Document:

exv4w1

Exhibit 4.1

CONTANGO OIL & GAS COMPANY

and

COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

RIGHTS AGREEMENT

Dated
as of September 30, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.	 	Certain Definitions
	 	 	1	 
	Section 2.	 	Appointment of Rights Agent
	 	 	6	 
	Section 3.	 	Issue of Rights Certificates
	 	 	6	 
	Section 4.	 	Form of Rights Certificates
	 	 	8	 
	Section 5.	 	Countersignature and Registration
	 	 	9	 
	Section 6.	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	9	 
	Section 7.	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	10	 
	Section 8.	 	Cancellation and Destruction of Rights Certificates
	 	 	12	 
	Section 9.	 	Reservation and Availability of Capital Stock; Registration of Securities
	 	 	13	 
	Section 10.	 	Capital Stock Record Date
	 	 	14	 
	Section 11.	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	14	 
	Section 12.	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	24	 
	Section 13.	 	Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power
	 	 	24	 
	Section 14.	 	Fractional Rights and Fractional Shares
	 	 	27	 
	Section 15.	 	Rights of Action
	 	 	28	 
	Section 16.	 	Agreement of Rights Holders
	 	 	28	 
	Section 17.	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	29	 
	Section 18.	 	Concerning the Rights Agent
	 	 	29	 
	Section 19.	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	Section 20.	 	Duties of Rights Agent
	 	 	31	 
	Section 21.	 	Change of Rights Agent
	 	 	32	 
	Section 22.	 	Issuance of New Rights Certificates
	 	 	33	 
	Section 23.	 	Redemption and Termination
	 	 	34	 
	Section 24.	 	Exchange
	 	 	35	 
	Section 25.	 	Notice of Certain Events
	 	 	36	 
	Section 26.	 	Notices
	 	 	37	 
	Section 27.	 	Supplements and Amendments
	 	 	37	 
	Section 28.	 	Successors
	 	 	38	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 29.	 	Determinations and Actions by the Board of Directors, etc.
	 	 	38	 
	Section 30.	 	Benefits of this Agreement
	 	 	38	 
	Section 31.	 	Severability
	 	 	39	 
	Section 32.	 	Governing Law
	 	 	39	 
	Section 33.	 	Counterparts
	 	 	39	 
	Section 34.	 	Descriptive Headings
	 	 	39	 
	Section 35.	 	Force Majeure
	 	 	39	 
	 	 	 
	 	 	 	 
	Exhibit A —	 	Form of Board Resolutions
	 	 	 	 
	 	 	 
	 	 	 	 
	Exhibit B —	 	Form of Rights Certificate
	 	 	 	 
	 	 	 
	 	 	 	 
	Exhibit C —	 	Form of Summary of Rights
	 	 	 	 

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RIGHTS AGREEMENT

     RIGHTS
AGREEMENT, dated as of September 30, 2008 (the “Agreement”), between CONTANGO OIL & GAS
COMPANY, a Delaware corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY, N.A. (the “Rights
Agent”).

W I T N E S S E T H

     WHEREAS,
on September 30, 2008 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized and declared a dividend distribution of one Right for each
share of Common Stock (as hereinafter defined) of the Company outstanding at the close of business
on October 1, 2008 (the “Record Date”) (subject to the right to cancel such dividend in certain
events) and has authorized the issuance of one Right (as such number may hereafter 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 earlier of the Distribution Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one one-hundredth of a share of
Preferred Stock (as hereinafter defined) of the Company having the rights, powers and preferences
set forth in the form of Certificate of Designations, Preferences, and Relative Rights and
Limitations as provided in Resolutions of the Board of Directors attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the
“Rights”); and

     WHEREAS, the Rights will be held by the Rights Agent under this Agreement as trustee for the
stockholders of the Company until the Distribution Date; and

     WHEREAS, the Board of Directors of the Company has considered whether approval of this
Agreement and the distribution of the Rights is in the interests of the Company and all other
pertinent factors; and

