Document:

Exhibit
4.1

 

Execution
Version

 

THIRD
AMENDMENT TO RIGHTS AGREEMENT

 

This THIRD AMENDMENT is dated as of April 9,
2009, to the Rights Agreement, dated as of April 11, 1989, and amended by
the first amendment dated as of February 24, 1999, and the second amendment
dated as of June 3, 2008, by and between CREDO Petroleum Corporation (the “Company”) and Computershare Trust Company,
N.A., as successor in interest to American Securities Transfer, Incorporated,
as Rights Agent (the “Rights Agent”)
(as heretofore amended, the “Rights Agreement”).

 

WHEREAS, the Company and the Rights Agent have
heretofore executed and entered into the Rights Agreement;

 

WHEREAS, pursuant to Section 26 of the Rights
Agreement, the Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with the provisions of Section 26
thereof;

 

WHEREAS, the Board of Directors has determined that it
is in the best interests of the Company and its shareholders to reincorporate
from Colorado into Delaware (the “Reincorporation”)
pursuant to a merger to be effected between the Company and a wholly owned
subsidiary of the Company incorporated in Delaware, the effective time of such
merger being referred to herein as the “Effective
Time”; and

 

WHEREAS, in connection with the Reincorporation, the
Board of Directors has determined that it is in the best interests of the
Company to enter into the Third Amendment to Rights Agreement in order to
terminate the Rights Agreement immediately prior to the Effective Time.

 

NOW, THEREFORE, the Company and the Rights Agent
hereby agree as follows:

 

1.             Final Expiration Date.  The
definition of the term “Final Expiration Date” as set forth in Section 7(a) of
the Rights Agreement (i.e., “the close of business on April 28, 2009”) is
hereby deleted and replaced with the following: “the close of business on the
date immediately prior to the Effective Time.”

 

2.             Termination of Rights Agreement.  
The Company and Rights Agent hereby agree that, immediately prior to the
Effective Time, the Rights Agreement shall be terminated for all purposes and
shall be of no further force and effect, except as to those provisions of the
Rights Agreement that expressly survive the termination of the Rights
Agreement.  The Company agrees to notify
the Rights Agent promptly after the occurrence of the Effective Time.

 

3.             Failure of Reincorporation to Occur. 
If the Effective Time does not occur on or prior to the close of
business on April 28, 2009, this Third Amendment shall be terminated and
of no further force or effect, and the Rights Agreement shall be unaffected by
the terms hereof.  The Company agrees to
notify the Rights Agent promptly in the event the Effective Time does not
occur.

 

4.             Successors and Assigns.  This Third
Amendment shall inure to the benefit of and be binding upon the successors and
assigns of the parties hereto.

 

 

5.             Authority.  Each
signatory hereto signing in a representative capacity represents and warrants
to every party hereto that he or she is duly authorized to execute this Third
Amendment on behalf of his or her respective party and that he or she has the
power to bind his or her respective party to this Third Amendment by such
signature.

 

6.             Further Instruments and Actions. 
The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Third Amendment.

 

7.             Severability.  In case one
or more provisions of this Third Amendment shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality,
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.

 

8.             Entire Agreement.  This Third
Amendment constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes and preempts any prior agreements,
understandings or representations made by and among such parties, whether
written or oral, and no party shall be liable or bound to any other party in
any matter by any warranties, representations or covenants except as
specifically set forth herein or therein.

 

9.             Limited Effect.   Except as expressly modified by this Third
Amendment, the Rights Agreement shall continue to be and shall remain, in full
force and effect and the valid and binding obligation of the parties thereto in
accordance with its terms.

 

10.           Governing Law.  This Third
Amendment shall be deemed to be a contract made under the laws of the State of
Colorado and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.

 

11.           Execution in Counterparts. 
This Third Amendment may be executed in any number of counterparts and
each of such counterpart shall for all purposes be deemed an original, and all
such counterparts shall together constitute but one and the same instrument.  A signature to this Third Amendment
transmitted electronically shall have the same authority, effect, and
enforceability as an original signature.

 

[Remainder of Page Intentionally Left Blank]

 

*                              *                              *

 

2

 

IN WITNESS WHEREOF, this Third Amendment has been duly
executed by the Company and the Rights Agent as of the day and year first
written above.

 

	
   

  	
  CREDO PETROLEUM
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By.

