rights Agreement and which do not
affect the rights, duties or responsibilities of the Rights Agent, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11, 13 and 22 hereof, the Rights Certificates evidencing
the Rights issued on the Record Date whenever such certificates are issued,
shall be dated as of the Record Date and the Rights Certificates evidencing
Rights to holders of record of Common Stock issued after the Record Date shall
be dated as of the Record Date but shall also be dated to reflect the date of
issuance of such Right Certificate. On their face, Rights Certificates shall
entitle the holders thereof to purchase, for each Right, one one-hundredth of a
share of Preferred Stock, or other securities or property as provided herein, as
the same may from time to time be adjusted as provided herein, at the price per
one one-hundredth of a share of Preferred Stock of $22.00 as the same may from
time to time be adjusted as provided herein (the “Purchase Price”).

 

(b)  Notwithstanding
any other provision of this Rights Agreement, any Rights Certificates that
represents Rights that are or were at any time on or after the earlier of the
Stock Acquisition Date or the Distribution Date beneficially owned by an
Acquiring Person or any Affiliate or Associate thereof (or any transferee of
such Rights) shall have impressed on, printed on, written on or otherwise
affixed to it (if the Company or the Rights Agent has knowledge that such Person
is an Acquiring Person or an Associate or Affiliate thereof or transferee of
such Persons or a nominee of any of the foregoing) the following
legend:

 

8

The
beneficial owner of the Rights represented by this Rights Certificate is an
Acquiring Person or an Affiliate or Associate (as such terms are defined in the
Rights Agreement) of an Acquiring Person or a subsequent holder of such Rights
Certificates beneficially owned by such Persons. Accordingly, this Right
Certificate and the Rights represented hereby are null and void and will no
longer be transferable as provided in the Rights Agreement.

 

The
provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Rights
Certificates.

 

5.  Countersignature
and Registration.

 

(a)  The
Rights Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, its Chairman or its Chief Financial Officer, either manually
or by facsimile signature, and have affixed thereto the Company’s seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned, either manually or by facsimile, 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 Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights 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 Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights 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 and after receipt by the Rights Agent of all relevant
information, the Rights Agent will keep or cause to be kept, at one of its
offices designated for such purposes, records for registration and transfer of
the Rights Certificates issued hereunder. Such records shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates, the date of
each of the Rights Certificates and the certificate numbers for each of the
Rights Certificates. 

 

6.  Transfer. 

 

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

 

9

(a)  Subject
to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time after
the Close of Business on the Distribution Date and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates (other
than Rights Certificates representing Rights that have become null and void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be (i) transferred or (ii) split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock or
other securities as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer any Rights Certificate shall surrender the Rights Certificate at the
office of the Rights Agent designated for such purposes with the form of
assignment on the reverse side thereof duly endorsed (or enclose with such
Rights Certificate a written instrument of transfer in form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such signature guaranteed by a
member of a securities approved medallion program. Any registered holder
desiring to split up, combine or exchange any Rights Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be split up, combined or exchanged at the
office of the Rights Agent designated for such purposes. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e), 11 and 14 hereof, countersign (by
manual or facsimile signature) and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates. The Rights Agent shall have
no duty or obligation under this Section unless and until it is satisfied that
all such taxes and/or governmental charges have been paid.

 

(b)  Subject
to the provisions of Section 11(a)(ii) hereof, upon receipt by the Company and
the Rights Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security satisfactory to them, and, if requested
by the Company, reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.

 

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

 

(a)  Subject
to Section 11(a)(ii) hereof, the Rights shall become exercisable, and may be
exercised to purchase Preferred Stock, except as otherwise provided herein, in
whole or in part at any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase on the reverse side
thereof duly executed (with such signature duly guaranteed), to the Rights Agent
at the office of the Rights Agent designated for such purpose, together with
payment of the Purchase Price with respect to each Right exercised, subject to
adjustment as hereinafter provided, at or prior to the Close of Business on the
earlier of (i) June 2, 2008 (the “Final Expiration Date”), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (such date being
herein referred to as the “Redemption Date”) or (iii) the time at which all such
Rights are exchanged as provided in Section 24 hereof (the earliest of (i), (ii)
and (iii) being herein referred to as the “Expiration Date”).

 

10

(b)  The
Purchase Price and the number of shares of Preferred Stock or other securities
or consideration to be acquired upon exercise of a Rights shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Purchase Price shall be payable in lawful money of the United States of America,
in accordance with Section 7(c) hereof.

 

(c)  Except as
provided in Section 11(a)(ii) hereof, upon receipt of a Rights Certificate with
the form of election to purchase duly executed, accompanied by payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) or so much thereof as is necessary for the shares to be purchased and an
amount equal to any applicable tax or governmental charge, by cash, certified
check or official bank check payable to the order of the Company or the Rights
Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) requisition from any transfer agent of the Preferred Stock (or make
available if the Rights Agent is the transfer agent) certificates for the number
of shares of Preferred Stock so elected to be purchased and the Company will
comply and hereby authorizes and directs such transfer agent to comply with all
such requests, (ii) requisition from the Company the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14(b)
hereof, and (iii) promptly after receipt of such Preferred Stock certificates
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, and, when appropriate, after receipt of the cash requisitioned
from the Company promptly deliver such cash to or upon the order of the
registered holder of such Rights Certificate. In the event of a purchase of
securities, other than Preferred Stock, pursuant to Section 11(a) or Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii). In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
necessary to comply with this Rights Agreement.

 

(d)  Except as
otherwise provided herein, in case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights Certificate or to his duly authorized assigns, subject to the provisions
of Section 6 and Section 14 hereof.

 

(e)  Notwithstanding
anything in this Rights Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported exercise 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) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request.

 

11

8.  Cancellation
and Destruction of Rights Certificates. 

 

All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
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 Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

 

9.  Reservation
and Availability of Shares of Preferred Stock.

 

(a)  The
Company covenants and agrees that at all times it will cause to be reserved and
kept available, out of and to the extent of its authorized and unissued shares
of Preferred Stock not reserved for another purpose (and, following the
occurrence of a Triggering Event, other securities) or held in its treasury, the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) that, as provided in this Rights Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights; provided, however, that the Company shall be
required to reserve and keep available shares of Preferred Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii), Section 11(a)(iii)
or Section 13 hereof only if, and to the extent that, the Rights become
exercisable pursuant to such adjustments.

 

(b)  The
Company shall (i) use its best efforts to cause, from and after such time as the
Rights become exercisable, the Rights and all shares of Preferred Stock (and
following the occurrence of a Triggering Event, other securities) issued or
reserved for issuance upon exercise thereof to be reported by the National
Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”)
or such other system then in use, and if the Preferred Stock shall become listed
on any national securities exchange, to cause, from and after such time as the
Rights become exercisable, the Rights and all shares of Preferred Stock (and,
following the occurrence of a Triggering Event, other securities) issued or
reserved for issuance upon exercise thereof to be listed on such exchange upon
official notice of issuance upon such exercise and (ii) if then necessary, to
permit the offer and issuance of such shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities), register and qualify
such shares of Preferred Stock (and, following the occurrence of a Triggering
Event, other securities) under the Securities Act and any applicable state
securities or “blue sky” laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the Expiration Date of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days,
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall promptly notify the Rights Agent in writing
thereof and 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 (with prompt written notice
thereof to the Rights Agent). Notwithstanding any provision of this Rights
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Securities Act (if
required) shall have been declared effective.