     WHEREAS, the Board of Directors of the Company has concluded that approval of this Agreement
and the distribution of the Rights is in the interests of the Company because the existence of the
Rights will help (i) reduce the risk of coercive two-tiered, front-end loaded or partial offers
that may not offer fair value to all stockholders, (ii) mitigate against market accumulators who
through open market and/or private purchases may achieve a position of substantial influence or
control without paying to selling or remaining stockholders a fair control premium, (iii) deter
market accumulators who are simply interested in putting the Company into “play,” (iv) restrict
self-dealing by a substantial stockholder, and (v) preserve the Board of Directors’ bargaining
power and flexibility to deal with third-party acquirors and to otherwise seek to maximize values
for all stockholders.

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

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

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          (a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% 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) Kenneth R. Peak.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as the result
of an acquisition of shares of Common Stock by the Company, which by reducing the then
number of shares of Common Stock outstanding, increases the proportional number of shares
of Common Stock beneficially owned by such Person to 20% or more of the shares of Common
Stock of the Company then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 20% or more of the shares of Common Stock of the
Company then outstanding by reason of share purchases by the Company and shall, after such
share purchase by the Company, become the Beneficial Owner of any additional shares of
Common Stock of the Company, then such Person shall be deemed to be an “Acquiring Person”
as of the date of such additional purchase. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would otherwise be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an “Acquiring
Person,” then such Person shall not be deemed to be an “Acquiring Person” for any purposes
of this Agreement.

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

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

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

          (e) “Agreement” shall have the meaning set forth in the Preamble hereof.

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

          (i) that 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, 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

2

 

or exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for payment, purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event, 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 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;

          (ii) that 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 without limitation 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)
solely as a result of an oral or written agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding: (A) arises
exclusively 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 also then
reportable by such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or

          (iii) that 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 (c)) or disposing of any voting securities of the Company,

provided, however, that nothing in this paragraph (f) 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.

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

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

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          (i) “Common Stock” shall mean the shares of Common Stock, par value $.005 per share,
of the Company and, to the extent that there are not a sufficient number of shares of
Common Stock authorized to permit the full exercise of the Rights, shares of any other
class or series of the Company designated for such purpose containing terms substantially
similar to the terms of the shares of Common Stock, except that “Common Stock” when used
with reference to any Person other than the Company shall mean the shares of capital stock
of such Person with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.

          (j) “Company” shall have the meaning set forth in the Preamble hereof.

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

          (l) “equivalent preferred shares” shall have the meaning set forth in Section 11(b).

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

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

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

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

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

          (r) “Person” shall mean any individual, firm, corporation, partnership or other
entity.

          (s) “Preferred Stock” shall mean a share of the Series F Junior Preferred Stock, par
value $.01 per share, of the Company and, to the extent that there are not a sufficient
number of Series F Junior Preferred Stock authorized to permit the full exercise of the
Rights, shares of any other series of Preferred Stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Series F Junior
Preferred Stock.

          (t) “Preferred Stock Fraction” shall mean one one-hundredth of a share of Preferred
Stock.

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          (u) “Principal Party” shall have the meaning set forth in Section 11(n) hereof.

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

          (w) “Record Date” shall have the meaning set forth in the Recitals hereof.

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

          (y) “Rights Agent” shall have the meaning set forth in the Preamble hereof.

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

          (aa) “Rights Dividend Declaration Date” shall have the meaning set forth in the
Recitals hereof.

          (bb) “Rights” shall have the meaning set forth in the Recitals hereof.

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

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

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

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

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

          (hh) “Subsidiary” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.

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

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

5

 

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

          (ll) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.

     Unless otherwise specified, where reference is made in this Agreement to sections of, and the
General Rules and Regulations under, the Exchange Act, such reference shall mean such sections and
rules as amended from time to time and any successor provisions thereto.