  	
  /s/ James T.
  Huffman

  
	
   

  	
  Name:

  	
  James T. Huffman

  
	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  
	
   

  	
  (as Rights
  Agent)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By.

  	
  /s/ Kellie Gwinn

  
	
   

  	
  Name:

  	
  Kellie Gwinn

  
	
   

  	
  Title:

  	
  Vice President

  

 

3Exhibit 4.2

 

Execution Version

 

CREDO PETROLEUM CORPORATION

 

and

 

COMPUTERSHARE TRUST COMPANY, N.A.

 

RIGHTS AGREEMENT

 

Dated as of April 9, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  Section 2.

  	
   

  	
  Appointment of Rights Agent

  	
   

  	
  7

  
	
  Section 3.

  	
   

  	
  Issue of Right Certificates

  	
   

  	
  7

  
	
  Section 4.

  	
   

  	
  Form of Right Certificates

  	
   

  	
  9

  
	
  Section 5.

  	
   

  	
  Countersignature and Registration

  	
   

  	
  10

  
	
  Section 6.

  	
   

  	
  Transfer, Split Up, Combination and Exchange of
  Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates

  	
   

  	
  11

  
	
  Section 7.

  	
   

  	
  Exercise of Rights; Purchase Price; Expiration Date
  of Rights

  	
   

  	
  12

  
	
  Section 8.

  	
   

  	
  Cancellation and Destruction of Right Certificates

  	
   

  	
  14

  
	
  Section 9.

  	
   

  	
  Availability of Preferred Shares

  	
   

  	
  14

  
	
  Section 10.

  	
   

  	
  Preferred Shares Record Date

  	
   

  	
  15

  
	
  Section 11.

  	
   

  	
  Adjustment of Purchase Price, Number of Shares or
  Number of Rights

  	
   

  	
  16

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted Purchase Price or Number of
  Shares

  	
   

  	
  26

  
	
  Section 13.

  	
   

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

  	
   

  	
  27

  
	
  Section 14.

  	
   

  	
  Fractional Rights and Fractional Shares

  	
   

  	
  28

  
	
  Section 15.

  	
   

  	
  Rights of Action

  	
   

  	
  30

  
	
  Section 16.

  	
   

  	
  Agreement of Right Holders

  	
   

  	
  31

  
	
  Section 17.

  	
   

  	
  Right Certificate Holder Not Deemed a Stockholder

  	
   

  	
  32

  
	
  Section 18.

  	
   

  	
  Concerning the Rights Agent

  	
   

  	
  32

  
	
  Section 19.

  	
   

  	
  Merger or Consolidation or Change of Name of Rights
  Agent

  	
   

  	
  33

  
	
  Section 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
  34

  
	
  Section 21.

  	
   

  	
  Change of Rights Agent

  	
   

  	
  37

  
	
  Section 22.

  	
   

  	
  Issuance of New Right Certificates

  	
   

  	
  38

  
	
  Section 23.

  	
   

  	
  Redemption

  	
   

  	
  38

  
	
  Section 24.

  	
   

  	
  Exchange

  	
   

  	
  40

  
	
  Section 25.

  	
   

  	
  Notice of Certain Events

  	
   

  	
  42

  
	
  Section 26.

  	
   

  	
  Notices

  	
   

  	
  43

  
	
  Section 27.

  	
   

  	
  Supplements and Amendments

  	
   

  	
  44

  
	
  Section 28.

  	
   

  	
  Successors

  	
   

  	
  44

  
	
  Section 29.

  	
   

  	
  Benefits of This Agreement

  	
   

  	
  44

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 30.

  	
   

  	
  Severability

  	
   

  	
  45

  
	
  Section 31.

  	
   

  	
  Governing Law

  	
   

  	
  45

  
	
  Section 32.

  	
   

  	
  Counterparts

  	
   

  	
  45

  
	
  Section 33.

  	
   

  	
  Descriptive Headings

  	
   

  	
  45

  
	
  Section 34.

  	
   

  	
  Effective Time

  	
   

  	
  45

  
	
  Section 35.

  	
   

  	
  Force Majeure

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
  Form of
  Certificate of Designations

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  -

  	
  Form of
  Right Certificate

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  -

  	
  Summary
  of Rights to Purchase Preferred Shares

  	
   

  	
   

  

 

ii

 

CREDO PETROLEUM CORPORATION

and

COMPUTERSHARE TRUST COMPANY, N.A.

