Document:

Exhibit 10.15
 
Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

Strategic
Alliance and Product Sales Agreement

                This
Strategic Alliance and Product Sales
Agreement, including the Exhibits and/or amendments (if any) attached
hereto (the “Agreement”) is entered into by and between Overstock.com, Inc., a Utah
Corporation located at 6322 South, 3000 East, Suite 100, Salt Lake City, UT
84121 (“Overstock”) and Safeway Inc.,
a Delaware Corporation with principal headquarters located at 5918 Stoneridge
Mall Road, Pleasanton, California 94588 (“Safeway”).
The Agreement shall be effective as of February 26, 2002 (the “Effective Date”).

Background

                WHEREAS, Overstock is an Internet retailer of
name-brand surplus and close-out merchandise and specializes in selling
first-quality merchandise at deep discounts across a broad range of categories;

                WHEREAS,  Safeway is one of the largest food and drug retailers
in North America and owns or operates stores throughout North America;

                WHEREAS, Overstock and Safeway desire to enter
into this Agreement according to the terms and conditions set forth herein;

                NOW THEREFORE, in consideration of the mutual promises set forth
herein, the Parties agree as follows:

1.     DEFINITIONS

1.1.          “Applicable Laws” means state,
federal and local laws, rules, regulations, codes, ordinances,
administrative rulings, judgments, decrees, injunctions, writs, orders, and
directives of any jurisdiction applicable to the Parties or the Agreement
together with any interpretations of any governmental entity or agency with
jurisdiction over the Agreement or the Parties.

1.2.          “Business Day” means a day other than a
Saturday, Sunday or holiday on which financial institutions are authorized or
obligated to close in New York, New York, U.S.A.

1.3.          “Confidential Information” is defined in
Section 8.1.

1.4.          “Content” means interviews, concepts, data,
images, programming, computer code, photographs, illustrations, graphics, audio
clips, video clips, text, or other materials generated in any form or media.

 

1.5.          “Custom Content” shall mean Intellectual
Property (including Content) made, conceived, or developed by Overstock after
the Effective Date specifically on behalf of Safeway in creating the Web
Site.  Custom Content does not include any
Overstock Content, Overstock Intellectual Property created or otherwise owned
or in the possession of Overstock prior to the Effective Date of this
Agreement, as well as other Overstock Intellectual Property developed by or on
behalf of Overstock outside the scope of this Agreement, or Third Party
Content.

1.6.          “Customer Information” is defined in
Section 3.9.2.

1.7.          “Customer Service Standards” is defined in
Section 3.8.3.

1.8.          “Domain Name” shall mean the domain name
specified for the Web Site in accordance with Section 3.3.

1.9.          “Intellectual Property” means all
inventions (whether or not prosecutable under patent laws), works of
authorship, information fixed in any tangible medium of expression (whether or
not protectable under copyright laws), moral rights, mask works, trademarks,
trade names, trade dress, trade secrets, publicity rights, know-how, ideas
(whether or not protectable under trade secret laws), and all other subject
matter protectable under patent, copyright, moral right, mask work, trademark,
trade secret, or other laws, including without limitation all new or useful
art, combinations, discoveries, formulae, manufacturing techniques, technical
developments, artwork, software, programming, applets, scripts, designs,
service marks, logos, tags lines, and other corporate branding/identity.

1.10.        “Look and Feel” means the graphics, design,
organization, presentation, layout, user interface, navigation and stylistic
convention (including the digital implementations thereof) of a particular
piece of media.

1.11.        “Overstock Content” shall mean: (i)
Intellectual Property (including Content and the Overstock Site) made,
conceived, or developed by Overstock prior to the Effective Date and contained
in, comprising, or otherwise necessary to produce, display and/or maintain the
Web Site; and (ii) Intellectual Property made, conceived or developed by or on
behalf of Overstock independent of this Agreement. Overstock Content does not
include Safeway Content, Third Party Content, or Custom Content.

1.12.        “Overstock Site” means the Web sites or
collection of Internet pages residing on Servers owned or controlled by
Overstock or its affiliated, subsidiary or related companies and currently
accessible by the public via the Internet at the URL http://www.overstock.com.

1.13.        “Party” means either Safeway or Overstock; “Parties”
means Safeway and Overstock.

1.14.        “Privacy Policy” means the privacy policy
set forth in Exhibit A.

1.15.        “Product” means
those products ordered by Safeway under this Agreement for in-store sales and
those products offered for sale on the Web Site.

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1.16.        “Product
List” means a list of those Products (including available quantities
and Purchase Price) that are available for purchase by Safeway from Overstock’s
vendors, suppliers and other providers.

1.17.        “Project
Manager” is defined in Section 10.1

1.18.        “Purchase Price” is defined in Section
2.2.3.

1.19.        “Safeway Content” shall mean Intellectual
Property (including Content) made, conceived, or developed by Safeway and contained
in, comprising, or otherwise necessary to display and/or maintain the Web Site.
Safeway Content does not include Overstock Content or Third Party Content.

1.20.        “Safeway Site” means the Web sites or
collection of Internet pages residing on Servers owned or controlled by Safeway
or its affiliated, subsidiary or related companies and currently accessible by
the public via the Internet at the URL http://www.safeway.com
or other URLs owned or controlled by any Safeway Store.

1.21.        “Safeway Stores” means Safeway, Safeway
Food and Drugs, Carr’s, Dominick’s, Eagle, Genuardi’s, Pak’n Save Foods,
Pavilions, Randalls, Simon David, Tom Thumb, Vons, and other stores owned
and/or operated by Safeway or any of its Affiliates on or after the Effective
Date.

1.22.        “Server” means computers or other data
processing devices that host, store, or deliver content over the Internet or
such other communications network or networks as are capable of interactive
communications with the Web Site, Safeway Site and Overstock Site, utilizing
such communications protocols and technology as exist now or may in the future
become available.

1.23.        “Term” is defined in Section 9.1.

1.24.        “Third Party Content” means Intellectual
Property (including Content) licensed, made, conceived, or developed by a third
party used by Overstock and contained in, comprising, or otherwise necessary to
display and/or maintain the Web Site.

1.25.        “Web Site” means the co-branded Web site or
collection of Internet pages developed by Overstock and Safeway in connection
with this Agreement and residing within the Overstock Site and currently
accessible by the public via the Internet at the URL http://www.safewayexclusives.com.

1.26.        “Web Site Service Standards” is defined in
Section 3.1.

2.     SALES AND
PURCHASES OF PRODUCTS FOR IN-STORE SALES.

2.1.          Joint
Commitments.

2.1.1.       Each Party recognizes that the other
Party generally purchases products 

 

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from a wide variety of respective vendors,
liquidators, and suppliers. Periodically during the term of this Agreement, the
Parties  may provide one another with
non-confidential, general information regarding the identity and status of  relevant suppliers and vendors for purposes
of complying with the exclusivity obligations set forth herein.

2.1.2.       During the Term and subject to this
Section 2.1, Safeway agrees to use reasonable good faith efforts to abstain
from purchasing any Products or other substantially similar products as are
contemplated hereunder from any of Overstock’s respective vendors or suppliers
with whom Safeway does not have a pre-existing relationship as of the Effective
Date. Subject to Safeway’s obligations under this Section 2.1, Safeway shall
not be prohibited or restricted from purchasing any goods from any liquidator
or similar person or entity.

2.1.3.       In addition, during the Term and subject
to the conditions contained in this Agreement, Safeway shall purchase from
Overstock no less than [*] of all products made available by Safeway in
connection with Safeway’s “Safeway Exclusives” program. If Safeway fails, for a
period of thirty (30) consecutive days during the Term, to sell Products [*],
Overstock shall have the right, for a period of thirty (30) days thereafter, to
terminate this Agreement upon not less than thirty (30) days written notice to
Safeway .  Notwithstanding anything to
the contrary contained herein, Safeway’s obligation under this Section 2.1
shall be conditioned on Overstock’s ability to timely deliver to Safeway
Products at competitive prices which are of equal or greater quality, quantity
and timeliness as those which Safeway could purchase from third parties. In the
event Overstock fails to meet its obligations under this Agreement, the Parties
shall negotiate in good faith to appropriately adjust downward Safeway’s
obligations under this Section 2.1.2.

2.1.4.       Notwithstanding anything to the contrary
contained herein but without affecting Safeway’s purchase obligations in
Section 2.1.3, Overstock acknowledges that Safeway currently maintains, and
shall be allowed to maintain unaffected by this Agreement, an existing
contractual relationship with [*] for online sales of related products.

2.1.5.       Overstock agrees that, during the Term,
it shall not sell goods which are the same or similar to the Products to any
store that has more than four hundred (400) retail stores in the following
categories: (a) drug; (b) mass merchandising; (c) grocery; or
(d) club or warehouse stores. In addition to the foregoing, Overstock agrees
that, during the Term, it shall not, directly or through an affiliate, enter
into any business relationship of any type (including without limitation,
on-line sales, in-store sales, or consulting) with any entity selling groceries
or drugs that has more than four hundred (400) retail stores.

2.1.6.       Non-Solicitation.  Each of the Parties agrees that during the
term of this Agreement and for a [*] period thereafter, it shall not, except
with the prior written consent of the other, solicit the employment or
engagement of any employee of the other Party; provided that nothing shall
prohibit either Party from employing an employee of the other who initiated
discussions regarding employment, or who responded to a generally publicized
advertisement for employment. In the event of a breach of this Section 2.16,
the breaching Party shall pay to the non-breaching Party, as liquidated damages
and not as a penalty, an amount equal to [*]. Payments to be made under this
Section 2.1.6 shall be made within fifteen (15) days of the non-breaching
Party’s demand.

2.2.          Product
Offering; Prices and Payment.

2.2.1.       To the extent possible, Overstock shall
periodically provide Safeway with 

 

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written Product Lists and shall provide the Safeway
Project Manager with frequent updates (as such become available) to the Product
List to reflect changes in the Product mix, quantity, Purchase Price and other
information.

2.2.2.       In order to assist Safeway  in determining whether to purchase Product
and to the extent possible, Overstock shall, within ten (10) Business Days
after a request from the Safeway Project Manager, use reasonable efforts to
deliver a representative sample (contained in representative packaging) of the
requested Product to the Safeway Project Manager, [*].

2.2.3.       Safeway’s initial purchase price for each
Product shall be equal to Overstock’s actual, documented cost for the Product plus
[*] (“Purchase Price”), subject to
adjustment as provided herein. If Safeway specifically requests special sorting
or repackaging services from Overstock, Safeway shall reimburse Overstock at a
mutually agreed upon fee.

2.2.4.       Overstock shall invoice Safeway for all
Product in a form and manner mutually agreed by the Parties.  Safeway shall pay all amounts (unless
Safeway disputes such invoice amounts in good faith) within the later of ten
(10) Business Days after receipt of Overstock’s invoice or Safeway’s first
receipt of Product at the Delivery Point. 
Safeway may contest, in good faith, all or any portion of an invoice by
providing Overstock with written notice of such contest (the “Contest Notice”).  The Contest Notice will include the reason
for such contest and the amount that the Safeway believes is properly due.  Overstock shall investigate the matter and
provide a written response to Safeway. 
If the Parties disagree, the dispute shall be submitted to the dispute
resolution procedure set forth in Section 10.10 and 10.11 below. Safeway’s
payment obligations and Overstock’s Product delivery obligations hereunder
shall be suspended while any good-faith payment dispute is outstanding.

2.3.          Orders.

2.3.1.       Safeway’s purchase orders (“Purchase
Order(s)”) for Products shall be submitted to Overstock in writing or via email
within ten (10) business days from the anticipated arrival date of Products.
Overstock shall provide Safeway with reasonable notice if Overstock has reason
to believe that its suppliers or vendors will not have a certain Product
available for shipment to Safeway. In addition, Overstock shall provide Safeway
with as much notice as possible if it anticipates or has reason to believe that
Overstock’s supply of a Product will not be sufficient to meet Safeway’s
requirements. The Parties understand that because Overstock’s inventory of
Products is dependent on the availability of Products from Overstock’s
respective vendors, suppliers, and/or other providers, Overstock cannot make
any specific representations regarding or otherwise guaranteeing the
availability of the types or quantities of Products which may or may not be
available for purchase by Safeway. Notwithstanding the foregoing, however, the
Parties agree that at such time as Overstock accepts Safeway’s Purchase Order
in accordance with Section 2.3.4 below, Overstock shall be obligated to timely
and accurately fill such Purchase Order.