 

12

(c)  The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of Preferred Stock (and following the
occurrence of a Triggering Event, other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable shares in
accordance with applicable law.

 

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

 

10.  Preferred
Stock Record Date. 

 

Each
Person in whose name any certificate for shares of Preferred Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock (or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable taxes or governmental charges) was made.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a stockholder of
the Company with respect to the 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, if any,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

 

13

11.  Adjustments
to Number and Kind of Shares. 

 

Number of
Rights or Purchase Price. The number and kind of shares subject to purchase upon
the exercise of each Right, the number of Rights outstanding and the Purchase
Price are subject to adjustment from time to time as follows:

 

(a)  (i) In
the event the Company shall at any time after the date of this Rights Agreement
(A) declare or pay any dividend on Preferred Stock payable in shares of
Preferred Stock, (B) subdivide or split the outstanding shares of Preferred
Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Preferred Stock into a smaller number of shares or effect
a reverse split of the outstanding 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 Preferred Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of capital stock or
other securities, which, if such Right had been exercised immediately prior to
such date, the holder thereof would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).

 

(ii)  Subject
to Section 24, in the event that 

 

14

(A)  any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any
time after the date of this Rights Agreement, directly or indirectly, (1) shall
consolidate with or merge with and into the Company or any of its Subsidiaries
or otherwise combine with the Company or any of its Subsidiaries and the Company
or such Subsidiary shall be the continuing or surviving corporation of such
consolidation, merger or combination and the Common Stock of the Company shall
remain outstanding and no shares thereof shall be changed into or exchanged for
stock or other securities of the Company or of any other Person or cash or any
other property, or (2) shall, in one or more transactions, other than in
connection with the exercise of a Right or Rights and other than in connection
with the exercise or conversion of securities exercisable for or convertible
into securities of the Company or of any Subsidiary of the Company, transfer any
assets or property to the Company or any of its Subsidiaries in exchange (in
whole or in part) for any shares of any class of capital stock of the Company or
any of its Subsidiaries or any securities exercisable for or convertible into
shares of any class of capital stock of the Company or any of its Subsidiaries,
or otherwise obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the
Company or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the Company or any of
its Subsidiaries (other than as part of a pro rata offer or distribution by the
Company or such Subsidiary to all holders of such shares), or (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire
(other than as a pro rata dividend) or dispose of, to, from or with, as the case
may be (in one transaction or a series of transactions), the Company or any of
its Subsidiaries, any assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm’s-length negotiation with an unaffiliated third
party, or (4) shall receive any compensation from the Company or any of its
Subsidiaries for services other than compensation for employment as a regular or
part-time employee, or fees for serving as a director, at rates in accordance
with the Company’s (or its Subsidiary’s) past practices, or (5) shall receive
the benefit, directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial assistance or any
tax credits or tax advantage provided by the Company or any of its Subsidiaries,
or (6) shall engage in any transaction with the Company (or any of its
Subsidiaries) involving the sale, license, transfer or grant of any right in, or
disclosure of, any patents, copyrights, trade secrets, trademarks, know-how or
any other intellectual or industrial property rights recognized under any
country’s intellectual property laws which the Company (including its
Subsidiaries) owns or has the right to use on terms and conditions not approved
by the Board of Directors of the Company; or

 

15

(B)  any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person; 

 

(C)  or during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or any recapitalization of
the Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions involving the
Company or any of its Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person or any Affiliate or Associate of such Acquiring
Person) which has the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or securities exercisable
for or convertible into equity securities of the Company or any of its
Subsidiaries, which is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person (any of
(A), (B) or (C) being referred to herein as a “Flip-In Event”); then upon the
first occurrence of such Flip-In Event (i) the Purchase Price shall be adjusted
to be the Purchase Price in effect immediately prior to the Flip-In Event
multiplied by the number of one one-hundredth of a share of Preferred Stock for
which a Right was exercisable immediately prior to such Flip-In Event, whether
or not such Right was then exercisable, and (ii) each holder of a Right, except
as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii) hereof,
shall thereafter have the right to receive, upon exercise thereof at a price
equal to the Purchase Price (as so adjusted), in accordance with the terms of
this Rights Agreement and in lieu of shares of Preferred Stock, such number of
shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the Current Market Price per share of
the Common Stock (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; provided, however, that the Purchase Price (as so adjusted)
and the number of shares of Common Stock so receivable upon the exercise of a
Right shall, following the Flip-In Event, be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in
this Rights Agreement to the contrary, however, from and after the Flip-In
Event, any Rights that are beneficially owned by (x) any Acquiring Person (or
any Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the Flip-In Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the Flip-In Event pursuant to either (I) a transfer from the Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding, whether written or
otherwise, regarding the transferred Rights or (II) a transfer which the
Company’s Board of Directors has determined is part of a plan, agreement,
arrangement or understanding, whether written or otherwise, which has the
purpose or effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be null and void without any further action
and any holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Rights Agreement. The Company
shall notify the Rights Agent in writing when this Section 11(a)(ii) applies and
shall use all reasonable efforts to ensure that the provisions of this Section
11(a)(ii) 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 its Affiliates, Associates or transferees hereunder. From
and after the Flip-In Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have become
null and void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become null and void pursuant to the provisions of this paragraph shall be
canceled.

 

16

(iii)  The
Company may at its option substitute for a share of Common Stock issuable upon
the exercise of Rights in accordance with the foregoing subparagraph (ii) such
number or fractions of shares of Preferred Stock having an aggregate current
market value equal to the Current Market Price of a share of Common Stock. In
the event that there shall not be sufficient shares of Common Stock issued but
not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company’s Board
of Directors shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party (A) determine the
excess (such excess, the “Spread”) of (1) the value of the shares of Common
Stock issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the “Current Value”) over (2) the Purchase Price (as adjusted
in accordance with the foregoing subparagraph (ii)), and (B) with respect to
each Right (other than Rights which have become null and void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing paragraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in
accordance therewith), (1) cash, (2) a reduction in such Purchase Price, (3)
shares of Preferred Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Company’s Board of Directors to have substantially the same value as the
shares of Common Stock (such shares of Preferred Stock and shares or fractions
of shares of preferred stock being hereinafter referred to as “Common Stock
Equivalents”), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having a value which, when added to the value of
the shares of Common Stock actually issued upon exercise of such Right, shall
have an aggregate value equal to the Current Value (less the amount of any
reduction in such Purchase Price), where such aggregate value has been
determined by the Company’s Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Company’s Board
of Directors; provided, however, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the date of the Flip-In Event (the “Flip-in Trigger Date”), then the Company
shall be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such Purchase
Price, shares of Common Stock (to the extent available), and then, if necessary,
such number or fractions of shares of Preferred 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 of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common Stock
and/or Common Stock Equivalents could be authorized for issuance upon exercise
in full of the Rights, the 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days after the Flip-In Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares of Common Stock or Common Stock Equivalents (such 30-day
period, as it may be extended being hereinafter referred to as the “Substitution
Period”). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this Section 11(a)(iii),
the Company (x) shall provide, subject to the last sentence of Section 11(a)(ii)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to the
first sentence of Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
(with prompt written notice thereof to the Rights Agent) 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 (with prompt
written notice thereof to the Rights Agent). For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price per
share of the Common Stock on the Flip-In Trigger Date and the per share or per
unit value of any Common Stock Equivalent shall be deemed to equal the Current
Market Price per share of the Common Stock on such date. The Company’s Board of
Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).