RIGHTS AGREEMENT

 

Agreement,
dated as of April 9, 2009, between CREDO Petroleum Corporation, a Delaware
corporation (the “Company”), and Computershare Trust Company, N.A., as
rights agent (the “Rights Agent”). This Agreement shall become effective
immediately following the effective time of the merger of CREDO Petroleum
Corporation, a Colorado corporation (“CREDO Colorado”) with and into the
Company, pursuant to that certain Merger Agreement by and between CREDO
Colorado and the Company (the “Effective Time”), and the Company will provide
the Rights Agent with notice of the occurrence of the Effective Time promptly
thereafter.

 

The
Board of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “Right”) for each Common Share (as
hereinafter defined) of the Company outstanding on April 10, 2009 (the “Record
Date”), each Right representing the right to purchase one one-thousandth of
a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined), such dividend to be payable as promptly as practicable
following the Effective Time.

 

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

 

 

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

 

(a)                                  “Acquiring
Person” shall mean any Person who or which, following the Effective Time,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company
or any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan or (iv) any Person who is,
immediately following the Effective Time, the Beneficial Owner of 15% or more
of the Common Shares of the Company then outstanding, but only so long as such
Person thereafter does not, at any time while the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding, acquire Beneficial
Ownership of any additional Common Shares (other than upon the exercise of any
rights hereunder or pursuant to a stock dividend or distribution or similar
action by the Company); provided, however, that such Person shall cease to be
excluded from the definition of Acquiring Person pursuant to this clause (iv) immediately
at such time as such Person ceases to be the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding.  Notwithstanding the foregoing, no Person
shall become an “Acquiring Person” as the result of (i) an acquisition of
Common Shares by the Company which, by reducing the number of Common Shares of
the Company outstanding, increases the proportionate number of Common Shares of
the Company beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding; provided, however, that,
if a Person shall become the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases 

 

2

 

by the Company, become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be deemed to be an “Acquiring
Person,” or (ii) an
acquisition of Common Shares resulting from the grant of a compensatory equity
award to such Person, or any of such Person’s Affiliates or Associates, in
connection with services provided as a director or officer of the Company or
any of its Subsidiaries.  Notwithstanding
the foregoing, if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an “Acquiring
Person” for any purposes of this Agreement.

 

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

 

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

 

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

 

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

 

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates has (A) the
right to acquire (whether such right is exercisable immediately or only after
the 

 

3

 

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

 

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

 

Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person’s Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued 

 

4

 

and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.

 

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

 

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

 

(g)                                 “Common
Shares” when used with reference to the Company shall mean the shares of
common stock, par value $0.10 per share, of the Company.  “Common Shares” when used with reference to
any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.

 

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

 

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

 

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

 

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

 

(l)                                     “NASDAQ”
shall mean the National Association of Securities Dealers, Inc. Automated
Quotation System.

 

5

 

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

 

(n)                                 “Preferred
Shares” shall mean shares of Series A Junior Participating Preferred
Stock, par value $0.10 per share, of the Company having the rights and
preferences set forth in the Form of Certificate of Designations attached
to this Agreement as Exhibit A.

 

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

 

(p)                                 “Record
Date” shall have the meaning set forth in the second paragraph hereof.

 

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

 

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

 

(s)                                  “Right”
shall have the meaning set forth in the second paragraph hereof.

 

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

 

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

 

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

 

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

 

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

 

6

 

Section 2.                                            Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable,
upon ten (10) days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and in no event shall be liable for the acts or omissions of any
such co-Rights Agent.