2.3.2.       All purchases and sales between Overstock
and Safeway will be initiated by Safeway’s issuance of written Purchase Orders
or Purchase Orders auto-faxed directly to Overstock from Safeway. Each Purchase
Order shall include: (i) identification of 
Products ordered; (ii) quantity to be purchased; (iii) Purchase Price of
Products ordered; (iv)  requested 

 

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delivery dates; (v) shipping instructions; and (vi)
purchase order number(s).  Nothing
contained in any purchase order will modify any material terms or conditions of
this Agreement, and in the event of any conflict between this Agreement and any
purchase order, this Agreement shall govern.

2.3.3.       During the Term, Overstock shall provide
Safeway with [*] on all Product orders. To that end, Overstock shall use
commercially reasonable efforts to timely and accurately fulfill all Safeway
orders in accordance with Safeway’s [*], regardless of any allocation methodologies
that may otherwise apply to any Product.

2.3.4.       Overstock shall notify Safeway of the
acceptance or rejection of a Purchase Order within two (2) Business Days of
receipt; provided that, in the event that 
Overstock does not respond to any Purchase Order within such two (2)
Business Day period, Overstock shall be deemed to have accepted the order as
written.

2.3.5.       Safeway may redirect delivery of Products
prior to shipment at no additional charge other than any additional freight
charges actually incurred by Overstock . Furthermore, Safeway may, [*], cancel
or reschedule delivery of Products if Overstock has not yet placed a binding
order for such Products on Safeway’s behalf or Overstock is not legally bound
to purchase such Products.  If Overstock
has placed a binding order for such Products on Safeway’s behalf or Overstock
is legally bound to purchase such Products and Safeway cancels an order,
Safeway shall reimburse Overstock an amount equal to [*].  Overstock shall use best commercially
reasonable efforts to return or resell such Products on behalf of Safeway at
the highest price possible.

2.3.6.       Overstock (at Safeway’s expense) shall
provide information which is required for Safeway to obtain any export or
import licenses required for Safeway to ship or receive Products, including,
but not limited to, certificates of origin, (NAFTA, etc.), manufacturer’s
affidavits, Buy America qualification, and U.S. Federal Communications
Commissions identifier, if applicable.

2.4.          Packaging
and Shipping.

2.4.1.       Unless otherwise specified by Safeway,
Overstock and/or its respective vendors, suppliers or other providers will
mark, package and deliver all goods in a manner which is in accordance with
industry standard practices.  Overstock
shall use commercially reasonable efforts to accommodate any special packaging
requests made by Safeway, and Safeway shall bear any additional expenses
relating thereto.

2.4.2.       Shipment will be F.O.B. Safeway’s
distribution center (“Delivery Point”),
at which time risk of loss and title pass to Safeway.  All freight charges from either Overstock or the
third party supplier to the Delivery Point, will be borne by Safeway.  Unless provided in this Agreement, [*].

2.4.3.       Upon reaching agreement on the prices
associated with Product rush orders, Overstock shall use its reasonable efforts
to meet Safeway’s requirements for reasonable rush orders for Products
requiring immediate delivery.  The
Parties will negotiate in good faith the prices for such rush orders, taking
into consideration Overstock’s available inventory and 

 

6

 

additional shipping and personnel expense necessary.

2.4.4.       If Overstock fails to timely and
accurately fill any Safeway Purchase Order that has been accepted by Overstock,
Safeway may, in its sole discretion, either (i) accept the deficient order and
Overstock shall credit Safeway promptly for such deficiency, or (ii) terminate
the order and return any materially deficient order Products at Overstock’s
expense.

2.5.          Inspection
and Acceptance.

2.5.1.       Safeway will inspect all Products for
obvious physical damage within five (5) days of receipt thereof. Safeway may
reject any Product that appears defective by notifying Overstock in writing or
by facsimile of its rejection within such five (5) day inspection period and
requesting a Returned Material Authorization (“RMA”)
number.  Overstock will provide the RMA
number in writing or by facsimile to Safeway within five (5) days of receipt of
the request. If Safeway observes Product discrepancies that are the result of
shipping or Product carrier and/or transport circumstances, Safeway shall make
note of such Product shipping discrepancies on the applicable bill of
lading.  Within ten (10) days of receipt
of the RMA number, Safeway will return to Overstock the rejected Product with
the RMA number displayed on the rejected Product. Products not rejected by
Safeway within two (2) Business Days of Safeway’s inspection thereof shall be
deemed accepted by Safeway.

2.5.2.       Unless it is determined that Safeway, its
agents or affiliates are responsible for the defect or discrepancy apparent in
a returned Product, Overstock shall reimburse Safeway for the cost of the
defective returned item together with return shipping and related charges from
Safeway’s Standard Product Recovery Center (PRC) to Overstock or its designee
within ten (10) Business Days after receiving the rejected Product from
Safeway.

2.6.          Inventory
Balancing.

2.6.1.       Safeway may return to Overstock and have
liquidated any or all unsold Product (“Unsold Product”) at Safeway’s sole
discretion in accordance with this Section 2.6; provided that such request is
made within sixty (60) days of Safeway’s original receipt of such Unsold
Products.

2.6.2.       In the event Safeway desires to return or
have liquidated any Unsold Product, Safeway shall notify Overstock, and
Overstock shall use its best commercially reasonable efforts to promptly
identify, through use of its in-house business to business reseller personnel
or otherwise, willing, ready and able buyers for the Unsold Products. Overstock
shall use best commercially reasonable efforts to liquidate Unsold Products on
behalf of Safeway at the highest price possible.

2.6.3.       At such time as Overstock identifies a
buyer or buyers of all or part of the Unsold Product, Overstock shall provide
Safeway with written or email notice of the price to be paid for, and quantity
to be purchased of, the Unsold Product by such buyer(s).  Safeway shall then have the right to either
(i) sell the Unsold Product directly to the buyer(s), (ii) return the Unsold
Product to Overstock for processing prior to the sale thereof to the buyer(s)
(in which case Overstock shall provide Safeway with a written “not-to-exceed”
estimate of its handling costs, which shall not include the cost of  return shipping back to Overstock, which
shall be 

 

7

 

borne by Overstock (but only to the extent that and
insofar as such Overstock borne Unsold Product costs do not prevent Overstock from
receiving at least  [*] for Products
provided Safeway hereunder, as set forth in Section 2.7 below), or (iii) keep
the Unsold Product.  If Safeway chooses
option (ii) above, Safeway shall use best commercially reasonable efforts to
itemize, sort, and organize all Unsold Products returned for processing to
Overstock.

2.6.4.       Safeway shall include an Unsold Product
Inventory Report (containing a description of Unsold Products and quantities)
with all Unsold Product shipments returned back to Overstock. Such Unsold
Product Inventory Reports shall correspond to and adequately reflect Safeway’s
pre-return Product itemization, sorting and organization obligations hereunder.
Upon Overstock’s receipt of Unsold Product, Overstock will, within five (5)
days, reconcile Unsold Products actually received with Unsold Products
documented on Safeway’s Unsold Product Inventory Report accompanying such
return shipment. The Parties agree that Safeway shall have no financial
responsibility to Overstock for Unsold Products that are returned to Overstock
on account of “shrinkage”, stolen, or missing Unsold Product, unless such
damage or loss was caused by Safeway or its agents.

2.6.5.       Upon liquidation of Unsold Product as set
forth herein, Safeway shall be entitled to receive (either directly from the
buyer(s) or from Overstock) the aggregate amount realized from the sale of the
Unsold Products. Overstock shall share in any decreased return on Unsold
Product, but  only to the extent provided
in Section 2.7 below.

2.6.6.       The Parties agree that Overstock shall
have no financial responsibility to Safeway for Unsold Products that are
returned to Overstock in damaged or non-resalable form, or on account of
“shrinkage”, stolen, or missing Product, unless such damage or loss was caused by
Overstock or its agents.

2.7.          Reconciliation. The Parties shall, on a
calendar quarterly basis, determine the aggregate Purchase Price paid by
Safeway for Unsold Products and the amount actually received by Safeway for the
sale of Unsold Products under Section 2.6 above (“Realized Amount”). In the
event the Realized Amount is less than the aggregate Purchase Price for the
applicable Unsold Products, subject to the next sentence, Overstock shall remit
back to Safeway (or credit to Safeway, at Safeway’s discretion), the difference
between the  Realized Amount and the
aggregate Purchase Price for the applicable Unsold Products.  Notwithstanding the foregoing, the Parties
expressly agree that in no event shall Overstock be obligated to remit to
Safeway any amount which would, in the aggregate for such calendar quarter,
cause Overstock to realize proceeds of less than Overstock’s actual, documented
cost for such Products plus [*]. See Exhibit B attached
hereto as an illustration of the foregoing.

2.8.          Sell-Off.  Upon expiration or termination of this
Agreement, Safeway shall have the right, in its sole discretion, to sell-off
all Products in its inventory.

3.     WEB SITE
OPERATIONS AND SALES.

3.1.          Hosting and Maintenance of the Web Site.
Overstock will be solely responsible for hosting, maintaining, securing, and
operating the Web Site in accordance with the standards set forth herein,
including the technical requirements and service standards set forth in Exhibit
C 

 

8

 

(the “Web Site
Service Standards”).

3.2.          Future Developments.  Overstock will use commercially reasonable
efforts to provide mutually agreed upon modifications or enhancements to the
Website that are requested by Safeway. 
Any Safeway-initiated modifications, additions, improvements and/or
enhancements shall be performed at a mutually agreeable rate, which in no event
shall exceed Overstock’s then current consulting and development rates.

3.3.          Domain Name.

3.3.1.       Overstock shall obtain and maintain during
the Term, on Safeway’s behalf, at Safeway’s expense for registration fees and
similar out-of-pocket expenses, and in Safeway’s name, an Internet Protocol
address and corresponding domain name(s) as instructed by Safeway from time to
time (singularly
or collectively, “Domain Name”), and do all other acts necessary to establish
and maintain the Internet Protocol address and Domain Name of the Web Site. The
initial Domain Name shall be www.safewayexclusives.com.

3.3.2.       Safeway (at its own expense for registration
fees and similar out-of-pocket expenses) may add to or change the Domain Name
at any time by providing Overstock with written notice and Overstock shall make
any additions or changes necessary (including without limitation, additional
filings with registration entities or additional or modified links to or from
the Web Site) within thirty (30) days after receiving such notice.  All right, title and interest in the Domain
Name shall vest immediately and exclusively in Safeway. Overstock shall list
the Administrative Contact and Billing Contact as follows:

 

Administrative Contact,
Technical Contact:

        sande,
bob  (BSW504)  bob.sande@SAFEWAY.COM

       
Safeway, Inc.

        2800
Ygnacio Valley Rd

        Walnut
Creek, Ca  94596

       
925-944-4560

 

Billing Contact:

        Harry,
Little  (LHK551)  harry.little@SAFEWAY.COM

        Safeway
IT

        2800
Ygnacio Valley Rd.

        Walnut
Creek, CA  94598

       
925-944-4570

3.4.          Hidden
Text.  Without prior written
permission from Safeway, Overstock shall not include any hidden, microscopic,
or invisible text, commands, code, programming, meta tags, or other similar
material in the Web Site.

3.5.          Branding;
Advertisements.

3.5.1.       The Parties shall mutually agree upon any
third party advertisement, trademark, service mark, trade name, copyright or
other Content on the Web Site. If Safeway 

 

9

 

consents to any third party advertisement on the Web
Site, [*] of any and all revenues invoiced to such third parties. Without
limiting the foregoing, neither Party shall enter into any agreement with any
third party that imposes any obligations upon the other Party, without the
other’s prior written consent.

3.5.2.       The page header of the Web Site shall be
reserved for the exclusive use of Safeway branding and logos. During Term, and subject to Safeway’s consent as
to placement, size and frequency, Overstock may place on the Web Site text
and/or graphics stating “Powered by Overstock” or a similar attribution reasonably
acceptable to Safeway.