     Section 2. Appointment of Rights Agent.

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

          (b) On the Record Date, the Company will deliver a Rights Certificate to the Rights
Agent, registered in the name of the Rights Agent as trustee for the beneficial owners of
the Rights represented thereby, for that number of Rights equal to the number of shares of
Common Stock issued and outstanding on the Record Date, and the Rights Agent shall hold the
Rights represented thereby in trust for the beneficial owners in accordance with the
provisions of this Agreement.

     Section 3. Issue of Rights Certificates.

          (a) Until the earlier of (i) the close of business on the tenth day after a Stock
Acquisition Date involving an Acquiring Person that has become such in a transaction as to
which the Board of Directors has not made the determination referred to in
Section 11(a)(ii)(B) hereof, or (ii) the close of business on such date as may be fixed by
the Board of Directors of the Company by notice to the Rights Agent and publicly announced
by the Company, which date shall not be later than 65 days 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, or any successor provision
thereto, if upon consummation thereof, such Person would be the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding (the earlier of (i) and (ii) being
herein referred to as the “Distribution Date”), (x) beneficial interests in the Rights will
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the shares of Common Stock registered in the names of the holders of the
shares of Common Stock (which certificates for shares of Common Stock shall be deemed also
to be certificates for beneficial interests in the Rights) and not by separate
certificates, and (y) the Rights and beneficial

6

 

interests therein 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 shares of 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. Upon
the distribution of the Rights Certificates as provided in this subsection (a), the trust
created hereby shall cease.

          (b) As promptly as practicable following the Record Date, the Company will send a copy
of a Summary of Rights, in substantially the form of Exhibit C hereto (the “Summary
of Rights”), by first-class, postage prepaid mail, to each record holder of the shares of
Common Stock as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for the shares of Common
Stock outstanding as of the Record Date, until the earlier of the Distribution Date and the
Expiration Date, beneficial interests in the Rights will be evidenced by such certificates
for the shares of Common Stock and the registered holders of the shares of Common Stock
shall also be the registered holders of the beneficial interests in the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date (as such term is defined
in Section 7 hereof), the transfer of any certificates representing shares of Common Stock
in respect of which Rights have been issued shall also constitute the transfer of the
Rights associated with such shares of Common Stock. Certificates issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date upon the
transfer of shares of Common Stock outstanding on the Record Date shall bear the legend set
forth in subsection (c).

          (c) Except as provided in Section 22 hereof, Rights shall be issued in respect of all
shares of Common Stock that are issued (whether originally issued or delivered from the
Company’s treasury) after the Record Date 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 beneficial interests in the associated Rights, and shall
bear the following legend:

“This certificate also evidences a beneficial interest in and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between Contango Oil &
Gas Company (the “Company”) and Computershare Trust Company, N.A. (the “Rights
Agent”) dated as of September 30, 2008 (the “Rights Agreement”), and as the same may
be amended from time to time, the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the

7

 

principal offices of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates and
beneficial interests therein 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 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 containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, beneficial interests in the Rights associated with
the shares of Common Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of shares of Common Stock shall also be the registered holders of
beneficial interests in the associated Rights, and the transfer of any of such certificates shall
also constitute the transfer of beneficial interests in the Rights associated with the shares of
Common Stock represented by such certificates.

     Section 4. Form of Rights Certificates.

          (a) 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 entitle the holders thereof to
purchase such number of Preferred Stock Fractions as shall be set forth therein at the
price set forth therein (such exercise price per Preferred Stock Fraction, 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.

          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights that the Company knows are beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any continuing oral
or written plan, agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer that the Board of

8

 

Directors of the Company has determined is part of an oral or written plan, agreement,
arrangement or understanding that has as a primary purpose or effect 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 such Agreement.”

     Section 5. Countersignature and Registration.

          (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President or any Vice President, either
manually or by facsimile signature, which signature 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 valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent 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 Agreement any such Person was not such an officer.