 

Section 3.                                            Issue
of Right Certificates.  (a) Until
the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
of the Company for or pursuant to the terms of any such plan) of a tender or
exchange offer the consummation of which would result in any Person becoming
the Beneficial Owner of Common Shares of the Company aggregating 15% or more of
the then outstanding Common Shares of the Company (including any such date
which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the “Distribution
Date”), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares of the
Company registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares of the
Company.  As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to

 

7

 

be sent (and the Rights Agent will, if requested and provided with the
necessary information, send) by first-class, insured, postage-prepaid mail, to
each record holder of Common Shares of the Company as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of Exhibit B
hereto (a “Right Certificate”), evidencing one Right for each Common
Share so held.  As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

 

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

 

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

 

8

 

This certificate also
evidences and entitles the holder hereof to certain Rights as set forth in the
Rights Agreement between CREDO Petroleum Corporation. (the “Company”) and
Computershare Trust Company, N.A. (the “Rights Agent”), dated as of April 9,
2009 as it may be amended from time to time (the “Rights Agreement”), the terms
of which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. 
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate.  The
Company will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. 
As set forth in the Rights Agreement, Rights beneficially owned by any
Person (as defined in the Rights Agreement) who becomes an Acquiring Person (as
defined in the Rights Agreement) become null and void.

 

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

 

Section 4.                                            Form of
Right Certificates.  The Right
Certificates (and the forms of election to purchase Preferred Shares and of
assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto, and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the duties, rights or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any applicable rule or regulation made pursuant

 

9

 

thereto or with
any applicable rule or regulation of any stock exchange or the Financial
Industry Regulatory Authority, or to conform to usage.  Subject to the provisions of Section 22
hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandths of a Preferred Share as shall be set forth
therein at the price per one one-thousandth of a Preferred Share set forth
therein (the “Purchase Price”), but the number of such one
one-thousandths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

 

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

 

10

 

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

 

Section 6.                                            Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates. 
Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the Designated Office of the Rights Agent.  Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right Certificate or Right Certificates,
as the case may be, as so requested.  The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right

 

11

 

Certificates.  The Rights Agent shall have no duty or
obligation under this Section 6 unless and until it is reasonably
satisfied that all such taxes and/or charges have been paid.

 

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

 

Section 7.                                            Exercise
of Rights; Purchase Price; Expiration Date of Rights.  (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein), in whole or in part, at any time after the Distribution Date,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof properly and duly executed, to the Rights Agent at
the Designated Office of the Rights Agent, together with payment of the
Purchase Price for each one one-thousandth of a Preferred Share as to which the
Rights are exercised, at or prior to the earliest of (i) the Close of
Business on April 10, 2019 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.

 

(b)                                 The
Purchase Price for each one one-thousandth of a Preferred Share purchasable
pursuant to the exercise of a Right shall initially be $30.00, and shall be
subject to

 

12

 

adjustment from time to time as provided in Section 11 or 13
hereof, and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)                                  Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase properly and duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check,
cashier’s check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes any such transfer
agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent of the Preferred Shares with such depositary
agent) and the Company hereby directs such depositary agent to comply with such
request; (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14
hereof; (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate.

 

(d)                                 In
case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to

 

13

 

the Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to such holder’s duly
authorized assigns, subject to the provisions of Section 14 hereof.

 

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

 

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

 

14

 

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

 

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

 

15

 

distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

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

 

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

 

16

 

(ii)                                  Subject
to Section 24 hereof, in the event any Person becomes an Acquiring Person,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal
the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of the Company (determined pursuant
to Section 11(d) hereof) on the date of the occurrence of such
event.  In the event that any Person
shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.

 

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

 

17

 

Person whose Rights would be null and void pursuant to
the preceding sentence shall be cancelled.

 

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

 

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

 

18

 

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

 

(c)                                  In
case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those

 

19

 

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

 

(d)                                 (i) For
the purpose of any computation hereunder, the “current per share market price”
of any security (a “Security” for the purpose of this Section 11(d)(i))
on any date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days immediately prior to
but not including such date; provided, however, that, in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security or
Securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to

 

20

 

the expiration of 30 Trading Days after but not including the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security.  The closing price for each day shall be the
last sale price, regular way, reported at or prior to 4:00 P.M. Eastern
time or, in case no such sale takes place on such day, the average of the bid
and asked prices, regular way, reported as of 4:00 P.M. Eastern time, in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities
exchange, the last quoted price reported at or prior to 4:00 P.M. Eastern
time or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported as of 4:00 P.M. Eastern time by
NASDAQ or such other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company.  The term “Trading Day” shall mean a
day on which the principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction of business, or,
if the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.

 

(ii)                                  For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i).  If the
Preferred Shares are not publicly traded, the “current per share market price”
of the Preferred Shares shall be conclusively deemed to be the current per
share market price of the Common Shares as determined pursuant to Section 11(d)(i) hereof

 

21

 

(appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by one
thousand.  If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, “current per
share market price” shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.