 

17

(b)  In case
the Company shall fix a record date for the issuance of rights (other than the
Rights), options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase Preferred Stock (for a period expiring within 45
calendar days after such record date), shares having the same rights, privileges
and preferences as the Preferred Stock (a “Preferred Stock Equivalent”) or
securities convertible into Preferred Stock or Preferred Stock Equivalent at a
price per share of Preferred Stock or Preferred Stock Equivalent (or having a
conversion price per share, if a security convertible into Preferred Stock or
Preferred Stock Equivalent) less than the Current Market Price per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying 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 Preferred Stock
Equivalent (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 Preferred Stock Equivalent to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which is in a form other than cash, the value of
such non-cash consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. 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.

 

18

(c)  In case
the Company shall fix a record date for 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, cash, assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes) of the portion of the
cash, assets or evidences of indebtedness to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such Current Market Price per share of Preferred
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in effect
if such record date had not been fixed.

 

(d)  (i) For the
purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices per
share of the Common Stock for the 30 consecutive Trading Days immediately prior
to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the “Current Market Price” per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per share
of the Common Stock for the 10 consecutive Trading Days immediately following
such date; provided, however, that in the event that the Current Market Price
per share of the Common Stock is determined during a period following the
announcement by the issuer of the Common Stock of (i) any dividend or
distribution on the Common Stock (other than a regular quarterly cash dividend
and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification occurs, then, and in each such
case, the Current Market Price shall be properly 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 American Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
American 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 shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the shares of Common Stock 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 Common Stock selected by the
Company’s Board of Directors. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent and shall be conclusive for all
purposes. If the Common Stock is not publicly held or not so listed or traded,
“Current Market Price” per share shall mean the fair value per share as
determined in good faith by the Company’s Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.

 

19

(ii)  For the
purpose of any computation hereunder, the “Current Market Price” per share (or
one one-hundredth of a share) of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this Section
11(d) (other than the last sentence thereof). If the Current Market Price per
share (or one one-hundredth of a share) of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section 11(d), the
“Current Market Price” per share of Preferred Stock shall be conclusively deemed
to be an amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Rights Agreement)
multiplied by the Current Market Price per share of the Common Stock and the
“Current Market Price” per one one-hundredth of a share of Preferred Stock
shall, be equal to the Current Market Price per share of the Common Stock (as
appropriately adjusted). 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 Company’s Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. 

 

(e)  Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (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-hundredth of a share of Common Stock or other share or
one-hundred-hundredth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) one
year from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.

 

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

 

20

(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 shares of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.

 

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

 

21

(j)  Irrespective
of any adjustment or change in the Purchase Price or the number of shares of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Rights Certificate issued hereunder.

 

(k)  Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then par value, if any, of the shares of Common Stock, Preferred Stock
or other capital stock issuable upon exercise of the Rights, the Company shall
take any corporate action, including using its best efforts to obtain any
required stockholder approvals, 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 Common Stock, Preferred Stock or other capital stock at
such adjusted Purchase Price. If upon any exercise of the Rights, a holder is to
receive a combination of Common Stock and Common Stock Equivalents, a portion of
the consideration paid upon such exercise, equal to at least the then par value
of a share of Common Stock of the Company, shall be allocated as the payment for
each share of Common Stock of the Company so received.

 

(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 (with prompt written notice thereof to the Rights Agent)
until the occurrence of such event the issuance 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 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 of Preferred Stock and
other capital stock or securities upon the occurrence of the event requiring
such adjustment.

 

(m)  Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly permitted or required by this Section 11, as and to the
extent that in their good faith judgment the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
Preferred Stock at less than the Current Market Price, (iii) issuance for cash
of shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.

 

22

(n)  The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person, (ii) merge with or
into any other Person, or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction or a series of related 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 or
Persons, if (x) at the time of or immediately after such consolidation, merger
or sale there are any charter or by-law provisions or any rights, warrants or
other instruments or securities outstanding or agreements in effect which
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates. The Company shall not
consummate any such consolidation, merger or sale unless prior thereto the
Company and such other Person shall have executed and delivered to the Rights
Agent a supplemental agreement evidencing compliance with this
subsection.

 

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

 

(p)  Anything
in this Rights Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Record Date and prior to the Distribution
Date (i) declare or pay any dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event equals the result obtained
by multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction, the numerator or which shall be
the number of shares of Common Stock outstanding immediately prior to the
occurrence of such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately following the occurrence of such
event.

 

12.  Certification
of Adjustments. 

 

Whenever
an adjustment is made as provided in Sections 11 or 13 hereof, the Company shall
(a) promptly prepare a certificate signed by its Chief Executive Officer, its
Chairman, its Chief Financial Officer or by the Treasurer or any Assistant
Treasurer or the Secretary of the Company setting forth such adjustment and a
brief statement of the facts and computations giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common
Stock) in accordance with Section 26 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to give such notice shall not affect the
validity of or the force or effect of or the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of any such
adjustment or any such event unless and until it shall have received such a
certificate. Any adjustment to be made pursuant to Sections 11 and 13 of this
Rights Agreement shall be effective as of the date of the event giving rise to
such adjustment.

 

23

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

 

(a)  Except as
provided in Section 13(b) hereof, in the event that following the first
occurrence of a Flip-In Event, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person or Persons and the
Company, as the case may be, shall not be the surviving or continuing Person of
such consolidation or merger, or (y) any Person or Persons shall consolidate
with, or merge with and into, the Company, and the Company shall be the
continuing or surviving Person of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or of the Company or cash or any other property
other than, in the case of the transactions described in subparagraphs (x) or
(y), a merger or consolidation which would result in all of the Voting Power
represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such transactions), or (z) the
Company or one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer to any other Person or any Affiliate or Associate of such Person, in
one transaction, or a series of related 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), then, on the first occurrence of any such event
(a “Flip-Over Event”), proper provision shall be made so that (i) each holder of
a Right (other than Rights which have become null and void pursuant to Section
11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof), in accordance with the terms of this Rights Agreement
and in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by dividing
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) by 50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) and the number of shares of Common Stock of such Principal
Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Flip-Over Event, all the obligations and duties of the Company pursuant to
this Rights Agreement; (iii) the term “Company” for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only apply
to such Principal Party following the first occurrence of a Flip-Over Event; and
(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 hereof) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

 

24

(b)  “Principal
Party” shall mean

 

(i)  in the
case of any transaction described in (x) or (y) of the first sentence of Section
13(a) hereof: (A) the Person that is the issuer of the securities into which
shares of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Stock of which has the greatest aggregate market value or (B) if no securities
are so issued, (x) the Person that is the other party to the merger or
consolidation and that survives said merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if it survives);
and

 

(ii)  in the
case of any transaction described in (z) of the first sentence in Section 13(a)
hereof, the Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons that is the issuer
of Common Stock having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
paragraphs (b)(i) or (b)(ii), (1) 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, the term “Principal Party” shall refer to such other Person, or
(2) if 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, the
term “Principal Party” shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest market value of shares outstanding, or (3)
if 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 clauses (1) and (2) above shall apply to each of
the owners having an interest in the joint venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.