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

          (a) 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 may be
transferred, split up, combined or exchanged for another Rights

9

 

Certificate or Certificates, entitling the registered holder to purchase a like number
of Preferred Stock Fractions (or, following a Triggering Event, shares of Common Stock or
other securities, cash or other assets, as the case may be, as the Rights Certificate or
Certificates surrendered then entitled 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) and Section 14 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 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.

          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the 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.

          (a) Subject to subsection (e), 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 at any time after the
Distribution Date 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 (except as provided in Section 11(q)
hereof) with respect to the total number of Preferred Stock Fractions (or shares of Common
Stock, other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable (except as provided in Section 11(q) hereof), at or
prior to the earliest of (i) the close of business on
September 30, 2011 (the “Final
Expiration Date”), (ii) the consummation of a transaction contemplated by Section 13(d)
hereof, or (iii) the time at which the Rights are redeemed or terminated as

10

 

provided in Section 23 hereof (the earlier of (i), (ii) and (iii) being herein
referred to as the “Expiration Date”).

          (b) The Purchase Price for each Preferred Stock Fraction pursuant to the exercise of a
Right shall initially be $200, and shall be subject to adjustment from time to time as
provided in Section 11 and hereof and shall be payable in accordance with subsection (c).

          (c) 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 Preferred Stock Fraction
(or shares of Common Stock, other 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, the
Rights Agent shall, subject to Section 20(k) and Section 14(b) 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 shares 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 some or all of 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
Preferred Stock Fractions 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) may be
made, at the election of the holder of the Rights Certificate, (x) in cash or by certified
bank check or money order payable to the order of the Company or (y) by delivery of Rights
if and to the extent authorized by Section 11(q) hereof. In the event that the Company is
obligated to issue other securities of the Company (including shares of Common Stock), 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.

          (d) In case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights Agent 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.

11

 

          (e) Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Section 11(a)(ii) 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 to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing
oral or written plan, agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has determined is part
of an oral or written plan, agreement, 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;
provided, however, that the Rights held by an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or the transferees of such Persons referred
to above shall not be voided unless the Acquiring Person in question or an Affiliate or
Associate of such Acquiring Person shall be involved in the transaction giving rise to the
Section 11(a)(ii) Event. 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 other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.

          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to a
registered holder 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 canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this 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 canceled
Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

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     Section 9. Reservation and Availability of Capital Stock; Registration of
Securities.

          (a) The Company covenants and agrees that it will cause to be reserved and kept
available for issuance upon the exercise of outstanding Rights as many 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), which together shall at all
times after the Distribution Date be sufficient to permit the exercise in full of all
outstanding Rights.

          (b) So long as the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock 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 and other securities reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

          (c) 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, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement or statements
under the Act, with respect to the securities purchasable upon exercise of the Rights on an
appropriate form or forms, (ii) cause such registration statement or statements to become
effective as soon as practicable after such filing, and (iii) cause such registration
statement or statements 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 date of the expiration of the Rights.
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 subsection (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
is no longer in effect. 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.

13

 

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

          (e) The Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Rights Certificates and of any certificates for a number of
Preferred Stock Fractions (or shares of Common Stock 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 that 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 Preferred
Stock Fractions (or shares of Common Stock 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 Preferred Stock Fractions (or shares of Common Stock 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 shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been established to the
Company’s satisfaction that no such tax is due.

     Section 10. Capital Stock Record Date. Each Person in whose name any
certificate for a number of Preferred Stock Fractions (or shares of Common Stock or other
securities, as the case may be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of such Preferred Stock Fractions
(or shares of Common Stock or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the applicable 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 applicable 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 and other securities covered
by each Right and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.