 

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

 

(f)                                    If,
as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (c) hereof, inclusive,
and the provisions of Sections 7, 9, 10 and 13 hereof with respect to the
Preferred Shares shall apply on like terms to any such other shares.

 

22

 

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

 

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

 

(i)                                     The
Company may elect, on or after the date of any adjustment of the Purchase
Price, to adjust the number of Rights in substitution for any adjustment in the
number of one one-thousandths of a Preferred Share purchasable upon the
exercise of a Right.  Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a Preferred Share for which a Right
was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of

 

23

 

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

 

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

 

24

 

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

 

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

 

(m)                               Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that it, in its sole discretion, shall determine to be advisable in order that
any consolidation or subdivision of the Preferred Shares, issuance wholly for
cash of any Preferred Shares at less than the current market price, issuance
wholly for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or

 

25

 

issuance of rights, options or warrants referred to in Section 11(b) hereof,
hereafter made by the Company to holders of the Preferred Shares shall not be
taxable to such stockholders.

 

(n)                                 In
the event that, at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on
the Common Shares payable in Common Shares, or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then, in any such case, (A) the number of
one one-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it.  The adjustments provided for in this Section 11(n) shall
be made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.

 

Section 12.                                      Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth the amount of the adjustment and a brief statement of
the facts and computations accounting for such adjustment (including, without
limitation, the record date for the adjustment), (b) file with the Rights
Agent and with each transfer agent for the Common Shares or the Preferred
Shares and the Securities and Exchange Commission a copy

 

26

 

of such
certificate and (c) if such adjustment occurs at any time after the
Distribution Date, mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.

 

Section 13.                                      Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.  In the event, directly or indirectly, at any
time after a Person has become an Acquiring Person, (a) the Company shall
consolidate with, or merge with and into, any other Person, (b) any Person
shall consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of such other Person (including
the Company as successor thereto or as the surviving corporation) as shall
equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-

 

27

 

thousandths of a
Preferred Share for which a Right is then exercisable and dividing that product
by (B) 50% of the then current per share market price of the Common Shares
of such other Person (determined pursuant to Section 11(d) hereof) on
the date of consummation of such consolidation, merger, sale or transfer; (ii) the
issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term “Company”
shall thereafter be deemed to refer to such issuer; and (iv) such issuer
shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9 hereof)
in connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares of the Company thereafter deliverable upon
the exercise of the Rights.  The Company
shall not consummate any such consolidation, merger, sale or transfer unless,
prior thereto, the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing.  The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. 
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

 

Section 14.                                      Fractional
Rights and Fractional Shares.  (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable,

 

28

 

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

 

(b)                                 The
Company shall not be required to issue fractions of Preferred Shares (other
than fractions which are integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share).  Fractions of Preferred Shares in integral
multiples of one one-thousandth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
that such

 

29

 

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

 

(c)                                  The
holder of a Right, by the acceptance of the Right, expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of a Right (except as provided above). 
The Rights Agent shall have no duty or obligation with respect to this Section 14
and Section 24(d) unless and until it has received specific
instructions (and sufficient cash, if required) from the Company with respect
to its duties and obligations under such Sections.

 

Section 15.                                      Rights
of Action.  All rights of action in
respect of this Agreement, excepting the rights of action expressly given to
the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares); and any registered holder
of any Right Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in such holder’s own behalf and for such holder’s own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company to

 

30

 

enforce, or
otherwise act in respect of, such holder’s right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. 
Without limiting the foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement, and will be
entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Agreement.

 

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

 

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

 

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

 

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

 

31

 

Section 17.                                      Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.

 

Section 18.                                      Concerning
the Rights Agent.  The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder, and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration of this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
damage, judgment, fine, penalty, claim, demand, settlement, cost or expense
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent, for any action taken, suffered or omitted by the Rights
Agent in connection with the acceptance, amendment and administration of this
Agreement, including without limitation the costs and expenses of defending
against any claim of liability arising therefrom directly or indirectly in the
premises.

 

32

 

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 administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

 

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

 

33

 

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

 

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

 

Section 20.             Duties of Rights Agent.  The Rights Agent undertakes the duties and
obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

 

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

 

(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking, suffering or omitting any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer
or the

 

34

 

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 or suffered or omitted by it under the provisions of this
Agreement in reliance upon such certificate.