3.6.          Navigation.

3.6.1.       The Web Site will be accessible to users
via the Internet with the aid of any standard Web browser. Overstock shall
create and maintain during the Term: (i) a hyperlink from the Safeway Site, and
any other Safeway Stores web site(s) requested by Safeway, to the Web Site, and
(ii) corresponding hyperlinks from the Web Site back to the Safeway Site.  The type and placement of the hyperlinks
shall be as agreed to by the Parties.

3.6.2.       Overstock shall provide an interstitial
page for users that click the hyperlink from the Safeway Site to the Web Site
informing such users that it is leaving the Safeway Site.  Except as provided in this Section,
Overstock shall not, in conjunction with the Web Site, use any interstitials,
pop-up windows, other intermediate steps or any other technology or content
which acts as a barrier to the transition of a user from the Safeway Site to
the Web Site or any transition between pages within the Web Site, nor shall
Overstock otherwise frame the pages within the Web Site or use any other
technology which interferes with or affects the page layout of such pages.

3.6.3.       Overstock agrees not to override browser
back button functionality for any purpose, including, without limitation, to
prevent users who link to the Web Site from the Safeway Site from returning to
the Safeway Site.

3.7.          Infrastructure
Requirements.

3.7.1.       During the Term, Overstock shall, [*],
provide all necessary servers, communication lines, connectivity and related hardware,
software, equipment, physical facilities, and technology to host and operate
the Web Site. In the event Safeway requests that Overstock utilizes any custom
hardware, software or equipment solely for Safeway, the Parties shall negotiate
in good faith regarding an equitable cost sharing arrangement therefore.

3.7.2.       Overstock shall configure and operate the
Web Site upon a  secure computer
hardware server with a direct Internet connection of at least T-1 bandwidth.
Overstock shall locate the Web Site at Overstock’s premises or at a locked and
secured location at a third party’s premises, provided no third party will have
access to the Web Site, Customer Information or any Confidential Information of
Safeway.

3.8.          Sale of
Products On the Web Site.

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3.8.1.       The Web Site shall promote and sell only
those Products mutually agreed by the Parties. In no event shall Overstock
knowingly include on the Web Site any Content or offer any Products which (i)
infringe upon the copyright, literary, privacy, publicity, trademark, service
mark or any other personal or property right of any person; (ii) constitute
libel or defamation of any person or entity; (iii) constitute unfair
competition or false advertising, (iv) contain content that is obscene, child
pornographic or harmful to minors; or (iv) violate any Applicable Laws. The
Parties further acknowledge and agree that nothing contained in this Agreement
shall obligate Safeway to include Products on the Web Site that would violate
the terms of any agreement binding on Safeway as of the Effective Date.

3.8.2.       In the event that a Web Site user desires
to purchase a Product on or through the Web Site and such Product is no longer
available to Overstock, Overstock agrees to use commercially reasonable efforts
to provide such customer (at the customer’s sole discretion) with a reasonable
alternative to the unavailable Product.

3.8.3.           Overstock shall provide customer
service and support in accordance with the standards specified in Exhibit D
(the “Customer Service Standards”).  Without limiting the foregoing, Overstock
(or, if applicable, the respective Product manufacturer) agrees to provide all
customer service and support for the Products sold to customers from the Web Site
with highest industry standard responsiveness and satisfaction.

3.8.4.           Order Processing.  Overstock
will be solely responsible for order processing, order fulfillment, payment
processing, shipment, cancellations, complaints, returns and other forms of customer
service. All such obligations shall be performed in accordance with the
Customer Service Standards, or if not addressed thereon, in accordance with
highest industry standards.

3.9.          Privacy
Policy; Customer Information.

3.9.1.       Overstock represents, covenants, and
agrees that it shall comply with all 
terms and conditions of the Privacy Policy, as may be amended from time
to time upon the mutual agreement of the Parties. In the event the Parties are
unable to agree upon any such modification, but Overstock implements such
modification without the approval of Safeway, Safeway shall have the right, but
not the obligation, to terminate this Agreement without penalty or cost upon
not less than ten (10) days prior written notice to Overstock.

3.9.2.       Without limiting any other warranty or
obligation of Overstock under this Agreement, during the Term and thereafter in
perpetuity, Overstock will not gather, store, use, disclose, distribute, sell,
share, rent or otherwise transfer any personally identifiable information
obtained from users of the Web Site, including name, address, phone numbers,
credit card numbers, or Products requested (the “Customer Information”) in any manner, except as expressly provided in this
Agreement or as Overstock may be expressly directed in advance in writing by
Safeway.

3.9.3.       Overstock represents, covenants, and
agrees that it will use Customer Information only in compliance with: (i) this
Agreement; (ii) the Privacy Policy; and (iii) all Applicable Laws (including
applicable laws, policies and regulations related to spamming, privacy, and
consumer protection). Overstock further agrees that Overstock will use all 

 

11

 

commercially reasonable and appropriate security, such
as, for example, encryption and passwords, to protect Customer Information from
unauthorized disclosure (internally or externally) and that the use of such
security does not give rise to any privacy rights in the communication as
between Overstock and Safeway.

3.10.        Changes.

3.10.1.     Overstock shall not make any change to the
Look and Feel of the Web Site or Content contained thereon without Safeway’s
prior written consent.  The Parties do
acknowledge, however, that Overstock may, without Safeway’s consent, but with
notice to Safeway, make modifications to the Web Site other than to Look and
Feel if such modifications are being made throughout the Overstock Site.

3.10.2.     Overstock will use commercially reasonable
efforts to provide mutually agreed upon modifications or enhancements to the
Web Site during the Term that are requested by Safeway. Any Safeway-initiated
modifications, additions, improvements and/or enhancements shall be performed
at a mutually agreeable rate, which in no event shall exceed Overstock’s then current
consulting and development rates.

3.11.        Terms and
Conditions.  The Web Site
shall include Terms and Conditions for use, mutually agreed to by the Parties,
created in such a way as to cause each user to view (i.e., at a minimum, to be
forced to scroll through or past) and acknowledge (e.g., by an acknowledgement
button following the text) the same.

3.12.        Revenue
Sharing for Web Site Sales.

3.12.1.     Within fifteen (15) days of the end of each
calendar month during the term, Overstock shall pay to Safeway an amount equal
to the greater of (i) [*] of gross sales, or (ii) [*] of net profits for the
month just ended. For purposes of this Section, “gross sales” means the gross price invoiced for all Products sold less
only coupon discounts and promotional deductions agreed to by Safeway; “net profits” means the gross price
invoiced for all Products sold less the actual cost of the Product(s)
as documented by Overstock, taxes, out-bound shipping charges, and reasonable
reserve for returns.  At the end of each
calendar quarter during the Term, Overstock shall reconcile the return reserve
used in the calculation of net profits with actual returns received during such
period. Following such reconciliation, the applicable Party shall pay the other
Party the amount necessary to correct any overpayment or underpayment (as
applicable) resulting from the variance between the return reserve and actual
reserves.  If any reconciliation shows
an overstatement in the return reserve of more than [*], Overstock shall pay
Safeway the correction amount described in the previous sentence [*]; provided
that [*] shall not be Safeway’s exclusive remedy for an overstated return
reserve and payment of such amount shall not limit or otherwise affect any
other rights or remedies that Safeway may have under this Agreement or
Applicable Law.

3.12.2.     Overstock shall provide the following
reports to Safeway in the form and manner reasonably  requested by Safeway:  (a)
daily usage reports describing the number of page impressions, number of users
and such other information as reasonably requested by Safeway from time to
time;  (b) detailed weekly logging of
content access, and product movement, and (c) 

 

12

 

a detailed accounting of all revenues, costs and
expenses involved in the calculation of the amount payable under Section  3.12.1 (showing both the “gross sales” and
“net profit” calculations).  Without
limiting the foregoing, upon Safeway’s request, Overstock shall promptly
provide Safeway with invoices and other documentation supporting the report
described in clause (c).

3.13.        Joint
Promotional Activities for the Web Site.   Subject to Section 4.5 below, the Parties
will cooperate to promote the Web Site in ways to be mutually agreed upon.

4.     OWNERSHIP OF
INTELLECTUAL PROPERTY

4.1.          Ownership By
Safeway.

4.1.1.       Safeway Content. 
Safeway is the sole and exclusive owner of the Safeway
Content and all Intellectual Property relating thereto.  Subject to the terms and conditions
contained herein, Safeway grants to Overstock, during the Term, a limited,
non-exclusive, non-transferable, non-sublicensable, royalty free  license to access, operate, display and use
the Safeway Content solely on the Web Site. Overstock acknowledges and agrees
that it (i) may only use the Safeway Content in the form provided by Safeway,
(ii) may use the Safeway Content solely in connection with this Agreement,
and  (iii) shall not alter, edit, or
make any change to the Safeway Content without Safeway’s prior written
approval.  Safeway shall deliver the
Safeway Content to Overstock in an electronic file format (e.g., .pdf, .txt,
..gif, .jpg) or as otherwise agreed to by the Parties. Upon expiration or
termination of this Agreement, the licenses granted in this Section 4.1 shall immediately
revert to Safeway, and Overstock shall, at Safeway’s instructions, immediately
either deliver to Safeway or destroy and erase all original and copies,
summaries, abstractions and other iterations (regardless of form) of the
Safeway Content.

4.1.2.       Custom Content. Overstock acknowledges and
agrees that its creation and authorship of Custom Content constitutes a “work
made for hire,” as that term is defined in Title 17 of the United States Code
(the “Copyright Act”),  and that Safeway
is, and shall be deemed to be, the sole author and owner of the Custom Content
including Intellectual Property therein. 
With respect to all Custom Content that is not covered by the definition
of a “work made for hire” under the Copyright Act, such that Overstock would be
regarded as the copyright author and owner, Overstock hereby assigns and agrees
to assign to Safeway (at Safeway’s expense for registration fees and similar
out-of-pocket expenses), and Safeway accepts and agrees to accept, Overstock’s
entire right, title, and interest in and to such works, including all
copyrights therein, for all media now known or later developed.  Overstock further agrees to execute, or
cause to be executed by its employees, agents, or subcontractors, whatever
assignments of copyright and ancillary and confirmatory documents that may be
required or appropriate so that title to any Custom Content and to the
copyright therein shall be clearly and exclusively held by Safeway or any
nominee thereof.

4.1.3.       Domain Name.   Safeway
shall own all right, title and interest in and to the Domain Name and all
Intellectual Property related thereto.

4.2.          Overstock
Content. Overstock is
the sole and exclusive owner of the Overstock 

 

13

 

Content and all Intellectual Property relating
thereto.  Subject to the terms and
conditions contained herein, Overstock grants to Safeway, during the Term, a
limited, non-exclusive, non-transferable, non-sublicensable license to access,
reproduce, display and use the Overstock Content for use in the promotions set
forth herein. Safeway acknowledges and agrees that it (i) may only use the
Overstock Content in the form provided by Overstock, (ii) may use the Overstock
Content solely in connection with this Agreement, and  (iii) shall not alter, edit, or make any change to the Overstock
Content without Overstock’s prior written approval. Overstock shall deliver the
Overstock Content to Overstock in an electronic file format (e.g., .pdf, .txt,
..gif, .jpg) or as otherwise agreed to by the Parties. Upon expiration or
termination of this Agreement and subject to Safeway’s right to sell-off
inventory of Products, the licenses granted in this Section 4.2 shall revert to
Overstock, and Safeway shall, at Overstock’s instructions, immediately either
deliver to Overstock or destroy and erase all original and copies, summaries,
abstractions and other iterations (regardless of form) of the Overstock
Content.

4.3.          Third Party
Content.  Overstock shall
obtain and maintain throughout the Term, at Overstock’s sole cost and
expense,  a world-wide license to use
the Third Party Content incorporated into the Web Site . Such license must
include the electronic distribution and public display and performance of the
Third Party Content and the right to modify, amend, create derivative works,
rent, sell, assign, lease, sublicense, or otherwise alter or transfer the Third
Party Content. If Safeway specifically requests the inclusion of certain Third
Party Content, Safeway shall assist Overstock in securing the aforementioned
rights to such Third Party Content.