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          (a) (i) In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on any security of the Company payable in shares of Preferred Stock,
(B) subdivide the outstanding shares of Preferred Stock, (C) combine the outstanding shares
of Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the shares of 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 adjusted to the extent appropriate so that
the holder of any Right exercised after such time shall be entitled to receive, upon
payment of the adjusted Purchase Price, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, that, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Stock transfer
books were open, the 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:

          (A) any Acquiring Person or any Associate or Affiliate of any Acquiring
Person, at any time after the Stock Acquisition Date, directly or
indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and the shares of Common Stock of the Company or
other equity securities of the Company shall remain outstanding, (2) shall,
in one transaction or a series of transactions, transfer any assets to the
Company or to any of its Subsidiaries in exchange (in whole or in part) for
shares of Common Stock, for shares of other equity securities of the
Company, or for securities exercisable for or convertible into shares of
equity securities of the Company (shares of Common Stock or otherwise) or
otherwise obtain from the Company, with or without consideration, any
additional shares of such equity securities or securities exercisable for or
convertible into shares of such equity securities (other than pursuant to a
pro rata distribution to all holders of shares of Common Stock), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of assets in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of its
Subsidiaries, on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm’s-length negotiation with an
unaffiliated third party, other than pursuant to a Section 13 Event,
(4) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire

15

 

or dispose of assets having an aggregate fair market value of more than
$25,000,000 in one transaction or a series of transactions, to, from or with
(as the case may be) the Company or any of the Company’s Subsidiaries (other
than incidental to the lines of business, if any, engaged in as of the date
hereof between the Company and such Acquiring Person or Associate or
Affiliate), other than pursuant to a Section 13 Event, (5) shall receive any
compensation from the Company or any of the Company’s Subsidiaries other
than compensation for full-time employment as a regular employee at rates in
accordance with the Company’s (or its Subsidiaries’) past practices, or (6)
shall receive the benefit, directly or indirectly (except proportionately as
a stockholder and except if resulting from a requirement of law or
governmental regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, or

          (B) any Person, alone or together with its Affiliates and Associates,
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 Section 13 Event, 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 that provide fair
value to all stockholders, as determined by at least a majority of the
members of the Board of Directors, after taking into consideration all
factors that such members of the Board of Directors deem relevant,
including, without limitation, the long-term prospects and value of the
Company and the prices and terms that such members of the Board of Directors
believe, in good faith, could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value, or

          (C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries, other than a
Section 13 Event or series of such Section 13 Events (whether or not with or
into or otherwise involving an Acquiring Person) that has the effect,
directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities of the
Company or any of its Subsidiaries that is directly or indirectly
beneficially owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person,

then, promptly following the first occurrence of a Section 11(a)(ii) 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

16

 

in accordance with the terms of this Agreement, in lieu of a number of Preferred Stock Fractions,
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 Preferred Stock Fractions 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 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 that are
authorized by the Company’s Articles of Incorporation, as amended, but not
outstanding or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of the value of the Adjustment Shares issuable upon the
exercise of a Right (the “Current Value”) over the Purchase Price (such excess, the
“Spread”), and (B) with respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) shares of Common Stock of the same or a
different class or other equity securities of the Company (including, without
limitation, preferred shares or units of preferred shares that a majority of the
members of the Board of Directors in office at the time has deemed (based, among
other things, on the dividend and liquidation rights of such preferred shares) to
have substantially the same economic value as shares of Common Stock (such preferred
shares, hereinafter referred to as “common share equivalents”)), (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by a majority of the members of the Board of Directors in office at the
time after considering the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided,
however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the later of
(x) the first occurrence of a 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 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. If the Board of Directors of the Company shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the “Substitution Period”).
To the extent that the Company determines that some

17

 

action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and may suspend
the exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the shares of Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Common Stock on the Section 11(a)(ii) Trigger
Date and the value of any “common share equivalent” shall be deemed to have the same
value as the shares of Common Stock on such date.