 

(c)           The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or willful misconduct.

 

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

 

(e)           The
Rights Agent shall not be under any liability or responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible or liable for any breach by the Company of any covenant
or condition contained in this Agreement or in any Right Certificate; nor shall
it be responsible or liable for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11(a)(ii) hereof)
or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right

 

35

 

Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.

 

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

 

(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.

 

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

 

(i)            The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any

 

36

 

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

 

Section 21.             Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail.  In the event the transfer agency relationship
in effect between the Company and the Rights Agent terminates, the Rights Agent
will be deemed to have resigned automatically and be discharged from its duties
under this Agreement as of the effective date of such termination, and the
Company shall be responsible for sending any required notice.  The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (which holder shall, with
such notice, submit such holder’s Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (i) a Person organized and
doing business and in good standing under the laws of any state of the United
States, so long as such Person is authorized under such laws to exercise

 

37

 

all of the duties
of the Rights Agent under this Agreement and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (ii) an Affiliate of such Person.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. 
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

 

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

 

Section 23.             Redemption.  (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person
becomes an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 per Right,

 

38

 

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

 

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

 

39

 

Section 24.             Exchange.  (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become null and void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any adjustment in the number of Rights pursuant to Section 11(i) (such
exchange ratio being hereinafter referred to as the “Exchange Ratio”).  The Board of Directors of the Company may
implement such reasonable procedures as it may in good faith deem appropriate
to effect such exchange, which may include procedures designed to ensure that
Common Shares are not issued in respect of Rights that have become null and
void pursuant to the provisions of Section 11(a)(ii) hereof and that
Common Shares believed by it in good faith to be issuable in respect of Rights
that have not become so null and void are held in trust for the benefit of the
holders thereof.  Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding following the Effective
Time.

 

(b)           Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of the holders of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio.

 

40

 

The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. 
The Company promptly shall mail a notice of any such exchange to the
Rights Agent and 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 Common Shares for Rights
will be effected, and, in the event of any partial exchange, the number of
Rights which will be exchanged.  Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.

 

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

 

(d)           The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares.  In lieu of such fractional

 

41

 

Common Shares, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. 
For the purposes of this paragraph (d), the current market value of
a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

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

 

42

 

such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and, in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.

 

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

 

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

 

CREDO Petroleum Corporation

1801 Broadway, Suite 900

Denver, CO 80202

Attention: James T. Huffman

 

Subject to the provisions of Section 21 hereof,
any notice or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or

 

43

 

on the Rights Agent shall be sufficiently given or
made if sent by overnight delivery service or first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

 

Computershare
Trust Company, N.A.

350
Indiana Street, Suite 800

Golden,
Colorado  80401

Attn: Client Services

 

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

 

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

 

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

 

Section 29.             Benefits of This Agreement.  Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered

 

44

 

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

 

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

 

Section 31.             Governing Law.  This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state.

 

Section 32.             Counterparts.  This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

 

Section 33.             Descriptive Headings.  Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

 

Section 34.             Effective Time.  This Agreement shall become effective
immediately following the Effective Time, and shall have no force or effect
prior thereto.

 

Section 35.             Force Majeure.  Notwithstanding anything to the contrary
contained herein, the Rights Agent shall not be liable for any delays or
failures in performance

 

45

 

resulting from
acts beyond its reasonable control including, without limitation, acts of God,
terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions
or malfunction of computer facilities, or loss of data due to power failures or
mechanical difficulties with information storage or retrieval systems, labor
difficulties, war, or civil unrest. 

 

46

 

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

 

	
  Attest: 

  	
   

  	
  CREDO PETROLEUM
  CORPORATION 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /s/ Alford B. Neely

  	
   

  	
  By 

  	
  /s/ James T. Huffman

  
	
  Name: Alford B. Neely

  	
   

  	
  Name: James T. Huffman

  
	
  Title: Chief Financial
  Officer

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest: 

  	
   

  	
  COMPUTERSHARE TRUST
  COMPANY, N.A. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /s/ Ian Yewer

  	
   

  	
   

  
	
  Name: Ian Yewer

  	
   

  	
  By 

  	
  /s/ Kellie Gwinn

  
	