 

25

(c)  The
Company shall not consummate any consolidation, merger, sale or transfer
referred to in Section 13(a) unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and the Principal
Party involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the requirements of Sections 13(a) and (b) hereof
shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Rights Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and
further providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party at its own expense
shall:

 

(i)  prepare
and file a registration statement under the Securities Act, if necessary, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts 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 similarly comply with applicable state
securities laws;

 

(ii)  use its
best efforts, if the Common Stock of the Principal Party shall become listed on
a national securities exchange, to list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be listed on
a national securities exchange, to cause the Rights and the securities purchased
upon exercise of the Rights to be reported by NASDAQ or such other system then
in use;

 

26

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

 

(iv)  obtain
waivers of any rights of first refusal or preemptive rights in respect of the
shares of Common Stock of the Principal Party subject to purchase upon exercise
of outstanding Rights.

 

In the
event that any of the transactions described in Section 13(a) hereof shall occur
at any time after the occurrence of a transaction described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall thereafter be
exercisable in the manner described in Section 13(a).

 

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

 

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 holders of record 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 then current market value of a
whole Right. For the purposes of this Section 14(a), the then current market
value of a Right shall be determined in the same manner as the Current Market
Price of a share of Common Stock shall be determined pursuant to Section 11(d)
hereof.

 

27

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

 

(c)  Following
the occurrence of a Flip-In Event, the Company shall not be required to issue
fractions of shares or units of Common Stock or Common Stock Equivalents or
other securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of such Common Stock or Common Stock Equivalents or
other securities. In lieu of fractional shares or units of such Common Stock or
Common Stock Equivalents or other securities, 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 or unit of such Common Stock or Common Stock Equivalent
or other securities. For purposes of this Section 14(c), the Current Market
Value shall be determined in the manner set forth in Section 11(d) hereof for
the Trading Day immediately prior to the date of such exercise and, if such
Common Stock Equivalent is not traded, each such Common Stock Equivalent shall
have the value of one one-hundredth of a share of Preferred Stock.

 

(d)  The
holder of a Right by the acceptance of a Right expressly waives his right to
receive any fractional Right or any fractional shares upon exercise of a
Right.

 

15.  Rights
of Action. 

 

As of the
Record Date, all rights of action in respect of this Rights Agreement, other
than any rights of action vested in the Rights Agent, are vested in the
respective holders of record of the Rights Certificates (and, prior to the
Distribution Date, the holders of record of the Common Stock); and any holder of
record of any Rights 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 Rights 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 or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Rights 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 Rights Agreement and, accordingly, that they 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 Rights Agreement. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including attorneys’ fees, incurred by them
in any action to enforce the provisions of this Rights Agreement.

 

28

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 not be evidenced by a Rights Certificate
and will be transferable only in connection with the transfer of Common
Stock;

 

(b)  after the
Distribution Date, the Rights Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer;

 

(c)  the
Company and the Rights Agent may deem and treat the Person in whose name the
Rights 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
Rights Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent or the transfer agent of the Common
Stock) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and

 

(d)  notwithstanding
anything in this Rights Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person
as a result of its inability to perform any of its obligations under this Rights
Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.

 

29

17.  Rights
Certificate Holder Not Deemed a Stockholder. 

 

No holder
of a Right, as such, shall be entitled to vote, receive dividends in respect of
or be deemed for any purpose to be the holder of Common Stock or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote in 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 hereof), or to receive dividends or subscription rights in respect
of any such stock or securities, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.

 

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 preparation, delivery, amendment, administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense (including, without limitation, the
reasonable fees and expenses of legal counsel) incurred without gross negligence
or bad faith on the part of the Rights Agent (which gross negligence or bad
faith must be determined by a final, non-appealable order, judgment, decree or
ruling of a court of competent jurisdiction), for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance, administration,
exercise and performance of its duties under this Rights Agreement. The costs
and expenses incurred in enforcing this right of indemnification shall be paid
by the Company. The provisions of this Section 18 and Section 20 below shall
survive the termination of this Rights Agreement, the exercise or expiration of
the Rights and the resignation or removal of the Rights Agent.

 

(b)  The
Rights Agent shall be authorized and protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with
its acceptance and administration of this Rights Agreement and the exercise and
performance of its duties hereunder, in reliance upon any Right Certificate or
certificate for the Preferred Stock or Common 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, guaranteed, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in section 20 hereof.

 

30

19.  Merger
or Consolidation or Changed 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 corporate trust or shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Rights 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 Rights Agreement.

 

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

 

20.  Duties
of Rights Agent. 

 

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

 

(a)  The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or an employee of the Rights Agent), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.

 

(b)  Whenever
in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Market Price) be proved or established by the Company prior to taking,
suffering or omitting any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by certificate signed by the President
and by the Treasurer or any Assistant Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent for any action taken, suffered
or omitted in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.

 

31

(c)  The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence or bad faith (which gross negligence or bad faith
must be determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction). Anything to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage. Any liability of the Rights Agent under this
Rights Agreement will be limited to the amount of fees paid by the Company to
the Rights Agent.

 

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

 

(e)  The
Rights Agent shall not have any liability for, nor be under any responsibility
in respect of the validity of this Rights 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 Rights Certificate (except its
countersignature thereof); nor shall it be responsible or liable for any breach
by the Company of any covenant or condition contained in this Rights Agreement
or in any Rights Certificate; nor shall it be responsible or liable for any
adjustment required under the provisions of Sections 11, 13, 23 or 24 hereof or
otherwise responsible or liable for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of a Certificate furnished pursuant to Section
12 describing any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of
any shares of Common Stock to be issued pursuant to this Rights Agreement or any
Rights Certificate or as to whether any shares of Common Stock will, when
issued, be validly authorized and issued, fully paid and
nonassessable.

 

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

 

32

(g)  The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the Chief Executive Officer, the President or 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, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. Subject
to Section 20(c) hereof, the Rights Agent shall not be liable for any action
taken or suffered by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking or suffering any such action (or by the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.

 

(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 money to the Company or otherwise
act as fully and freely as though it were not the Rights Agent under this Rights
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other 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 (through its directors,
officers and employees) 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 or any
other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence or bad faith in the selection and continued employment thereof
(which gross negligence or bad faith must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction.

 

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

 

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

 

33

21.  Change
of Rights Agent. 

 

The
Rights Agent or any successor Rights Agent may resign and be discharged from its
duties under this Rights Agreement upon 30 days’ notice in writing, or such
earlier period as shall be agreed to in writing, mailed to the Company and to
each transfer agent of the Common Stock by registered or certified mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days’ notice in writing, or such earlier period as shall
be agreed to 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 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 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 incumbent Rights Agent or the holder of
record 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) a Person organized and
doing business under the laws of the United States or any State thereof, in good
standing, which is authorized under such laws to exercise stock transfer or
shareholder services 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 $25,000,000 or (b) an
Affiliate controlled by a Person described in clause (a) of this sentence. 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, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

 

22.  Issuance
of New Right Certificates. 

 

Notwithstanding
any of the provisions of this Rights Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by the Company’s Board of Directors to reflect
any adjustment or change in the Purchase Price per share and the number or kind
or class of shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this Rights
Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

 

34

23.  Redemption.

 

(a)  The Board
of Directors of the Company may, at its option, at any time prior to the earlier
of (x) the first occurrence of a Flip-In Event or (y) the Close of Business on
the Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $0.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”).