4.4.          Copyright
Notice.

4.4.1.       Overstock shall cause the following
copyright notice (or any other notices as instructed by Safeway) to be
displayed on each page of the Web Site on which Safeway Content is viewed: “©
____________ Inc.  All Rights Reserved.”

4.4.2.       Safeway shall cause the following
copyright notice (or any other notices as instructed by Safeway) to be
displayed on each item on which Overstock Content is displayed: “© ____________
Inc.  All Rights Reserved.”

4.5.          Use of Name, Trademark
and Logos.

4.5.1.       Each
Party understands that listing the other as a customer, client, or otherwise,
has value, and therefore agrees that each Party will submit to the other
Party for such Party’s prior written approval all marketing, advertising, press
releases, and all other promotional materials (including sales literature, press releases, trade shows,
posters, reference lists, or similar public announcements) referencing
the other Party and/or the other Party’s trade names, trademarks, service
marks, copyright or other Intellectual Property right, prior to the use or
distribution of such materials. Neither Party shall use or distribute any such
material unless and until it receives the other Party’s written approval to do
so. Approval shall not be unreasonably withheld or delayed.  Once approved, such materials may be reused
until such approval is reasonably withdrawn with reasonable prior notice.

4.5.2.       In using the other Party’s trade names,
trademarks, service marks, copyright or other Intellectual Property right
hereunder, each Party acknowledges and agrees 

 

14

 

that; (i) the other Party’s trade names, trademarks,
service marks, copyright or other Intellectual Property right shall remain the
sole property of the other Party; (ii) nothing in this Agreement shall confer
in the Party any right of ownership in the other Party’s trade names,
trademarks, service marks, copyright or other Intellectual Property; and (iii)
the Party shall not now or in the future contest the validity of the other
Party’s trade names, trademarks, service marks, copyright or other Intellectual
Property right.

4.5.3.       The Parties acknowledge and agree that,
in light of certain conflicts concerning the use of the Safeway name in
Indiana, Safeway may condition its consent under Section 4.5.1 to use outside
of Indiana and may impose special conditions on such use within Indiana.

5.     AUDIT RIGHTS.

5.1.          For
the purpose of confirming the accuracy of payments either made or outstanding
under this Agreement, Safeway will have the right to, or to direct an
independent “Big Five” auditor to, audit all books, records and documents of
Overstock that relate to this Agreement or payments made or otherwise
outstanding hereunder. Safeway shall give Overstock five (5) Business Days
prior written notice of such audit, and shall conduct such audit during regular
business hours in a manner that does not unreasonably interfere with
Overstock’s business.

5.2.          Overstock
shall, during the Term and for five (5) years thereafter, keep and maintain all
books and records as are necessary to substantiate, without limitation, Product
costs, gross sales calculations, net sales calculations, Product shipments,
Product sales, accounts receivable and invoiced amounts.

5.3.          All
audits shall be at the expense of Safeway unless the audit reveals
non-compliance by Overstock with the terms of this Agreement, in which case the
audit shall be at the expense of Overstock.

6.     REPRESENTATIONS
AND WARRANTIES; LIMITATION OF LIABILITIES

6.1.          General
Representations and Warranties.
Each Party represents and warrants for the benefit of the other that: (a) it
has full and requisite corporate power and authority to enter into and perform
under and grant the rights specified in this Agreement; and (b) in performance
of its obligations under this Agreement it will comply with all Applicable Laws
now or hereafter enacted that are applicable to performance under this
Agreement,  including the Health
Insurance Portability and Accountability Act of 1996 and other Applicable Laws
relating to the handling of personally identifiable data, and all Applicable
Laws which regulate any material because it is radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment, including but
not limited to the Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Resource Conservation Recovery Act, the Federal
Water Pollution Control Act, the Clean Air Act, the Montreal Protocol, the
Toxic Substances Control Act and similar laws, rules, statutes, treaties or
orders and international understandings.

6.2.          Overstock
Representations, Warranties and Covenants.

6.2.1.               Service.  Overstock represents, warrants and agrees that all
services to 

 

15

 

be provided under this Agreement shall be performed in
a professional, competent, and timely manner by appropriately qualified
personnel in accordance with this Agreement.

6.2.2.               Third Party Compensation.  Overstock represents and warrants that it has not received any
compensation from a third party to include any programs, data, hyperlinks,
advertisements, or other Content in the Web Site.

6.2.3.               Authority to License.  Overstock represents and warrants
that it has full power and authority to grant the rights granted by this
Agreement to Safeway (including without limitation, the right to use the Third
Party Content), that no consent of any other person or entity is required by
Overstock to grant such rights.

6.2.4.               Non-Infringement.  Overstock represents  and
warrants that to the best of Overstock’s knowledge neither the performance of
this Agreement by Overstock, nor the license to, and use by, Safeway and the
Web Site users of the Overstock Content, Third Party Content, Custom Content or
Web Site will in any way violate any agreement, nor constitute an infringement
or other violation of any copyright, trade secret, trademark, service mark,
patent, design, proprietary information, or other Intellectual Property of any
third party.

6.2.5.               Quiet Enjoyment.  Overstock represents  and
warrants that Safeway and the users of the Web Site shall be entitled to use
the Overstock Content, Third Party Content, Custom Content and Web Site without
unscheduled disturbance in accordance with this Agreement, subject only to
Safeway’s obligation to make the required payments under this Agreement.

6.2.6.               Title. 
Overstock warrants that to the best of its knowledge, Safeway
and its customers shall acquire good and clear title to the Products, free and
clear of all liens, claims, and encumbrances.

6.2.7.               Product
Warranty. Overstock shall provide and (where possible) assign
Product warranties or other warranties it receives from third parties in performance
of this  program to Safeway. However,
subject to the foregoing, Overstock (including its vendors and suppliers) is
neither providing nor representing or warranting that Products under this
Agreement come with any product warranty above or in addition to any
manufacturer or vendor-provided product warranty for any particular Product. To
the extent possible, Products will be provided under this Agreement with the
remainder of the manufacturer’s stated Product warranty (if any) in place.

6.3.          Safeway
Warranties. Safeway
warrants to Overstock that  all Content
provided to Overstock by  Safeway is
either owned or properly licensed by Safeway or is in the public domain and the
use thereof by Overstock will not infringe any Intellectual Property rights of
any third party.

6.4.          Limited
Warranty. UNLESS
EXPRESSLY PROVIDED, NEITHER PARTY MAKES ANY WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.

 

16

 

6.5.          Limitation
of Liabilities.  EXCLUDING
(I) LIABILITY CAUSED BY THE GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT
OF A PARTY, OR (II) EACH PARTY'S CONFIDENTIALITY OBLIGATIONS UNDER THIS
AGREEMENT, BOTH PARTIES’ LIABILITY FOR DAMAGES UNDER THIS AGREEMENT SHALL BE
LIMITED TO MONETARY DAMAGES, AND THE AGGREGATE AMOUNT THEREOF FOR ALL CLAIMS
SHALL IN NO EVENT EXCEED AN AMOUNT EQUAL TO THE AMOUNTS PAID BY SAFEWAY
HEREUNDER DURING THE PREVIOUS TWELVE (12) MONTHS PERIOD. NOTWITHSTANDING THE
FOREGOING, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER
UNDER ANY LEGAL OR EQUITABLE THEORY, FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS,
IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT. NOTWITHSTANDING THE
FOREGOING, THE LIABILITY LIMITATION CONTAINED IN THIS SECTION SHALL NOT APPLY
TO (I) LIABILITY CAUSED BY THE GROSS NEGLIGENCE, FRAUD OR WILLFUL
MISCONDUCT OF A PARTY, OR (II) EACH PARTY'S CONFIDENTIALITY OBLIGATIONS
UNDER THIS AGREEMENT.

7.     INDEMNIFICATION

7.1.          Overstock
Indemnity.

7.1.1.       Overstock shall indemnify, and hold
harmless Safeway, its users, directors, officers, agents, employees, members,
subsidiaries, joint venture partners, and predecessors and successors in
interest from and against any third party claim, action, proceeding, liability,
loss, damage, cost, or expense, including, without limitation, attorneys’ fees,
arising out of, relating to or in any way connected with: (1) any claim that
the Overstock Content, Third Party Content, Custom Content, and/or Web Site
(collectively, the “Web Content”)
infringes upon or otherwise violates any copyright, trade secret, trademark,
service mark, patent, design, proprietary information, or other Intellectual
Property rights of any third party (unless such infringement was caused by
Safeway), (2) any uncured material breach of its representations or warranties
contained herein, and/or (3) any negligent action or inaction of Overstock or
its employees, contractor or agents. 
Overstock shall pay all amounts that a court or arbitrator finally
awards or that Overstock agrees to in settlement of such claim(s) as well as
any and all expenses or charges arising from such claim(s) as they are incurred
by Safeway or any other party indemnified under this Section.

7.1.2.       If the operation or use of Web Content
becomes, or in Safeway’s opinion is likely to become, the subject of a claim,
Safeway shall permit Overstock, at Overstock’s option and expense for all
associated costs, either to (i) procure the right for Safeway to continue to
use the Web Content or (ii) modify the Web Content in such a manner for it to
become non-infringing, provided such modification does not cause the Web
Content to fail to comply with any of the requirements of this Agreement,
including all functionality, technical specifications, performance warranties,
and Web Site Specifications.

7.1.3.       Overstock shall have no indemnity
obligation under this Section 7.1 for claims arising out of any Safeway Content
incorporated into the Web Site.

7.2.          Safeway
Indemnification Obligations.

7.2.1.       Safeway shall defend, indemnify, and hold
harmless Overstock, its users, directors, officers, agents, employees, members,
subsidiaries, joint venture partners, and predecessors and successors in
interest from and against any third party claim, action, proceeding, liability,
loss, damage, cost, or expense, including, without limitation, attorneys’ fees 

 

17

 

as provided herein, arising out of or relating to: (1)
any claim that the Safeway Content infringes upon or otherwise violates any
copyright, trade secret, trademark, service mark, patent, design, proprietary
information, or other Intellectual Property rights of any third party(unless
such infringement was caused by Overstock), (2) any uncured material breach of
its representations or warranties contained herein, and/or (3) any negligent
action or inaction of Safeway or its employees, contractor or agents.  Safeway shall pay all amounts that a court
or arbitrator finally awards or that Safeway agrees to in settlement of such
claim(s) as well as any and all expenses or charges arising from such claim(s)
as they are incurred by Overstock or any other party indemnified under this
Section.

7.2.2.       If the operation or use of Safeway
Content becomes, or in Overstock’s opinion is likely to become, the subject of
a claim, Overstock shall permit Safeway, at Safeway’s option and expense for
all associated costs, either to (i) procure the right for Overstock to continue
to use the Safeway Content or (ii) modify the Safeway Content in such a manner
for it to become non-infringing, provided such modification does not cause the
Safeway Content to fail to comply with any of the requirements of this
Agreement, including all functionality, technical specifications, performance
warranties, and Web Site Specifications.

7.2.3.       Safeway shall have no indemnity
obligation under this Section 7.2 for claims arising out of any Overstock
Content, Custom Content or Third Party Content incorporated into the Web Site
to the extent that such Overstock Content, Custom Content, or Third Party
Content (as opposed to Safeway Content incorporated therein) form the basis for
such claims.

7.3           Indemnification
Procedure. As an indemnitee under this Agreement, an indemnitee shall (i)
promptly notify the indemnitor in writing of any such claim for which indemnity
may be had, (ii) allow the indemnitor to have sole control of the defense and
all related settlement negotiations so long as such defense and/or settlement
proceedings do not impair the rights of indemnitee (however, indemnitee
reserves the right to retain independent counsel of its choosing and at its own
expense);); and (iii) provide indemnitor with reasonably available information,
authority and assistance (at the indemnitor’s expense) necessary to perform
indemnitor’s obligations under this Section.