  Title: Branch President

  	
   

  	
  Name: Kellie Gwinn

  
	
   

  	
   

  	
  Title: Vice President

  

 

47

 

Exhibit A

 

FORM

 

of

 

CERTIFICATE OF
DESIGNATIONS

 

of

 

SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK

 

of

 

CREDO PETROLEUM
CORPORATION

 

(Pursuant to Section 151
of the

Delaware General Corporation Law)

 

 

CREDO Petroleum Corporation, a corporation organized
and existing under the General Corporation Law of the State of Delaware
(hereinafter called the “Corporation”), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation as required
by Section 151 of the General Corporation Law on April 9, 2009, with
effect immediately following the “Effective Time,” as that term is defined in
the Rights Agreement dated as of April 9, 2009.

 

RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors of this Corporation (hereinafter called
the “Board of Directors” or the “Board”) in accordance with the provisions of
the Certificate of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $0.10 per share, of the Corporation (the “Preferred
Stock”), and hereby states the designation and number of shares, and fixes the
relative rights, preferences, and limitations thereof as follows:

 

Series A Junior Participating Preferred Stock:

 

Section 1. Designation and Amount. The
shares of such series shall be designated as “Series A Junior
Participating Preferred Stock” (the “Series A Preferred Stock”) and the
number of shares constituting the Series A Preferred Stock shall be
40,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

 

A-1

 

Section 2. Dividends and Distributions.

 

(A)                              Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock, par value $0.10 per share
(the “Common Stock”), of the Corporation, and of any other junior stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
on the first day of March, June, September and December in each year
(each such date being referred to herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (a) $1
or (b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

 

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

 

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the

 

A-2

 

determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.

 

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

 

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

 

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

 

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

 

Section 4. Certain Restrictions.

 

(A)                              Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on

 

A-3

 

shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6. Liquidation, Dissolution or Winding
Up. Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding

 

A-4

 

up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.

 

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

 

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

 

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

 

A-5

 

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

 

IN WITNESS WHEREOF, this Certificate of Designations
is executed on behalf of the Corporation by its Chairman of the Board and
attested by its Secretary this 10th day of April 2009.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James T. Huffman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  

 

A-6

 

Exhibit B

 

Form of Right
Certificate

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER APRIL 10,  2019  OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT.

 

Right Certificate

 

CREDO PETROLEUM
CORPORATION.

 

This certifies that __________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Agreement, dated as of April 9, 2009 (the “Agreement”), between CREDO
Petroleum Corporation a Delaware corporation (the “Company”), and Computershare
Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Agreement) and
prior to 5:00 P.M., New York City time, on April 10, 2019 at the
designated office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $0.10 per share, of the Company
(the “Preferred Shares”), at a purchase price of $30.00  per one one-thousandth of a Preferred
Share (the “Purchase Price”), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of April 10, 2009, based on the Preferred Shares as
constituted at such date. As provided in the Agreement, the Purchase Price and
the number of one one-thousandths of a Preferred Share which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.

 

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

 

This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent, may
be exchanged for another Right Certificate or

 

B-1

 

Right Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of Preferred
Shares as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.

 

Subject to the provisions of the Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at
a redemption price of $.001 per Right or (ii) may be exchanged in whole or
in part for Preferred Shares or shares of the Company’s Common Stock, par value
$0.10 per share.

 

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

 

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

 

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

 

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

 

	
  ATTEST:

  	
   

  	
  CREDO PETROLEUM CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPUTERSHARE TRUST COMPANY, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   Name:

  	
   

  	
   

  
	
   

  	
   Title:

  	
   

  	
   

  

 

B-2

 

Form of Reverse Side
of Right Certificate

FORM OF ASSIGNMENT

 

(To be executed by the registered
holder if such 

holder desires to transfer the Right Certificate.)

 

FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers
unto________________________

	
   

  

(Please print name and address of transferee)

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Guaranteed:

 

All Guarantees must be made by a financial institution
(such as a bank or broker) which is a participant in the Securities Transfer
Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc.
Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”)
and must not be dated. Guarantees by a notary public are not acceptable.

 

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

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

Form of
Reverse Side of Right Certificate — continued

 

B-3

 

FORM OF ELECTION TO
PURCHASE

 

(To be executed if holder
desires to exercise 

Rights represented by the Right Certificate.)