 

(b)  Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights (or at such later time as the Company’s Board of Directors may
establish for the effectiveness of such redemption), and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give written notice to the Rights
Agent and shall 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 Company’s
Board of Directors ordering the redemption of the Rights (or such later time as
the Company’s Board of Directors may establish for the effectiveness of such
redemption), 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 shall state the
method by which the payment of the Redemption Price will be made. The failure to
give notice required by this Section 23(b) or any defect therein shall not
affect the legality or validity of the action taken by the Company.

 

(c)  In the
case of a redemption permitted under Section 23(a) hereof, the Company may, at
its option, discharge all of its obligations with respect to the Rights by (i)
issuing a press release announcing the manner of redemption of the Rights and
(ii) mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent of the Common Stock, and upon such action, all outstanding Right
Certificates shall be null and void without any further action by the
Company.

 

35

24.  Exchange
of Rights for Common Stock.

 

(a)  The Board
of Directors of the Company may, at its option, at any time after the occurrence
of a Flip-In Event, exchange all or part of the then outstanding and exercisable
Rights (which (i) shall not include Rights that have become null and void
pursuant to the provisions of Section 11(a)(ii) and (ii) shall include, without
limitation, any Rights issued after the Distribution Date in accordance with
Section 22 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 (the
“Exchange Ratio”). Notwithstanding the foregoing, the Company’s Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 24(a)
shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 24(a).

 

(b)  Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (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 the Rights Agent notice and public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares 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 pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.

 

(c)  In any
exchange pursuant to this Section 24, the Company, at its option, may
substitute, and, in the event that there shall not be sufficient shares of
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 substitute to the extent of such insufficiency, for each share of
Common Stock that would otherwise be issuable upon exchange of a Right, a number
of shares of Preferred Stock or Preferred Stock Equivalent or fractions thereof
having an aggregate current per share market price (determined pursuant to
Section 11(d) hereof) equal to the current per share market price of one share
of Common Stock (determined pursuant to Section 11(d) hereof) as of the date of
the Flip-In Event.

 

36

(d)  In the
event that there shall not be sufficient shares of 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.

 

(e)  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 of Common Stock, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock 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 the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the Current Market Price of a share of
Common Stock (as defined in Section 11(d) hereof for the purposes of
computations made other than pursuant to Section 11(a)(iii)) for the Trading Day
immediately prior to the date of exchange pursuant to this Section
24.

 

25.  Notice
of Proposed Actions.

 

(a)  In case
the Company, after the Distribution Date, shall propose (i) to effect any of the
transactions referred to in Section 11(a)(i) or to pay any dividend to the
holders of record of its Preferred Stock payable in stock of any class or to
make any other distribution to the holders of record of its Preferred Stock
(other than a regular periodic cash dividend), or (ii) to offer to the holders
of record of its Preferred Stock or options, warrants, or other rights to
subscribe for or to purchase shares of Preferred Stock (including any security
convertible into or exchangeable for Preferred Stock) or shares of stock of any
other class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock or any recapitalization or reorganization of the Company,
or (iv) to effect any consolidation or merger with or into, 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 or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Right Certificate and the Rights Agent,
in accordance with Section 26 hereof, notice of such proposed action, which
shall specify the record date for the purposes of such transaction referred to
in Section 11(a)(i), or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution or winding up is to take place
and the record date for determining participation therein by the holders of
record of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of record of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of record of
Preferred Stock, whichever shall be the earlier.

 

37

(b)  In case
any of the transactions referred to in Section 11(a)(ii) or Section 13 of this
Rights Agreement are proposed, then, in any such case, the Company shall give to
each holder of Rights and to the Rights Agent, in accordance with Section 26
hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13 hereof, as the case may be, and, upon consummating such transaction,
shall similarly give notice thereof to each holder of Rights.

 

(c)  The
failure to give notice required by this Section 25 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.

 

26.  Notices. 

 

Notices
or demands authorized by this Rights Agreement to be given or made by the Rights
Agent or by the holder of record of any Right Certificate or Right to or on
behalf of 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:

 

Teton
Petroleum Company

1600
Broadway

Denver,
CO 80202

Attention:
Corporate Secretary

Subject
to the provisions of Section 20 hereof, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if in writing and sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)

 

as
follows:

Computershare
Investor Services, LLC.

2 North
LaSalle Street

Chicago,
Illinois 60602

Attention:
Michael Lang

38

Notices
or demands authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right 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 it appears
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent.

 

27.  Supplements
and Amendments. 

 

Except as
provided in the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Rights Agreement in any respect without the approval of any
holders of the Rights. At any time when the Rights are no longer redeemable,
except as provided in the penultimate sentence of this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
this Rights Agreement without the approval of any holders of Right Certificates
in order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; provided that no such supplement or amendment
shall adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
and no such amendment may cause the Rights again to become redeemable or cause
this Rights Agreement again to become amendable other than in accordance with
this sentence. Notwithstanding anything contained herein to the contrary, upon
the delivery of a certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment complies with this Section 27
and provided that such supplement or amendment does not change or increase the
Rights Agent’s rights, duties, liabilities or obligations hereunder, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Rights Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.

 

28.  Successors. 

 

All of
the covenants and provisions of this Rights 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.

 

29.  Benefits
of this Rights Agreement. 

 

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

 

39

30.  Determinations
and Actions by the Board of Directors. 

 

The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Rights Agreement and to exercise the rights and powers
specifically granted to the Company’s Board of Directors of the Company or to
the Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend or not amend this Rights Agreement). All such
actions, calculations, interpretations and determinations that are done or made
by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties. Notwithstanding anything contained
herein to the contrary, the Rights Agent is entitled always to assume that the
Company’s Board of Directors acted in good faith and shall be fully protected
and incur no liability in reliance thereon.

 

31.  Governing
Law. 

 

This
Rights 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 solely by residents of such state and
performed entirely within such state.

 

32.  Counterparts. 

 

This
Rights 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.

 

33.  Descriptive
Headings. 

 

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

 

34.  Severability. 

 

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

 

40

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

 

	 	ATTEST	 	 	Teton Petroleum Company
	 	 	 	 	 
	 	 	 	 	 
	
      By: 
	
       
	 	
       By:
       
	
	 	
      

      Name: Patrick
      A. Quinn	 	 	
      

      Name: Karl
      F. Arleth
	 	
      Title: Chief
      Financial Officer
	 	 	Title: President
      & CEO
	 	 	 	 	 
	 	 	 	 	 
	 	 	 		 COMPUTERSHARE INVESTOR SERVICES,
      LLC.
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
       By:  
	 
	 	 	 	 	
      

      Name: 
	 	 	 	 	Title:
	 	 	 	 	 

 

41

 

EXHIBIT
A

Teton
Petroleum Company

 

CERTIFICATE

OF
DESIGNATION, PREFERENCES, AND RIGHTS

OF THE
TERMS OF THE

SERIES C
PREFERRED STOCK

 

Pursuant
to Section 151 of the General Corporation Law of the State of
Delaware:

 

We, the
President and Chief Executive Officer and the Secretary, respectively, of Teton
Petroleum Company, organized and existing under the General Corporation Law of
the State of Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:

 

That
pursuant to the authority conferred upon the Board of Directors by the Amended
Certificate of Incorporation of the said Corporation, the said Board of
Directors on June 2, 2005, adopted the following resolution creating a series of
200,000 shares of Preferred Stock designated as Series C Preferred
Stock:

 

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

 

Section
1. Designation and Amount. The shares of such series shall be designated as
“Series C Preferred Stock” (the “Series C Preferred Stock”), $0.001 par value
per share, and the number of shares constituting such series shall be
200,000.