8.     CONFIDENTIALITY

8.1.          The
term “Confidential Information” shall mean (i) the terms of this Agreement (and
not its existence), (ii) CustomerInformation, (ii) any information disclosed by
one Party to the other pursuant to this Agreement which is in written, graphic,
machine readable or other tangible form and is marked “Confidential”,
“Proprietary” or in some other manner to indicate its confidential, and (iv)
oral information disclosed by one Party to the other pursuant to this
Agreement, provided that such information is designated as confidential at the
time of disclosure and reduced to a written summary by the disclosing Party,
within thirty (30) days after its oral disclosure, which is marked in a
manner to indicate its confidential nature and delivered to the receiving
Party. Notwithstanding the above, neither Party shall have liability to the
other with regard to any Confidential Information of the other which: (i) was
generally known and available at the time it was disclosed or becomes generally
known and available through no fault of the receiver; (ii) was known to the
receiver, without restriction, at the time of disclosure as shown by 

 

18

 

the files of the receiver in existence at the time of
disclosure; (iii) is disclosed with the prior written approval of the
disclosure; (iv) was independently developed by the receiver without any use of
the Confidential Information; or (v) becomes known to the receiver, without
restriction, from a source other than the disclosure without breach of this
Agreement by the receiver and otherwise not in violation of the disclosure’s
rights.  In addition, each Party shall
be entitled to disclose the other Party’s Confidential Information to the
extent such disclosure is requested by the order or requirement of a court, administrative
agency, or other governmental body, including the Securities and Exchange
Commission; provided, that the Party required to make the disclosure shall
provide prompt, advance notice thereof to enable the other Party to seek a
protective order or otherwise prevent such disclosure, confidential treatment
of certain information, or otherwise prevent such disclosure.

8.2.          Each
Party shall (i) treat as confidential all Confidential Information of the other
Party, (ii) not use such Confidential Information except as expressly set forth
herein or otherwise authorized in writing, (iii) implement reasonable
procedures to prohibit the disclosure, unauthorized duplication, misuse or
removal of the other Party’s Confidential Information, and (iv)  not disclose any of the other Party’s
Confidential Information to any third party except as may be necessary and
required under this Agreement, and subject to confidentiality obligations at
least as protective as those set forth herein. 
Without limiting the foregoing, each of the Parties shall use at least
the same procedures and degree of care which it uses to prevent the disclosure
of its own confidential information of like importance to prevent the
disclosure of Confidential Information disclosed to it by the other Party under
this Agreement, but in no event less than reasonable care. The receiving Party
shall notify the disclosing Party, in writing, of any disclosure, loss or use
of Confidential Information in violation of this Agreement promptly after the
receiving Party receives notice of such violation.

8.3.          If
either Party breaches any of its obligations with respect to confidentiality,
or if such a breach is likely to occur, the other Party shall be entitled to
equitable relief, including specific performance or an injunction, in addition
to any other rights or remedies, including money damages, provided by law.

8.4.          With
respect to Confidential Information in the receiving Party’s possession as of
such expiration or termination, the receiving Party shall within ten (10)
Business Days after the expiration or termination of this Agreement, return or
destroy all such Confidential Information in its actual or constructive
possession (including all original, copies, summaries, abstractions and other
iterations, regardless of form) to the disclosing Party in any manner that the
disclosing Party may reasonably direct.

9.     TERM AND
TERMINATION

9.1.          Term.  Unless terminated earlier as provided herein, this Agreement
shall have a term of two (2) years commencing on the Effective Date (the “Initial Term”), unless terminated sooner
by written notice given by a Party pursuant to this Agreement.  No later than [*] prior to the expiration of
the Initial Term, or any subsequent Term, Safeway may give notice to Overstock,
extending the term for [*].  For
purposes of the exclusivity provisions of this Agreement, “Term” shall refer to the Initial Term and
any renewal or subsequent term(s).

 

19

 

9.2.          Termination
for Cause.  This Agreement
may be terminated by a Party for cause immediately by written notice upon the
occurrence of any of the following events: (i) if the other ceases to do
business, or otherwise terminates its business operations; (ii) if the other
breaches any provision of this Agreement and fails to cure such breach within
thirty (30) days (immediately in the case of a breach of Section 11) of written
notice describing the breach; (iii) if the other Party becomes insolvent or
seeks protection under any bankruptcy, receivership, trust deed, creditors
arrangement, composition or comparable proceeding, or if any such proceeding is
instituted against the other (and not dismissed within ninety (90) days); (iv)
in accordance with the Customer Service Standards and the Web Site Service
Standards; and/or (v) following a force majeure event in accordance with
Section 10.2.

9.3.          Survival. Sections 2.6, 2.7, 2.8,
3.3, 3.10, 3.13, 3.14, 4-8 (inclusive), 9.3, and 10 shall survive the
expiration or termination of this Agreement.

10.  GENERAL

10.1.        Project
Managers. Each Party will appoint a project manager (“Project Manager”)
as a primary point of contact for this Agreement, and will provide written
notification to the other Party of the names of the Project Managers within
five (5) Business Days of the Effective Date. The Project Managers shall be
responsible for: (i) managing the day-to-day activities under this Agreement,
(ii) serving as liaisons between the Parties, (iii) assigning and scheduling
the appropriate personnel to perform all of the required services under this Agreement,
and (iv) authorizing and executing any and all change order(s) in connection
with the development of the Web Site. 
In the event that either Party appoints a new Project Manager, such
Party will promptly notify the other. 
Should either Party be dissatisfied with the performance, competence,
responsiveness, capabilities, cooperativeness, or fitness for a particular task
of any person assigned by the other Party to perform services under this
Agreement, including the Project Manager, such Party may request the
replacement of that person.  Each Party
shall endeavor to address the concerns of the other Party and, if appropriate,
to replace the person(s) requested to be replaced.

10.2.        Force
Majeure.  Neither Party shall be considered in default
of performance of its obligations under this Agreement to the extent that
performance of such obligations is delayed by acts of terrorism, civil
disturbance, or acts of God; provided, however, that if performance is delayed
by a force majeure even for a period of more than twenty (20) days, either
Party, in its sole discretion, may terminate this Agreement.

10.3.        Assignment.  This Agreement shall be binding on the Parties hereto and their
successors and assigns.  Neither Party
may assign, license, or otherwise transfer its rights or obligations under this
Agreement without the prior written consent of the other Party, which consent
shall not be unreasonably withheld; provided, however, that either Party may
assign or transfer, in whole or part, this Agreement or any of its rights or
obligations arising hereunder in connection with a sale, merger, acquisition or
other disposition involving all or substantially all of its assets or
liabilities if such assignee agrees in writing to be bound by all terms and
conditions contained herein; provided,
further, that Overstock (or its acquiror) shall remain liable of all
of its obligations under this Agreement regardless of any assignment.

10.4.        Independent
Contractors.  Each Party shall perform its obligations
hereunder as 

 

20

 

an independent contractor of the other and shall be
solely responsible for its own financial obligations.  Nothing contained herein shall be construed to imply a joint
venture or principal and agent relation­ship between the Parties, and neither
Party shall have any right, power or authority to create any obligation,
express or implied, on behalf of the other in connection with the performance
hereunder.

10.5.        Modification.  No alteration, amendment, waiver, cancellation or any other
change in any term or condition of this Agreement shall be valid or binding on
either Party unless the same shall have been mutually assented to in writing by
both Parties.

10.6.        Waiver.  The failure of either Party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other Party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any
way affect the right of either Party to enforce each and every such provision
thereafter.  The express waiver by
either Party of any provision, condition or requirement of this Agreement shall
not constitute a waiver of any future obligation to comply with such provision,
condition or requirement.

10.7.        Notices. All notices, requests, or
other communications (excluding invoices) hereunder shall be in writing and
either transmitted via certified or registered mail, overnight courier,
facsimile (with a machine-provided receipt), hand delivery or certified or
registered mail, postage prepaid and return receipt requested to the Parties at
the following addresses or such other addresses as may be specified by written
notice. Notices will be deemed to have been given (i) on the next Business Day
if sent by overnight courier, prepaid, or by facsimile, or hand delivery, or
(ii) three (3) Business Days if sent by U.S. mail, postage prepaid.

10.8.        No Third
Party Beneficiaries.  Unless otherwise expressly provided, no provisions
of this Agreement are intended or shall be construed to confer upon or give to
any person or entity other than Safeway or Overstock any rights, remedies or
other benefits under or by reason of this Agreement.

10.9.        Severability.  This Agreement represents the negotiated agreement of the
Parties, with the advice and assistance of counsel, and shall not be construed
against either Party as the drafter thereof. In the event that any provision of
this Agreement conflicts with governing law or if any provision is held to be
null, void or otherwise ineffective or invalid by a court of competent
jurisdiction, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
Applicable Laws, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and will
be construed in such a manner as to carry out the full intention of the Parties
and the Parties will negotiate in good faith to replace any material provisions
that have been determined to be invalid.

10.10.      Informal
Dispute Resolution.  All disputes, controversies or claims
(collectively, “Disputes”) arising out of or
relating to this Agreement (excluding indemnity claims) shall initially be
submitted to the Project Managers for good faith negotiations.  If the Project Managers are unable to
resolve the Dispute within ten (10) Business Days after submission of the
dispute to them, either Party may escalate the Dispute to the vice presidents
(or other executive with a similar 

 

21

 

level of authority) responsible for such Party’s
performance of the Agreement for attempted resolution through good faith
negotiations.  If such executives are
unable to resolve the Dispute within ten (10) Business Days after submission of
the Dispute to them, then the Parties may proceed to litigation or, if mutually
agreed, arbitration.

10.11.      Arbitration.  Any Dispute (other than a Dispute
under Section 8 of this Agreement) that the Parties are unable to resolve
through the procedures set forth in Section 10.10 of this Agreement shall be
submitted to arbitration in accordance with the following procedures:

10.11.1.   Either Party may demand arbitration by giving
the other Party notice to such effect, which notice shall describe, in
reasonable detail, the facts and legal grounds forming the basis for the filing
Party’s request for relief and shall include a statement of the total amount of
damages claimed, if any, and any other remedy sought by that Party.  If Safeway requests arbitration as a result
of a perceived non-compliance by Overstock of the terms of this Agreement, the
arbitration shall be held before one neutral arbitrator in Salt Lake City, Utah
.. If Overstock requests arbitration as a result of a perceived non-compliance
by Safeway of the terms of this Agreement, the arbitration shall be held before
one neutral arbitrator in the San Francisco Bay Area, California.

10.11.2.   Within 5 Business Days after the other
Party’s receipt of such demand, the Parties shall mutually determine who the
arbitrator will be.  If the Parties are
unable to agree on the arbitrator within that time period, the arbitrator shall
be selected by the AAA.  In any event,
the arbitrator shall have a background in, and knowledge of, the retail sales
business and the information technology and e-commerce industries and shall be
an appropriate person based on the nature of the Dispute.  If a person with experience in both such
industries is not available, the arbitrator shall be chosen from the large and
complex case panel or, if an appropriate person is not available from such
panel, the retired federal judges pool.

10.11.3.   The arbitration shall be governed by the Commercial
Arbitration Rules of the AAA, except as expressly provided in this Section
10.  However, the arbitration shall be
administered by any organization mutually agreed to in writing by the Parties.  If the Parties are unable to agree on the
organization to administer the arbitration, it shall be administered by the AAA
under its procedures for large and complex cases.  Pending the arbitrator’s determination of the merits of the
Dispute, either Party may apply to any court of competent jurisdiction to seek
injunctive or other extraordinary relief.

10.11.4.   Discovery shall be limited to the request for
and production of documents and interrogatories.  Interrogatories shall be allowed only as follows:  a Party may request the other Party to
identify by name, last known address and telephone number (i) of all persons
having knowledge of facts relevant to the Dispute and a brief description of
that person’s knowledge, (ii) any experts who may be called as an expert
witness, the subject matter about which the expert is expected to testify, the
mental impressions and opinions held by the expert and the facts known by the
expert (regardless of when the factual information was acquired) which relate
to or form the basis for the mental impressions and opinions held by the expert
and (iii) any experts who have been used for consultation, but who are not
expected to be called as an 

 

22

 

expert witness, if such consulting expert’s opinions
or impressions have been reviewed by an expert witness.  All discovery shall be guided by the Federal
Rules of Civil Procedure.  All issues
concerning discovery upon which the Parties cannot agree shall be submitted to
the arbitrator for determination.

10.11.5.   In rendering an award, the arbitrator shall
determine the rights and obligations of the Parties according to the
substantive and procedural laws of the State of Delaware, without reference to
conflict of law principles.