 

To: CREDO PETROLEUM CORPORATION

 

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

 

Please insert social security or other identifying
number

 

	
   

  
	
  (Please print name and
  address)

  
	
   

  

 

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

 

Please insert social security or other identifying number

 

	
   

  
	
  (Please print name and
  address)

  
	
   

  

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

 

All Guarantees must be made by a financial institution
(such as a bank or broker) which is a participant in the Securities Transfer
Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc.
Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”)
and must not be dated. Guarantees by a notary public are not acceptable.

 

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

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

B-4

 

NOTICE

 

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

 

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

 

B-5

 

Exhibit C

 

SUMMARY OF RIGHTS TO
PURCHASE PREFERRED SHARES

 

Introduction

 

Effective April 10, 2009, the Board of Directors
of our Company, CREDO Petroleum Corporation, a Delaware corporation, declared a
dividend of one preferred share purchase right (a “Right”) for each outstanding
share of common stock, par value $0.10 per share.  The dividend is payable on April 10,
2009 to stockholders of record on April 10, 2009.

 

For those interested in the specific terms of the
Rights Agreement between our Company and Computershare Trust Company, N.A., as
the Rights Agent, dated April 9, 2009, we provide the following summary
description.  Please note, however, that
this description is only a summary, and is not complete, and should be read
together with the entire Rights Agreement, which has been filed with the
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A dated April 10, 2009.  A
copy of the agreement is available free of charge from our Company.

 

The Rights.  The Rights will initially trade with, and
will be inseparable from, the common stock. 
The Rights are evidenced only by certificates that represent shares of
common stock and not by separate certificates. 
New Rights will accompany any new shares of common stock we issue after April 10,
2009  until the earlier of the
Distribution Date (described below) and the redemption or expiration of the
Rights.

 

Exercise Price.  Each Right will allow its holder to purchase
from our Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock (“Preferred Share”) for $30.00 once the Rights
become exercisable.  Each one-thousandth
of a Preferred Share will give the stockholder approximately the same dividend,
voting, and liquidation rights as would one share of common stock.  Prior to exercise, the Right does not give
its holder any dividend, voting, or liquidation rights.

 

Exercisability.  The Rights will not be exercisable until

 

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

 

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

 

We refer to the date when the Rights become exercisable
as the “Distribution Date.” Until that date, the common stock certificates will
also evidence the Rights, and any transfer of shares of common stock will
constitute a transfer of Rights.  After
that date, the Rights will separate from the common stock and be evidenced by
book-entry credits or by Rights 

 

C-1

 

certificates that we will mail to all eligible holders
of common stock.  Any Rights held by an
Acquiring Person are void and may not be exercised.

 

Consequences Of A Person Or Group
Becoming An Acquiring Person.

 

·                  Flip In. 
If a person or group becomes an Acquiring Person, all holders of Rights
except the Acquiring Person may, for $30.00, purchase shares of our common
stock with a market value of $60.00, based on the market price of the common
stock prior to such acquisition.

 

·                  Flip Over. 
If our Company is acquired in a merger or similar transaction after the
Rights Distribution Date, all holders of Rights except the Acquiring Person
may, for $30.00, purchase shares of the acquiring corporation with a market
value of $60.00, based on the market price of the acquiring corporation’s stock
prior to such merger.

 

Preferred Share Provisions.

 

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

 

·                  will
not be redeemable.

 

·                  will
entitle holders to cumulative quarterly dividend payments of $.001 per share,
or an amount equal to the dividend paid on one share of common stock, whichever
is greater.

 

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

 

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

 

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

 

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

 

Expiration.  The Rights will expire on April 10,
2019.

 

Redemption.  Our Board may redeem the Rights for $.001 per
Right at any time before any person or group becomes an Acquiring Person.  If our Board redeems any Rights, it must
redeem all of the Rights.  Once the
Rights are redeemed, the only right of the holders of Rights will be to receive
the redemption price of $.001 per Right. 
The redemption price will be adjusted if we have a stock split or stock
dividends of our common stock.

 

C-2

 

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

 

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

 

Amendments.  The terms of the Rights Agreement may be
amended by our Board without the consent of the holders of the Rights.  After a person or group becomes an Acquiring
Person, our Board may not amend the agreement in a way that adversely affects
holders of the Rights.

 

C-3

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