 

Section
2. Dividends and Distributions.

 

(A) The
dividend rate on the shares of Series C
Preferred Stock shall be for each quarterly dividend (hereinafter referred to as
a “quarterly dividend period”), which quarterly dividend periods shall be
payable in cash on the last day of March, June, September and December of each
year (each such date being referred to herein as a “Quarterly Dividend Payment
Date”) (or in the case of original issuance, from the date of original issuance)
and shall end on and include the day next preceding the first date of the next
quarterly dividend period, at a rate per quarterly dividend period (rounded to
the nearest cent) equal to the greater of (a) $75.00 or (b) subject to the
provisions for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in cash, based upon the fair market value at the time the non-cash
dividend or other distribution is declared as determined in good faith by the
Board of Directors) 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 (but not
withdrawn) on the Common Stock, par value $0.001 per share, of the Corporation
(the “Common Stock”) during the immediately preceding quarterly dividend period,
or, with respect to the first quarterly dividend period, since the first
issuance of any share or fraction of a share of Series C Preferred Stock. In the
event this Company shall at any time after June 2, 2005 (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, 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.

 

A-1

(B) 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 no more
than 45 days prior to the date fixed for the payment thereof.

 

Section
3. 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 100 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on 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, 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.

 

A-2

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

 

(C)  Except
as set forth herein, in the Restated Certificate of Incorporation and in the
Bylaws, 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.

 

Section
4. Reacquired Shares. Any shares of Series C Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled 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 to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

 

Section
5. Liquidation, Dissolution or Winding Up.

 

(A) In the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the holders of the Series C
Preferred Stock shall be entitled to receive the greater of (a) $2,200.00 per
share, plus accrued dividends to the date of distribution, whether or not earned
or declared, plus a redemption premium of $1,200.00 per share of Preferred Stock
or (b) an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of Common Stock. 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, then in
each such case the amount to which holders of shares of Series C Preferred Stock
were entitled immediately prior to such event pursuant to 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) In the
event, however, that there are not sufficient assets available to permit payment
in full to the Series C Liquidation Preference and the liquidation preferences
of all other series of Preferred Stock, if any, which rank on a parity with the
Series C Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common
Stock.

 

A-3

Section
6. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or 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 the greater of (a) 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, or (b) $3,400
per share of Preferred Stock (the "Preferred Stock Consideration"). 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, 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.

 

Section
7. Rights of Preferred Shares in the Event of a Tender Offer or Similar
Overture. Unless
such Acquiring Person, within 10 days of the Stock Acquisition Date, as that
term is defined in the Rights Agreement dated as of June 3, 2005, between the
Company and Computershare Investor Services, LLC. (the “Rights Agreement”) (a)
publicly announces its withdrawal of its tender or exchange offer, or withdrawal
of its intention to commence such tender or exchange offer; and (b) divests a
sufficient number of shares of the outstanding Common Stock so that such Person
would no longer beneficially own securities of the Company representing 15% or
more of the Outstanding Common Stock of the Company (other than solely as a
result of a reduction in the outstanding shares of the Common Stock of the
Company), it shall become mandatory that the Preferred Stock shall become
redeemable within 364 days thereafter at a redemption price of $2,200.00 per
share, plus dividends, plus a redemption premium of the greater of (1) $1,200.00
per share of Preferred Stock or (2) an amount per share equal to 100 times the
aggregate payment to be distributed per share of common stock; provided,
however, that in
the event that an Acquiring Person, prior to such 364th day
either (x) concludes a definitive agreement with the Board pursuant to a stock
or cash tender or exchange offer or similar transaction that is for all
Outstanding Common Stock at a price and on terms that a majority of the outside
Board members (who are continuing Board members) determines to be adequate and
in the best interests of the Company, its stockholders and other relevant
constituencies (other than such Acquiring Person) or (y) (i) publicly announces
its withdrawal of its tender or exchange offer, or withdrawal of its intention
to commence such tender or exchange offer; and (ii) divests a sufficient number
of shares of the outstanding Common Stock so that such Person would no longer
beneficially own securities of the Company representing 15% or more of the
Outstanding Common Stock of the Company (other than solely as a result of a
reduction in the outstanding shares of the Common Stock of the Company), then
the Board shall have the option to retire any amount so outstanding and due for
$.0001 per Preferred Share.

 

A-4

Section
8. No Redemption. The shares of Series C Preferred Stock shall not be
redeemable, except as provided in Section 7 herein.

 

Section
9. Fractional Shares. Series C Preferred Stock may be issued in fractions 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 have the benefit of all other rights of holders of Series C
Preferred Stock. All payments made with respect to fractional shares hereunder
shall be rounded to the nearest whole cent.

 

Section
10. Certain Restrictions.

 

(A) Whenever
quarterly dividends or other dividends or distributions payable on the
Series C
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 C 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 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;
      

	(iii)  	
      redeem
      or purchase or otherwise acquire for consideration shares of any stock
      ranking on a parity (either as to dividends or upon liquidation,
      dissolution or winding up) with the Series C Preferred Stock, provided
      that the Corporation may at any time redeem, purchase or otherwise acquire
      shares of any such parity 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)  	
      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 10, purchase
or otherwise acquire such shares at such time and in such manner.

 

A-5

Section
11. Ranking. The Series C Preferred Stock shall be 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 series shall provide
otherwise.

 

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

 

A-6

 

IN
WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm
the foregoing as true under the penalties of perjury
this 8th day of
June, 2005.

	 	 	 
	 	
	 
 	 
 	 
 
		By:  	/s/ Karl F.
  Arleth
	 	
      

      Karl F. Arleth, President and Chief
	 	Executive Officer
	 Attest:	 
	/s/
      Patrick A. Quinn 
      

      Secretary	 
	 	 

 

A-7

 

EXHIBIT
B

[Form of
Rights
Certificate]

 

	 Certificate No. W-	
       Series C Preferred Stock
    Rights

 

NOT
EXERCISABLE AFTER JUNE 2, 2008, OR EARLIER IF REDEEMED OR EXCHANGED. AT THE
OPTION OF TETON PETROLEUM COMPANY, THE RIGHTS MAY BE REDEEMED AT $0.001 PER
RIGHT OR EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT, DATED JUNE 3, 2005, BETWEEN TETON PETROLEUM COMPANY AND COMPUTERSHARE
INVESTOR SERVICES, LLC., AS RIGHTS AGENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING
PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BE NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.