10.11.6.   Each of Safeway and Overstock agree that it
shall use commercially reasonable efforts to join (and will allow the other
Party to join) any third party that the Parties have agreed is indispensable to
the arbitration.  If any such third
party does not agree to be joined, the arbitration shall proceed nonetheless.

10.11.7.   The decision of, and award rendered by, the
arbitrator shall be determined no more than thirty (30) days after the
selection of the arbitrator and shall be final and binding on the Parties and
shall not be subject to appeal. 
Judgment on the award may be entered in and enforced by any court of
competent jurisdiction.  Each Party
shall bear its own costs and expenses (including filing fees) with respect to
the arbitration, including one-half of the fees and expenses of the arbitrator.

10.11.8.   The provisions of this Section 10 will not be
construed to prevent a Party from (i) seeking a temporary restraining order or
injunctive or other equitable relief or specific performance with respect to a
breach (or attempted breach) of this Agreement by the other Party, or (ii)
instituting litigation or other formal proceedings to the extent necessary (A)
to enforce the award of the arbitrator or (B) to avoid the expiration of any
applicable limitations period.  Except
for such matters, the Parties agree that the provisions of this Section 10 are
a complete defense to any suit, action or other proceeding instituted in any
court or before any administrative tribunal with respect to any Dispute.

10.12.      Governing
Law.  This Agreement shall be governed by the laws
of the State of Delaware, without reference to conflict of laws principles. If
Safeway commences suit hereunder, the Parties irrevocably submit to the
jurisdiction of courts in Salt Lake City, Utah. If Overstock commences suit
hereunder, the Parties irrevocably submit to the jurisdiction of courts in the
San Francisco Bay Area, California.

10.13.      Interpretation.

10.13.1.   This Agreement hereto, represent and
constitute the entire agreement between the Parties and supersedes all prior
agreements and understandings, whether written or oral, relating to the subject
matter contained herein.

10.13.2.   When used in this Agreement, the terms
“including” or “include” will not limit the generality of any provision of this
Agreement but rather will be interpreted as if followed by the words “without
limitation” or “but not limited to.”

10.13.3.   This Agreement and any amendment hereto or
any other document 

 

23

 

delivered pursuant hereto may be executed by telecopy,
in one or more counterparts, and by different Parties in separate
counterparts.  All of such counterparts
will constitute one and the same agreement (or other document) and will become
effective (unless otherwise provided therein) when one or more counterparts
have been signed by each Party and delivered to the other Party.  Any execution by telecopy will be followed
promptly by the delivery of signed original counterparts to the Party or
Parties receiving the telecopy.

10.13.4.   Headings are inserted for convenience only
and will not affect the construction of the Agreement.

                                IN WITNESS
WHEREOF, the Parties hereto have executed this
Agreement by persons duly authorized as of the date and year first above
written.

The
Parties have signed below to indicate their acceptance of the terms of this
Agreement.

 

 

	
  SAFEWAY
  INC.

  	
   

  	
  OVERSTOCK.COM,
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel Dmochowski 

  	
   

  	
  By:

  	
  /s/ Jason Lindsey

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: Daniel Dmochowski
  

  	
   

  	
  Name: 

  	
  Jason Lindsey

  
	
   

  	
   

  	
   

  	
   

  
	
  Title: Vice President,
  Marketing Services 

  	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  

 

 

24

 

EXHIBIT A

PRIVACY
POLICY

We use the information we collect when you log on and
visit different sections of our site to help make our site, products and
services more useful to you.  We also
use this information to offer savings awards and other promotions to you.  We may use this information to give you
personally-tailored coupons, offers or other information which may be provided
to us by 

other companies. We may create compilations of information that is not
personally-identifying and provide this data to other companies to help them
understand the demographics of our customers.

We do not sell or lease personally-identifying
information to any other company, person or agency. “Personally-identifying information”
means your name, address, social security number, bank account, credit card
number, telephone number or other information by which you can be personally
identified. We do not disclose personally identifying information to other
non-affiliated companies or persons for commercial purposes. We may disclose
personally-identifying information in response to a subpoena, court order or a
specific request by a law enforcement agency, or as required by law.

Please remember that you may be asked for information
by entities other than us when clicking on an advertisement or hypertext
language linking this site to other sites. We do not exercise control over any
information you give to any other entity, even if that information was provided
after linking to the entity requesting the information from our website.

By using this site, you are agreeing to the conditions
of this Privacy Policy.  IF YOU DO NOT
AGREE WITH THIS PRIVACY POLICY, DO NOT USE THIS SITE. We reserve the right at
our discretion to change, modify, add, or remove portions of this Policy at any
time. Any changes will be posted on the site. Please check this page
periodically for changes.

 

 

25

 

EXHIBIT B

 

RECONCILIATION ILLUSTRATION

 

 

(See attached)

 

26

 

 

[*]

 

27

 

EXHIBIT C

WEB SITE SERVICE STANDARDS

Overstock shall comply with the technical requirements
set forth in this Exhibit with respect to the Web Site.

 

1.     Servers; Capacity. 
Overstock shall have a back-up server available and ready to operate in
the event the main server ceases to function in accordance with this
Agreement.  Overstock shall maintain
sufficient Server capacity and Internet connectivity throughout the term of
this Agreement to accommodate growth in user numbers and overall traffic levels
to the Web Site. Overstock shall host and operate the Web Site such that users
experience access times and times to retrieve full Web pages that are no slower
than the access times and times to retrieve full Web pages by users visiting
comparable Web pages hosted by Overstock for the Overstock Web Site.  Without limiting the foregoing, Overstock
shall use reasonable commercial efforts to manage the Web Site so that usage
does not exceed seventy percent (70%) of capacity.  In the event Overstock anticipates that such usage will exceed
seventy percent (70%) of capacity within the next thirty (30) days, Overstock shall
notify Safeway of this anticipated event within five (5) days. If usage does at
any time exceed [*] of capacity, Overstock shall notify Safeway within one (1)
day of such event.

2.     Site
Availability.  Except as otherwise
agreed in writing between the Parties, the Web Site shall be available, via the
Internet, and according to the terms of this Agreement, twenty-four (24) hours
a day, seven (7) days a week, without interruption, with the sole exception of
scheduled maintenance periods (“Scheduled
Maintenance”), which
shall not exceed two (2) hours per week. 
Overstock shall use commercially reasonable efforts to conduct any
Scheduled Maintenance on equipment during hours when the number of visitors to
the Web Site is relatively low compared to the overall visitor access
rates.  Overstock shall provide Safeway
with at least twenty four (24) hours advance notice prior to conducting
Scheduled Maintenance.  In the event
that Site Availability for any month drops below [*] during the Primary
Business Hours (as defined below) (“Site
Availability Failure”),
Safeway shall have the remedies set forth in Section 10 of this Exhibit.  For the purposes of this Section, Site
Availability will be calculated based on the following formula:

                        X = 100 [1 — (Y /Z)] where

X =          Site Availability

Y =          Total number of minutes that the
Server is down in the applicable month.

Z =          Total
number of minutes during Primary Business Hours in applicable month

3.     Problem
Response.  Except during the
Scheduled Maintenance period, if the Server or the Web Site becomes unavailable
to users via the Internet, Overstock shall have qualified personnel respond
immediately and render continuous commercially reasonable efforts until the
problem has been remedied; provided that, in the event a problem arises outside
of Primary Business Hours, Overstock’s obligation under this Section shall be
suspended until the commencement of Primary Business Hours.

4.     Cooperation
and Access.  Overstock shall
cooperate fully with Safeway in providing Safeway with physical access to the
Server on which the Web Site is stored during normal business hours as
reasonably requested by Safeway given a minimum of (3) Business Days notice and
in removing access by the general 

 

28

 

public to the Web Site from Overstock’s computers upon
the written request of Safeway.

5.     Back-Up.  Overstock shall maintain daily onsite and
weekly offsite back-up copies of Customer Information and all other information
necessary or desirable to calculate revenues and pricing hereunder.  Overstock shall provide a copy of all such
back-up materials in a form and manner acceptable to Safeway within seventy two
(72) hours of Safeway’s request.

6.     Product Updates. Overstock will promptly update the
Products promoted on the Web Site so that at no time will more than [*] of
Products be unavailable to users for immediate delivery.

7.     Security. 
Overstock shall use commercially reasonable efforts to secure the Web
Site, reports, Customer Information, and the physical location where the Web
Site programs, computers and data are stored, against unauthorized intrusions,
modifications, introduction of viruses or damage. All transactions made through
the Web Site shall be received and processed using a secure Server.  The Server shall log all visits to the Web
Site, along with all relevant available information pertaining to the visits.

8.     Bug Fixes. 
Overstock shall use commercially reasonable efforts to correct any bugs
or other problems or irregularities that affect the proper operation of the Web
Site within forty eight (48) hours of discovery thereof.

9.  Abandonment.  Overstock shall use its best efforts to
minimize shopping cart abandonment on the Web Site.

10.   Reports.  Within two (2) Business Days after any outage, Overstock shall
provide Safeway with Web Site outage reports specifying, the time of outage,
response time, time to repair and a root cause analysis.  Within ten (10) days after the end of each
calendar month, Overstock shall provide Safeway with the following monthly
reports specifying (i) the average percentage of Products shown on the Web Site
that are available for immediate delivery, (ii) any virus or other similar
repairs during the preceding month and the time to complete all such
repairs,  (iii) average capacity during
the preceding month, and (iv) the abandonment report.

11.     Remedies
for Failures.  For each failure to
satisfy the standards set forth in Sections 1, 2, 3, 6 , 8, or 10 during the
Term (each, a “Service
Standard Failure”),
Overstock shall provide Safeway with a credit of [*] to be applied on Safeway’s
next order, or if such credit remains at the end of the Term, Overstock shall
pay all credits to Safeway within ten (10) days.  In the event that the combined number of Site Specification
Failures equals or exceeds [*] during any one (1) month period, Safeway, in
addition to any other rights or remedies it may have under the Agreement, shall
have the right to terminate the Agreement.

 

29

 

EXHIBIT D

CUSTOMER SERVICE REQUIREMENTS

 

Company shall comply with
the following customer service requirements:

 

1.               Receive and respond to e-mails and phone orders within
one (1) Business Day  of receipt via a
computer available to the customer service staff.

2.               Provide the User with an order confirmation within
twenty four (24) hours of receipt. 
Order confirmation should include any information on such order status,
and expected delivery times.

3.               Maintain ability to handle volumes in excess of [*] of
Company’s average daily order volumes.

4.               Receive orders on the Web Site or e-mail and process
orders within forty-eight (48) hours of receipt.

5.               Maintain “best practices” customer service policies, e.g.
“The Customer is always right, even when he/she is not.”

6.               Provide and staff a unique e-mail address for customer
service for the Web Site.

7.               Post the complete and accurate details of Company’s
customer service policies in the Web Site, including: return policies, warranty
information, contact information and any other information as may be required
by law.

8.               Provide Safeway with monthly reports specifying (i)
email and phone order response time, (ii) order confirmation response time,
(iii) average daily order volume, (iii) average daily order capacity, and (iv)
order processing response time.

9.               For each any failure to meet the standards contained
in Sections 1, 2, 3, 4 or 8 (“Service
Metric Failures”)
during the Term, Overstock shall provide Safeway with a credit of [*] to be
applied on Safeway’s next order.  In the
event that the combined number of Service Metric Failures equals or exceeds
[*], Safeway, in addition to any other rights or remedies it may have under the
Agreement, shall have the right to terminate the Agreement.

 

 

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Exhibit 4.2    
  

        HELMERICH & PAYNE EXPLORATION AND PRODUCTION CO.  

 and  

 UMB BANK, N.A.,

Rights Agent  

 Rights Agreement  

 Dated as of February 23, 2002  

  
 

    TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	Section 1.	 	Certain Definitions	 	1
	

Section 2.	
 	

Appointment of Rights Agent	
 	

4
	

Section 3.	
 	

Issuance of Rights Certificates	
 	

4
	

Section 4.	
 	

Form of Rights Certificates	
 	

6
	

Section 5.	
 	

Countersignature and Registration	
 	

7
	

Section 6.	
 	

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

7
	

Section 7.	
 	