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

18

 

          (c) In case the Company shall fix a record date for a distribution to all holders of
shares of Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly dividend out of the earnings or retained
earnings of the Company), assets (other than a regular quarterly dividend referred to above
or dividend payable in shares of Preferred Stock, but including any dividend payable in
stock other than shares of Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such
record date, less the then 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) 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 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 Common Stock
for the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date. 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 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 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 Common Stock or
securities convertible into shares of Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares of Common Stock, and prior to
the expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as
set forth above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, 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 Trading Day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on
the American Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the American Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national
securities exchange on which the

19

 

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,
Inc. 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 such organization, the average
of the closing bid and asked prices as furnished by a professional market maker making a
market in the shares of Common Stock selected by the Board of Directors of the Company. If
on any such date no market maker is making a market in the shares of Common Stock, the fair
value of such shares on such date as determined in good faith by the Board of Directors of
the Company shall be used. 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
shares of Common Stock are 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 of Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.

          (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 shares of 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 shares of
Preferred Stock are 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 shares of Common Stock occurring after the
date of this Agreement) multiplied by the current market price per share of Common
Stock. If neither the shares of Common Stock nor the shares of Preferred Stock are
publicly held or so listed or traded, “current market price” per share of Preferred
Stock shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the “current market price” of a Preferred Stock Fraction
shall be equal to the “current market price” of one Preferred Stock divided by 100.

          (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 one-millionth of a share of Preferred Stock, as the case may

20

 

be. Notwithstanding the first sentence of this subsection (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 that 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 shares of Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (q), and the
provisions of Section 7, Section 9, Section 10, Section 13 and Section 14 hereof with
respect to the shares of 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 Preferred Stock Fractions purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

          (h) Unless the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made in
subsections (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 Preferred Stock Fractions (calculated to the nearest one-millionth of a
Preferred Stock) obtained by (i) multiplying (x) the number of Preferred Stock Fractions
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 Preferred Stock
Fractions 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 Preferred
Stock Fractions 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 ten-thousandth of a share of Preferred
Stock) 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. The record date for the adjustment 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

21

 

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
Preferred Stock Fractions issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price per Preferred
Stock Fraction and the number of Preferred Stock Fractions that 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 or par value, if any, of the number of Preferred Stock
Fractions issuable upon exercise of the Rights, the Company shall take any corporate action
that may, in the opinion of its counsel, be necessary in order that the Company may validly
and legally issue such number of fully paid and nonassessable Preferred Stock Fractions at
such adjusted Purchase Price.

          (l) In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Preferred Stock Fractions and other capital
stock or securities of the Company, if any, issuable upon such exercise over and above the
number of Preferred Stock Fractions 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 shares of 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 or 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

22

 

referred to in this Section 11, hereafter made by the Company to holders of its shares
of Preferred Stock shall not be taxable to such stockholders.

          (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 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 that 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
stockholders of the Person who constitutes, or would constitute, the “Principal Party” for
purposes of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.

          (o) The Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or 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, or
(iii) combine the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated with each
Common Stock immediately prior to such event by a fraction the numerator of 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.

          (q) In the event that the Rights become exercisable following a Section 11(a)(ii)
Event, the Company, by action of a majority of the members of the Board of Directors in
office at the time, may permit the Rights, subject to Section 7(e) hereof, to be exercised
for 50% of the shares of Common Stock (or cash or other securities or assets to be
substituted for the Adjustment Shares pursuant to subsection

23

 

(a)(iii)) that would otherwise be purchasable under subsection (a), in consideration
of the surrender to the Company of the Rights so exercised and without other payment of the
Purchase Price. Rights exercised under this subsection (q) shall be deemed to have been
exercised in full and shall be canceled.