 

RIGHTS
CERTIFICATE

 

Teton
Petroleum 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 June 3, 2005 (“Rights Agreement”) between Teton Petroleum Company., a
Delaware corporation (“Company”), and Computershare Investor Services, LLC., a
Delaware limited liability company, as Rights Agent (“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. (Denver, Colorado
time) on June 2, 2008, at the office of the Rights Agent, or its successors as
Rights Agent, designated for such purposes, one one-hundredth of a fully paid
and nonassessable share of Series C Preferred Stock of the Company (“Preferred
Stock”) at a purchase price of $22.00 per one one-hundredth of a share, as the
same may from time to time be adjusted in accordance with the Rights Agreement
(the “Purchase Price”), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.

 

As
provided in the Rights Agreement, the Purchase Price and the number of shares of
Preferred Stock or other securities 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 and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided by the Rights Agreement.

 

B-1

Upon the
occurrence of a Flip-In Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person, (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a Person who, after such transfer,
became an Acquiring Person, or any Affiliate or Associate of an Acquiring
Person, such Rights shall be null and void and will no longer be transferable
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Flip-In Events.

 

This
Rights Certificate is subject to all the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are 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 of the Rights Agent, the Company and the
holders of record of the Rights Certificates, which limitation of rights include
the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the principal executive office of the Company and are 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, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing Rights entitling the
holder of record to purchase a like aggregate number of shares of Preferred
Stock 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 Right Certificate or Right Certificates for the
number of whole Rights not exercised.

 

Subject
to the provisions of the Rights Agreement, at any time prior to the earlier of
(i) the occurrence of a Flip-In Event (as such term is defined in the Rights
Agreement) or (ii) the Expiration Date (as such term is defined in the Rights
Agreement), the Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $0.001 per Right. Subject to the
provisions of the Rights Agreement, the Company may, at its option, at any time
after a Flip-In Event, exchange all or part of the Rights evidenced by this
Certificate for shares of the Company’s Common Stock or for Preferred Stock (or
shares of a class or series of the Company’s preferred stock having the same
rights, privileges and preferences as the Preferred Stock).

 

In the
event (i) any Person or group becomes an Acquiring Person or (ii) any of the
types of transactions, acquisitions or other events described above as
self-dealing transactions occur, and prior to the acquisition by such person or
group of 50% or more of the outstanding shares of Common Stock, the Board may
require all or any portion of the outstanding Rights (other than Rights owned by
such Acquiring Person which have become null and void) to be exchanged for
Common Stock on a pro rata basis, at an exchange ratio of one share of Common
Stock or one one-hundredth of a share of Preferred Stock (or of a share of a
class or series of the Company’s Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).

 

B-2

No
fractional shares of Preferred Stock shall be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
option of the Company, be evidenced by depositary receipts), and no fractional
shares of Common Stock will be issued upon the exchange of any Right or Rights
evidenced hereby, and in lieu thereof, as provided in the Rights Agreement,
fractions of shares of Preferred Stock or Common Stock shall receive an amount
in cash equal to the same fraction of the then Current Market Price (as such
term is defined in the Rights Agreement) of a share of Preferred Stock or Common
Stock, as the case may be.

 

No holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common 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 in 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 (other than certain actions specified 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 or exchanged 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 as of ________________________, ____.

 

 

	 	ATTEST:	 	 	Teton Petroleum Company
	 	 	 	 	 
	 	 	 	 	 
	
      By: 
	
       
	 	
       By:
       
	
	 	
      

      Secretary
	 	 	
      

      Title: 
	 	
       
	 	 	
	 	 	 	 	 
	 	 	 	 	 
	 	 COUNTERSIGNED:	 		 COMPUTERSHARE INVESTOR SERVICES,
      LLC.
	 	 	 	 	 as Rights Agent
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
       By:  
	 
	 	 	 	 	
      
      

      Authorized
      Officer

B-3

Form of
Reverse Side of Right Certificate

B-4

FORM
OF ASSIGNMENT

 

(To be
executed by the registered holder if such holder

desires
to transfer any or all of the Rights

represented
by this Right Certificate)

 

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

 

(Name, address and social security or other identifying number of
transferee) ___________________________________ (_______________) of the Rights
represented by this Rights Certificate, together with all right, title and
interest in and to said Rights, and hereby irrevocably constitutes and appoints
___________________

 

attorney
to transfer said Rights on the books of the within-named Company
with

full
power of substitution.

Dated:___________________,
______ ________________________________________

(Signature)

Signature
Guaranteed:

CERTIFICATE

 

The
undersigned hereby certifies by checking the appropriate boxes
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 (as such capitalized terms are defined in the Rights
Agreement);

 

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

 

Dated:
___________________, ______
________________________________________

(Signature)

Signature
Guaranteed:

Form of
Reverse Side of Right Certificate

(continued)

 

NOTICE

 

The
signatures to the foregoing Assignment and the foregoing Certificate, if
applicable, 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, and must be guaranteed by a participant in a Securities Transfer
Association (“STA”) recognized signature program.

 

In the
event that the foregoing Certificate is not duly executed, with signature
guaranteed, the Company may deem the Rights represented by this Rights
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Rights Certificate or Rights Certificates
in exchange for this Rights Certificate.

 

Form of
Reverse of Right Certificate

(continued)

FORM OF
ELECTION TO PURCHASE

(To be
executed by the registered holder if such holder

desires
to exercise any or all of the Rights

represented
by this Rights Certificate)

To Teton
Petroleum Company:

The
undersigned hereby irrevocably elects to exercise _______________ (__________)
of the Rights represented by this Rights Certificate to purchase the shares of
the Common Stock of the Company, or other securities or property issuable upon
the exercise of said number of Rights pursuant to the Rights
Agreement.

 

The
undersigned hereby requests that a certificate for any such securities and any
such property be issued in the name of and delivered to:

 

 

 

(Name,
address and social security or other

identifying
number of issuee)

The
undersigned hereby further requests that if said number of Rights shall not be
all the Rights represented by this Rights Certificate, a new Rights Certificate
for the remaining balance of such Rights be issued in the name of and delivered
to:

 

(Name,
address and social security or other

identifying
number of issuee)

Dated:___________________,
______ _________________________________

(Signature)

Signature
Guaranteed:

 

Form of
Reverse Side of Rights Certificate

(continued)

 

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 or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

 

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

 

Dated:___________________,______
  ___________________________

                   (Signature)

 

Signature
Guaranteed:

NOTICE

 

The
signature to the foregoing Election to Purchase and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of the this
Rights Certificate in every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.

 

In the
event that the foregoing Certificate is not executed, with signature guaranteed,
the Company may deem the Rights represented by this Rights Certificate to be
Beneficially Owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such capitalized terms are defined in the Rights
Agreement), and not issue any Rights Certificate or Rights Certificates in
exchange for this Rights Certificate.

 

 

EXHIBIT
C

 

UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED JUNE 3, 2005
(THE “RIGHTS AGREEMENT”), BETWEEN TETON PETROLEUM COMPANY AND COMPUTERSHARE
INVESTOR SERVICES, LLC., AS RIGHTS AGENT, RIGHTS ISSUED TO, BENEFICIALLY OWNED
BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

Teton
Petroleum Company

 

Summary
of Terms of

Rights
Agreement

 

Nature
of Right: When
exercisable, each Right (a “Right”) will initially entitle the holder to
purchase one one-hundredth of a share of Series C Preferred Stock (“Preferred
Stock”) of Teton Petroleum Company (the “Company”).