Exercise of Rights; Purchase Price; Expiration Date of Rights	
 	

8
	

Section 8.	
 	

Cancellation and Destruction of Rights Certificates	
 	

9
	

Section 9.	
 	

Reservation and Availability of Capital Stock	
 	

10
	

Section 10.	
 	

Preferred Stock Record Date	
 	

11
	

Section 11.	
 	

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

11
	

Section 12.	
 	

Certificate of Adjusted Purchase Price or Number of Shares	
 	

18
	

Section 13.	
 	

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

18
	

Section 14.	
 	

Fractional Rights and Fractional Shares	
 	

20
	

Section 15.	
 	

Rights of Action	
 	

21
	

Section 16.	
 	

Agreement of Rights Holders	
 	

21
	

Section 17.	
 	

Rights Certificate Holder Not Deemed a Stockholder	
 	

22
	

Section 18.	
 	

Concerning the Rights Agent	
 	

22
	

Section 19.	
 	

Merger or Consolidation or Change of Name of Rights Agent	
 	

23
	

Section 20.	
 	

Duties of Rights Agent	
 	

23
	

Section 21.	
 	

Change of Rights Agent	
 	

25
	

Section 22.	
 	

Issuance of New Rights Certificates	
 	

25
	

Section 23.	
 	

Redemption and Termination	
 	

26
	

Section 24.	
 	

Exchange	
 	

26
	

Section 25.	
 	

Notice of Certain Events	
 	

27
	

Section 26.	
 	

Notices	
 	

28
	

Section 27.	
 	

Supplements and Amendments	
 	

28
	

Section 28.	
 	

Successors	
 	

29
	

Section 29.	
 	

Determinations and Actions by the Board of Directors, etc.	
 	

29
	

Section 30.	
 	

Benefits of this Agreement	
 	

29
	

Section 31.	
 	

Severability	
 	

29
	

Section 32.	
 	

Governing Law	
 	

30
	

Section 33.	
 	

Counterparts	
 	

30
	

Section 34.	
 	

Descriptive Headings	
 	

30

 
 

EXHIBITS    
  

	Exhibit A	 	—	 	Form of Certificate of Designation, Preferences and Rights
	

Exhibit B	
 	

—	
 	

Form of Rights Certificates
	

Exhibit C	
 	

—	
 	

Form of Summary of Rights

 
 

RIGHTS AGREEMENT    
  

        RIGHTS AGREEMENT, dated as of February 23, 2002 (the "Agreement"), between Helmerich & Payne Exploration and Production Co., a Delaware corporation
(the "Company"), and UMB Bank, N.A., a national banking corporation (the "Rights Agent"). 

 
 

W I T N E S S E T H    
  

        WHEREAS, on the date hereof (the "Rights Dividend Declaration Date"), the Board of Directors of the Company authorized and declared a dividend distribution of one
Right (as hereinafter defined) for each share of common stock, par value $.01 per share, of the Company (the "Common Stock") outstanding at the close of business (as defined below) on the Distribution
Date (as such term is defined in the Distribution Date (as described below)) (the "Record Date"), and has authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to
the provisions of Section 11(p) hereof) for each share of Common Stock of the Company issued between the Record Date (whether originally issued or delivered from the Company's treasury) and the
Distribution Date (as hereinafter defined) each Right initially representing the right to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of
the Company (as defined below), upon the terms and subject to the conditions hereinafter set forth (the "Rights"); 

        WHERAS,
HP Co., a Delaware corporation ("HP Co.") is the holder of all of the issued and outstanding Common Stock on the date hereof and on the Record Date, and pursuant to the
Distribution Agreement dated as of the date hereof, between HP Co. and the Company (the "Distribution Agreement"), will cause to be effected a distribution of all such issued and outstanding Common
Stock, together with the Rights distributed to it by virtue of being such holder on the Record Date, to the holders of the outstanding common stock of HP Co., par value $.10 per share; 

        WHEREAS,
Rights will also be issued in respect of all shares of Common Stock that are issued to holders of capital stock, par value $.25 per share ("K Co. Capital Stock"), of Key
Production Company, Inc., a Delaware corporation ("K Co.") upon conversion of such K Co. Capital Stock in the merger of Mountain Acquisition Co., a Delaware corporation and wholly owned
subsidiary of the Company ("Merger Sub"), with and into K Co. pursuant to the Agreement and Plan of Merger dated as of the date hereof among HP Co., the Company, Merger Sub and K Co (the "Merger
Agreement"); 

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

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

        (1)  "Acquiring
Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company, or of any
Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, or (iv) any Person who becomes the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of
shares of Common Stock by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of fifteen percent (15%) or more of the then outstanding
shares of Common Stock, acquires beneficial ownership of additional shares of Common Stock representing one percent (1%) or more of the shares of Common Stock then outstanding, or (v) any such
Person who has reported or is required to report such ownership (but less than 20%) on Schedule 13G under the Exchange Act (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of 

 

such schedule (other than the disposition of the Common Stock) and, within 10 Business Days of being requested by the Company to advise it regarding the same, certifies to the Company that such
Person acquired shares of Common Stock in excess of 14.9% inadvertently or without knowledge of the terms of the Rights and who or which, together with all Affiliates and Associates, thereafter does
not acquire additional shares of Common Stock while the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding; provided,
however, that if the Person requested to so certify fails to do so within 10 Business Days, then such Person shall become an Acquiring Person immediately after such
10-Business-Day period. Notwithstanding anything in this definition of "Acquiring Person" to the contrary, neither HP Co. nor any Affiliate or Associate of HP Co. shall be an
Acquiring Person by virtue of HP Co. being the Beneficial Owner of Common Stock on the date hereof or at any time prior to ceasing to be the Beneficial Owner of such Common Stock in the
Spin-off. 

        (2)  "Act"
shall mean the Securities Act of 1933, as amended. 

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

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

        (1)  which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants
or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or
exchange, (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event (as hereinafter defined), or (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date (as hereinafter
defined) or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to
any Original Rights; 

        (2)  which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph
(ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is
not reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 

        (3)  which
are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting securities of 

2

 

the Company; provided, however, that nothing in this paragraph (d) shall cause a Person engaged in business as an underwriter of securities to
be the "Beneficial Owner" of, or to "beneficially own," any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days
after the date of such acquisition, and then only if such securities continue to be owned by such Person at such expiration of forty days. 

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

        (6)  "close
of business" on any given date shall mean 5:00 p.m., New York City time, on such date; provided, however,
that if such date is not a Business Day, it shall mean 5:00 p.m., New York City time, on the next succeeding Business Day. 

        (7)  "Common
Stock" shall mean the common stock, par value $.01 per share, of the Company, except that "Common Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the greatest voting power, or, if such Person shall have no capital stock, the equity securities or other equity interest having power to
control or direct the management, of such Person. 

        (8)  "Common
Stock Equivalents" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

        (10) "Current
Value" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

        (12) "Equivalent
Preferred Stock" shall have the meaning set forth in Section 11(b) hereof. 

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

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

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

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

        (17) "Person"
shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act. 

        (18) "Preferred
Stock" shall mean shares of Series A Junior Participating Preferred Stock, par value $.01 per share, of the Company having the rights, powers,
limitations, restrictions, specifications and preferences set forth in the form of Certificate of Designation, Preferences and Rights attached hereto as Exhibit A, and, to the extent that there
are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating Preferred Stock. 

        (19) "Principal
Party" shall have the meaning set forth in Section 13(b) hereof. 

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

        (21) "Qualified
Offer" shall have the meaning set forth in Section 11(a)(ii) hereof. 

        (22) "Record
Date" shall have the meaning set forth in the preamble of this Agreement. 

3

 

        (23) "Rights"
shall have the meaning set forth in the recitals of this Agreement. 

        (24) "Rights
Agent" shall have the meaning set forth in the preamble of this Agreement. 

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

        (26) "Rights
Dividend Declaration Date" shall have the meaning set forth in the recitals of this Agreement. 

        (aa)
"Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii) hereof. 

        (bb)
"Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof. 

        (cc)
"Spin-off" shall mean the distribution by HP Co. of all of the issued and outstanding Common Stock, together with the Rights associated therewith, to the holders of the
outstanding HP Co. common stock pursuant to the Distribution Agreement. 

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

        (ee)
"Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed or amended
pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such other than pursuant to a Qualified Offer. 

        (ff)
"Subsidiary" shall mean, with reference to any Person, either (i) any corporation of which an amount of voting securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person, or (ii) any other Person of which a majority of the voting
securities or equity interests is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person. 

        (gg)
"Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

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

        (jj)
"Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event. 

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

        Section 3.    Issuance of Rights Certificates.    

        (1)  Until
the earlier of (i) the close of business on the tenth Business Day after the Stock Acquisition Date (or, if the tenth Business Day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the Record Date), or (ii) the close of business on the tenth Business Day (or such later date as the Board shall
determine) after the date that a tender or exchange offer 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 Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would become an Acquiring Person, in either instance other than
pursuant to a Qualified Offer (the earlier of (i) and (ii) being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the 

4

 

Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage-prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit B hereto (the
"Rights Certificates"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments
(in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. 

        (2)  The
Company will make available, as promptly as practicable following the Record Date, a copy of a Summary of Rights, in substantially the form attached hereto as  Exhibit C (the "Summary of Rights") to
any holder of Rights who may so request from time to time prior to the Expiration Date. With respect to
certificates for the Common Stock outstanding as of the Record Date, or issued subsequent to the Record Date, unless and until the Distribution Date shall occur, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as such term is defined in Section 7(a) hereof), the transfer of any certificates representing shares of Common Stock in respect of which Rights have been issued, including
without limitation the transfer thereof in the Spin-off, shall also constitute the transfer of the Rights associated with such shares of Common Stock. 

        (3)  Rights
shall be issued in respect of all shares of Common Stock which are issued (whether originally issued or from the Company's treasury) after the Record Date
(including without limitation all shares of Common Stock issued upon conversion of K Co. Common Stock in the merger of Merger Sub into K Co. as provided in the Merger Agreement) but prior to the
earlier of the Distribution Date or the Expiration Date. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear the following legend
if such certificates are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date: 

This
certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Helmerich & Payne Exploration and Production Co. (the "Company")
and the Rights Agent thereunder (the "Rights Agent") dated as of February 23, 2002 (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. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are 

5

 

defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. 

With
respect to such certificates evidencing shares of Common Stock (whether or not such certificates include the foregoing legend), until the earlier of (i) the Distribution Date or
(ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by
such certificates. 

        Section 4.    Form of Rights Certificates.    

        (1)  The
Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall each be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-hundredth of a share, the "Purchase
Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. 

        (2)  Any
Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to
holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom such Acquiring Person (or any such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares of Common Stock or the Company or (B) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: 

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

        Section 5.    Countersignature and Registration.    

        (1)  The
Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile
signature, and shall 

6

 

have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature and shall not be entitled to any benefit under this Agreement or be valid for any purpose unless so
countersigned, and such countersignature upon any Rights Certificate shall be conclusive evidence, and the only evidence, that such Rights Certificate has been duly countersigned as required
hereunder. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any such person was not such an officer. 

        (2)  Following
the Distribution Date, the Rights Agent will keep, or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 

        Section 6.    Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.    

        (1)  Subject
to the provisions of Section 4(b), Section 7(e) and 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 Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates representing Rights that may have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitles such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 hereof and Section 24 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company or the Rights Agent may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. 

        (2)  Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement 

7

 

to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate, if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated. 

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

        (1)  Subject
to Section 7(e) hereof, at any time after the Distribution Date the registered holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one one-hundredths of
a share (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earlier of (i) 5:00 p.m., New York
City time, on February 22, 2012, or such later date as may be established by the Board of Directors prior to the expiration of the Rights (such date, as it may be extended by the Board, the
("Final Expiration Date"), or (ii) the time at which the Rights are redeemed or exchanged as provided in Section 23 and Section 24 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date"). 

        (2)  The
Purchase Price for each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right initially shall be $60.00, shall be subject
to adjustment from time to time as provided in Section 11 and Section 13(a) hereof and shall be payable in accordance with paragraph (c) below. 