Means
of Distribution: The
Rights will be distributed to holders of the Company’s outstanding Common Stock
as a dividend of one Right for each share of Common Stock. The Rights will also
be attached to all future issuances of Common Stock prior to the Distribution
Date (as defined below).

Exercisability: Rights
become exercisable on the earlier of: (i) the date of public announcement by the
Company or by any person or group (an “Acquiring Person”) that such person or
group has acquired beneficial ownership of 15% or more of the Company’s
outstanding Common Stock, or (ii) the tenth business day (unless extended by the
Board prior to the time a person becomes an Acquiring Person) following the
commencement, or announcement of an intention to commence, by any person or
group of a tender or exchange offer which would result in such person owning 15%
or more of the outstanding Common Stock of the Company (the earlier of such
dates is referred to as the “Distribution Date”), provided that an Acquiring
Person does not include an Exempt Person (as such term is defined in the Rights
Agreement). Rights will trade separately from the Common Stock once the Rights
become exercisable.

Purchase
Price: $22.00
per share, which is the amount that in the judgment of the Board of Directors
represents the long-term value of the Common Stock over the term of the Rights
Agreement (the “Purchase Price”).

Term:
The
Rights will expire upon the earlier of (i) three years after the date of
issuance, or June 2, 2008 or (ii) redemption or exchange by the Company as
described below.

Redemption
of Rights: Rights
are redeemable at a price of $0.001 per Right, by the vote of the Company’s
Board of Directors, at any time until the occurrence of a Flip-In Event (defined
below).

Preferred
Stock: The
Preferred Stock purchasable upon exercise of the Rights will be nonredeemable
and junior to any other series of preferred stock the Company may issue (unless
otherwise provided in the terms of such other series). Each share of Preferred
Stock will have a preferential cumulative quarterly dividend in an amount equal
to the greater of (a) $75.00 or (b) 100 times the dividend declared on each
share of Common Stock. In the event of liquidation, the holders of Preferred
Stock will receive a preferred liquidation payment equal to the greater of (a)
$2,200.00 per share, plus accrued dividends to the date of distribution whether
or not earned or declared, plus a
redemption premium of $1,200.00 per share of Preferred Stock or (b)
an amount per share equal to 100 times the aggregate payment to be distributed
per share of Common Stock. Each share of Preferred Stock will have 100 votes,
voting together with the shares of Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are exchanged
for or changed into other securities, cash and/or other property, each share of
Preferred Stock will be entitled to receive 100 times the amount and type of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution provisions. Fractional
shares (in integral multiples of one one-hundredth) of Preferred Stock 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 Stock on the last
trading date prior to the date of exercise. Because of the nature of the
Preferred Stock’s dividend, liquidation and voting rights, the value of one
one-hundredth of a share of Preferred Stock purchasable upon exercise of each
Right should approximate the value of one share of Common Stock.

 

Rights
in Event of Self-Dealing Transaction or Acquisition of Substantial Amount of
Common Stock: In the
event that an Acquiring Person engages in certain self-dealing transactions with
the Company, or Acquisition of or becomes a beneficial owner of 15% or more of
the outstanding Common Stock (“Flip-In Events”), a holder of a Right thereafter
has the right to purchase, upon payment of the then current Purchase Price, in
lieu of one one-hundredth of a share of Preferred Stock per outstanding Right,
such number of shares of Common Stock having a market value at the time of the
transaction equal to the Purchase Price divided by one-half the Current Market
Price (as defined in the Rights Agreement) of the Common Stock. Notwithstanding
the foregoing, Rights held by the Acquiring Person or any Associate or Affiliate
thereof or certain transferees will be null and void and no longer be
transferable.

Self-dealing
transactions are defined to include a
consolidation, merger or other combination of an Acquiring Person with the
Company in which the Company is the surviving corporation, the transfer of
assets to the Company in exchange for securities of the Company, the acquisition
of securities of the Company (other than in a pro rata distribution to all
stockholders), the sale, purchase, transfer, distribution, lease, mortgage,
pledge or acquisition of assets by the Acquiring Person to, from or with the
Company on other than an arm’s-length basis, compensation to an Acquiring Person
for services (other than for employment as a regular or part-time employee or
director on a basis consistent with the Company’s past practice), a loan or
provision of other financial assistance (except proportionately as a
stockholder) to an Acquiring Person or the licensing, sale or other transfer of
proprietary technology or know-how from the Company to the Acquiring Person on
terms not approved by the Board of Directors or a reclassification,
recapitalization or other transaction with the effect of increasing by more than
1% the Acquiring Person’s proportionate share of any class of securities of the
Company.

Rights
in Event of Business Combination: If,
following the occurrence of a Flip-In Event, the Company is acquired by any
person in a merger or other business combination transaction in which the Common
Stock is exchanged or converted or in which the Company is not the surviving
corporation, or 50% or more of its assets or earnings power are sold to any
person (“Flip-Over Events”), each holder of a Right (other than an Acquiring
Person, or Affiliates or Associates thereof) shall thereafter have the right to
purchase, upon payment of the then current Purchase Price, such number of shares
of common stock of the acquiring company having a current market value equal to
the Purchase Price divided by one-half the Current Market Price of such common
stock.

Exchange
Option: In the
event (i) any person or group becomes an Acquiring Person or (ii) any of the
types of transactions, acquisitions or other events described above as
self-dealing transactions occur, and prior to the acquisition by such person or
group of 50% or more of the outstanding shares of Common Stock, the Board may
require all or any portion of the outstanding Rights (other than Rights owned by
such Acquiring Person which have become null and void) to be exchanged for
Common Stock on a pro rata basis, at an exchange ratio of one share of Common
Stock or one one-hundredth of a share of Preferred Stock (or of a share of a
class or series of the Company’s Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).

Fractional
Shares: No
fractional shares of Common Stock will be issued upon exercise of the Rights
and, in lieu thereof, a payment in cash will be made to the holder of such
Rights equal to the same fraction of the current market value of a share of
Common Stock.

Adjustment: The
Purchase Price payable, and the number of shares of 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 Preferred Stock or convertible securities at less
than the 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 dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above). The number of Rights
associated with each share of Common Stock is 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 Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution
Date.

Rights
as Stockholder: The
Rights themselves do not entitle the holder thereof to any rights as a
stockholder, including, without limitation, voting rights or to receive
dividends.

Amendment
of Rights: Until the
Rights become nonredeemable, the Company may, except with respect to the
redemption price, amend the Agreement in any manner. After the Rights become
nonredeemable, the Company may amend the Agreement to cure any ambiguity, to
correct or supplement any provision which may be defective or inconsistent with
any other provisions, to shorten or lengthen any time period under the Rights
Agreement, or to change or supplement any provision in any manner the Company
may deem necessary or desirable, provided that no such amendment may adversely
affect the interests of the holders of the Rights (other than the Acquiring
Person or its Affiliates or Associates) or cause the Rights to again be
redeemable or the Agreement to again be freely amendable.

A copy of
the Rights Agreement is available, free of charge, from the Company, 1600
Broadway, Suite 2400, Denver, Colorado 80202, Attention: Secretary. This summary
description of the Rights Agreement does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as amended from
time to time, which is incorporated in this summary description by
reference.

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