        (3)  Upon
receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment,
with respect to each Right so exercised, of the Purchase Price per one one-hundredth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any applicable transfer tax required to be paid by the holder of such Rights Certificate in accordance with Section 9 hereof, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number of one one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to
be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct
the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) 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 Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be made by certified check, cashier's check, bank or trust check, bank draft,
wire transfer of immediately available funds or money order payable to the order of the Company. In the event that the Company is obligated to issue other securities (including 

8

 

Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and when appropriate. The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be issued. 

        (4)  In
case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof. 

        (5)  Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event or Section 13 Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or any such Associate or
Affiliate) has any continuing agreement, arrangement or understanding regarding the transferred Rights, shares of Common Stock or the Company or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or any
other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates or transferees hereunder. 

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

        Section 8.    Cancellation and Destruction of Rights Certificates.    

        All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up, combination or exchange shall, if surrendered to the Company or 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 Rights 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 Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at
the written request of the Company, destroy 

9

 

such cancelled Rights Certificates in accordance with applicable laws and regulations, and in such case shall deliver a certificate of destruction thereof to the Company. 

        Section 9.    Reservation and Availability of Capital Stock.    

        (1)  The
Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and, following the
occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities or out of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights. 

        (2)  So
long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. 

        (3)  The
Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, a registration statement under the Act, with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the Expiration Date. The Company will also take
such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in
order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the suspension has been rescinded. In addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights until such time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law, or a registration statement shall not have been declared effective. 

        (4)  The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a share of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. 

10

  

        (5)  The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect
of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax or charge which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may
be) in respect of a name other than that of the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any
Rights until such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Rights Certificates no later than the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due. 

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

        Section 11.    Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.    The Purchase
Price, the number and kind of 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 Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer 

11

 

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. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. 

        (ii)  In
the event any Person shall, at any time after the Rights Dividend Declaration Date, become an Acquiring Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a) hereof, or is an acquisition of shares of Common Stock pursuant to a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a majority of the members of the Board of Directors who are not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice from one or more investment banking firms, to be (a) at a price which is fair to stockholders and not inadequate (taking
into account all factors which such members of the Board deem relevant, including, without limitation, prices which could reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the best interests of the Company and its stockholders (a "Qualified Offer"), then, promptly following the occurrence of such
event, proper provision shall be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d) hereof) per
share of Common Stock on the date of such first occurrence (such number of shares, the "Adjustment Shares"). 

        (iii)  In
the event that the number of shares of Common Stock which is authorized by the Company's certificate of incorporation, but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall (A) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the "Current Value"), and (B) with respect to
each Right (subject to Section 7(e) hereof), make adequate provision to substitute for the Adjustment Shares, upon the exercise of a Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity securities of the Company (including, without limitation, shares, or units of shares, of
preferred stock, such as the Preferred Stock, which the Board has deemed to have essentially the same value or economic rights as shares of Common Stock (such shares of preferred stock being referred
to as "Common Stock Equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current
Value (less the amount of any reduction in the Purchase Price), where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment banking firm
selected by the Board; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein 

12

 

as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. For purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Current Value over (ii) the Purchase Price. If the Board determines in good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such thirty
(30) day period, as it may be extended, is herein called the "Substitution Period"). To the extent that the Company determines that action should be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such shareholder approval for such authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall be the Current Market Price per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the per share or
per unit value of any Common Stock Equivalent shall be deemed to equal the Current Market Price per share of the Common Stock on such date. 

        (b)  In
case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of
Preferred Stock ("Equivalent Preferred Stock")) or securities convertible into Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or per share of Equivalent
Preferred Stock (or having a conversion price per share, if a security convertible into Preferred Stock or Equivalent Preferred Stock) less than the Current Market Price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or Equivalent Preferred Stock to
be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration,
part or all of which may 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 the holders of the Rights. Shares of Preferred Stock owned by or held for the account of the Company
or any Subsidiary 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 

13

 

such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 

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

    (d)(i)  For
the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of
Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of the Common Stock is determined during a period following the announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification shall not
have occurred prior to the commencement of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, then, and in each such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange
or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted 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 the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by
any 

14

 

such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares on such date as determined in good faith by the Board shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, Current Market Price per share shall mean the fair value
per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 

        (ii)  For
the purpose of any computation hereunder, the Current Market Price per share of Preferred Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the Current Market Price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this Agreement) multiplied by the Current Market Price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 

        (e)  Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date. 

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

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

15

 

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

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

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

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

16

  

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

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

        (n)  The
Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. 

        (o)  The
Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 26 hereof, take (or permit
any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights. 

        (p)  Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Common Stock (including any
such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately 

17

 

adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction the numerator which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. 

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

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

        (a)  In
the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series of
related transactions, assets, cash flow or earning power aggregating more than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in one or more transactions each of which complies with Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal,
transfer restrictions or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence of a Section 11(a)(ii) Event), and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by 50% of the Current Market
Price (determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company 

18

 

pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event. 

        (b)  "Principal
Party" shall mean: 

          (i)  in
the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in such merger or consolidation or, if there is more than one such issuer, the issuer of Common Stock that has the highest
aggregate Current Market Price, and if no securities are so issued, the Person that is the other party to such merger or consolidation, or, if there is more than one such Person, the Person the Common
Stock of which has the highest aggregate Current Market Price; and 

        (ii)  in
the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion
of the assets, cash flow or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of
the assets, cash flow or earning power transferred pursuant to such transaction or transactions or if the Person receiving the largest portion of the assets, cash flow or
earning power cannot be determined, whichever Person the Common Stock of which has the highest aggregate Current Market Price; provided, however, that
in any such case, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value. 

        (c)  The
Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph (a) of this Section 13, the Principal Party will 

          (i)  prepare
and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Act) until the Expiration Date; and 

        (ii)  take
all such other action as may be necessary to enable the Principal Party to issue the securities purchasable upon exercise of the Rights, including but not limited
to the registration or qualification of such securities under all requisite securities laws of jurisdictions 

19

 

of the various states and the listing of such securities on such exchanges and trading markets as may be necessary or appropriate; and 

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

The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in
Section 13(a). 

        (d)  Notwithstanding
anything in this Agreement to the contrary, Section 13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock which is a Qualified Offer as such term is defined in Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such transaction is not less than the price per share of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer and (iii) the form of consideration being offered to the remaining holders of shares of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such tender offer or exchange offer. Upon consummation of any such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire. 

        Section 14.    Fractional Rights and Fractional Shares.    

        (a)  The
Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the registered holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For 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 of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights, selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. 

20

  

        (b)  The
Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise. 

        (c)  Following
the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be the closing price per share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) on
the Trading Day immediately prior to the date of such exercise. 

        (d)  The
holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14. 

        Section 15.    Rights of Action.    All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this 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 shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement. 

        Section 16.    Agreement of Rights 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 Common Stock; 

        (b)  after
the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates duly executed; 

21

 

        (c)  subject
to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and 

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

        Section 17.    Rights Certificate Holder Not Deemed a Stockholder.    No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of one one-hundredths of a share of Preferred Stock or any other securities
of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote 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 Rights Certificate
shall have been exercised in accordance with the provisions hereof. 

        Section 18.    Concerning the Rights Agent.    

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

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

22

 

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

        (a)  Any
corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust, stock transfer or other 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; but only if such corporation 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 Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 

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

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

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

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

        (c)  The
Rights Agent shall be liable hereunder only for its own 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 Rights Certificates or be
required to verify the same 

23

 

(except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only. 

        (e)  The
Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11, Section 13 or
Section 24 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or
Preferred Stock will, when so 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 the Chairman of the Board, the
President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. 

        (h)  The
Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not 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 such
act, default, neglect or misconduct; provided, however, reasonable care was exercised in the selection and continued employment thereof. 

        (j)    No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it. The Rights Agent shall have no responsibility to the Company, any holders of Rights, any holders of Common Stock or Preferred Stock for interest or earnings on any monies
held by the Rights Agent pursuant to this Agreement. 

        (k)  If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the 

24

 

case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first receiving written instruction from the Company. 

        Section 21.    Change of Rights Agent.    The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and, if such resignation occurs after the Distribution Date, to the registered holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and, if such removal occurs after the Distribution Date, to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of
thirty (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 Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate or, prior to the Distribution
Date, the holder of a certificate for the Common Stock, or the Rights Agent, may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a legal business entity organized and doing business under the laws of the United States or of the State of New York or of any
other state of the United States, in good standing, having an office in the State of New York, which is authorized under such laws to exercise corporate trust, stock transfer or shareholder services
powers and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an affiliate of a legal business entity described in
clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose, and the duties and obligations of the retiring or resigning Rights Agent shall cease and terminate. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 

        Section 22.    Issuance of New Rights Certificates.    Notwithstanding any of the provisions of this Agreement
or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or
change in the Purchase Price or the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the 

25

 

extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof. 

        Section 23.    Redemption and Termination.    

        (a)  The
Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the tenth Business Day following the
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth Business Day following the Record Date), or (ii) the
Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.01 per Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has
expired. The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price, as defined in Section 11(d)(i) hereof, of the Common
Stock at the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors. Subject to the foregoing, the redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors 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, evidence of which shall have been filed with the Rights Agent
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
for each Right so held.
Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made. 

        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 void pursuant to the provisions of Section 7(e) hereof) for Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board 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 Stock for or pursuant to the terms of any such plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then outstanding. 

26

  

        (b)  Immediately
upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange;  provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights. 

        (c)  In
any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Stock (or Equivalent Preferred Stock, as such term is defined in
paragraph (b) of Section 11 hereof) for Common Stock exchangeable for Rights, at the initial rate of one one-hundredth of a share of Preferred Stock (or Equivalent Preferred
Stock) for each share of Common Stock, as appropriately adjusted to reflect stock splits, stock dividends and other similar transactions after the date hereof. 

        (d)  In
the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of the
Rights. 

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

        Section 25.    Notice of Certain Events.    

        (a)  In
case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to
the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options,
or (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), or (iv) to effect
any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), 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 transaction or a series of related transactions, of more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or 

27

 

any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, 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 shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes
of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders
of the shares of Preferred Stock, whichever shall be the earlier. 

        (b)  In
case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities. 

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

Helmerich &
Payne Exploration and Production Co.

1579 East 21st Street

Tulsa, OK 74114

Attention: Corporate Secretary 

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

UMB
Bank, N.A., as Rights Agent

2401 Grand Blvd., 2nd Floor

Kansas City, MO 64108

Attn: Corporate Trust Department 

        Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing shares of Common Stock) 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.    Prior to the Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any holders of certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may 

28

 

be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates(other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything herein to the contrary, this Agreement may not be amended (other than pursuant to
clauses (i) or (ii) of the preceding sentence) at a time when the Rights are not redeemable. 

        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.    Determinations and Actions by the Board of Directors, etc.    For all purposes of this
Agreement, any calculation of the number of shares of Common Stock or any other class of capital stock outstanding at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board or any of the directors on the Board to any liability to
the holders of the Rights. 

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

        Section 31.    Severability.    If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith
judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth Business Day following the date of such determination by the Board of Directors. Without limiting the foregoing, if any
provision requiring a specific group of directors to act is held to by any court of competent jurisdiction or other authority to be invalid, void or unenforceable, such determination shall then be
made by the Board of Directors of the Company in accordance with applicable law and the Company's Restated Certificate of Incorporation and By-laws. 

29

 

        Section 32.    Governing Law.    This Agreement, each Right and each Rights 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 made and to be performed entirely within such State. 

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

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

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

	 	 	 	HELMERICH & PAYNE EXPLORATION AND PRODUCTION CO.
	

 	

 	
 	

By:	

/s/  STEVEN R. MACKEY      

	 	 	 	Name:	Steven R. Mackey
	 	 	 	Title:	Vice President
	

Attest:	
 	

UMB BANK, N.A.
	

By	

/s/  LARA L. STEVENS      
	
 	

By	

/s/  K. SCOTT MATTHEWS      

	Name:	Lara L. Stevens	 	Name:	K. Scott Matthews
	Title:	Assistant Secretary	 	Title:	Vice President

30

QuickLinks

Exhibit 4.2

TABLE OF CONTENTS

EXHIBITS

RIGHTS AGREEMENT

W I T N E S S E T H

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