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and 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 shares of Preferred Stock and the shares of
Common Stock, a copy of such certificate, and (c) 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 and except as contemplated
by subsection (d), proper provision shall be made so that:

          (i) each holder of a Right, except as provided in Section 7(e) hereof or
subsection (e), 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 or other adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of Preferred Stock
Fractions for which a Right is exercisable immediately prior to the first

24

 

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
shares 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), and 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 (2) 50% of the current market
price (determined pursuant to Section 11(d)(ii) hereof) per share of 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
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 its shares of 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 subsection (a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation; and

          (ii) in the case of any transaction described in clause (z) of the first
sentence of subsection (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;

provided, however, that in any such case, (1) if the shares of Common Stock of such
Person are not at such time and have 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 shares of Common Stock of which are and have been so registered,
“Principal Party” shall refer to such other Person, and (2) in case such Person is a

25

 

Subsidiary, directly or indirectly, of more than one Person, the shares of 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 shares of 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 Common
Stock that have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the Company and 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 Section 13 Event,
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) deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates that 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 that have not theretofore been exercised shall
thereafter become exercisable solely in the manner described in Section 13(a).

          (d) Notwithstanding anything in this Agreement to the contrary, Section 13 (other than
this subsection (d)) shall not be applicable to, and the term “Section 13 Event” shall not
include, 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
that complies with the provisions of Section 11(a)(ii) (B) hereof (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per Common Stock offered in such
transaction is not less than the price per 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 or exchange offer. Upon consummation of any such transaction
contemplated by this subsection (d), all Rights hereunder shall expire.

26

 

          (e) In the event that the Rights become exercisable under subsection (a) (except as
provided in subsection (d)), the Company, by action of a majority of the members of the
Board of Directors in office at the time, may agree with the Principal Party that the
Principal Party shall permit the Rights to be exercised for 50% of the shares of Common
Stock of the Principal Party that would otherwise be purchasable under subsection (a), in
consideration of the surrender to the Principal Party, as the successor to the Company
under subsection (a) (ii), of the Rights so exercised and without other payment of the
Purchase Price. Rights exercised under this subsection (e) shall be deemed to have been
exercised in full and shall be canceled.

     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 that evidence fractional Rights. In lieu of such fractional Rights, there
shall be paid 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 subsection
(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 American Stock Exchange or, if the Rights are not listed or admitted to
trading on the American Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be used.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock
upon exercise of the Rights or to distribute certificates which evidence fractional shares
of Preferred Stock. In lieu of fractional shares 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
a share of Preferred Stock. For purposes of this subsection (b), the current market value
of one share of Preferred Stock shall be 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.

27

 

          (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 that 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 share of Common Stock. For purposes of this
subsection (c), the current market value of one share of Common Stock shall be the closing
price of one share of Common Stock (as determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.

          (d) The holder of a Right or a beneficial interest in a Right by the acceptance
thereof expressly waives his right to receive any fractional Rights or any fractional
shares of Common Stock 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 are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the shares of Common Stock); and
any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the
shares of 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 shares of Common
Stock), may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such 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 or beneficial interests
therein, it is specifically acknowledged that the holders of Rights or beneficial interests
therein 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 or a
beneficial interest in a Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other such holder that:

          (a) prior to the Distribution Date, beneficial interests in the Rights will be
transferable only in connection with the transfer of shares 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 fully executed;

28

 

          (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 a beneficial
interest in 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 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, the Company must use its best efforts to have any such order, decree 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 Preferred Stock Fractions or any other
securities of the Company (including the shares of Common Stock) that 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 24 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. Anything in this Agreement to

29

 

the contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever (including, but
not limited to, lost profits), even if the Rights Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.

          (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 shares of 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.

     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 or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that 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 and trust 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 imposed by this Agreement upon the following terms and conditions, by all
of which the Company and the holders of Rights Certificates or beneficial interests in the
Rights, by their acceptance thereof, shall be bound:

30

 

          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the written 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 Chief Executive Officer, 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 (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 and
delivery 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 or Section 13 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 to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock or shares of 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

31

 

 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
Chief Executive Officer, 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 the Rights Agent under this Agreement and none of such actions shall constitute
a breach of trust. Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.

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

          (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 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 consulting
with 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’ prior written notice mailed to the Company and to each transfer agent of the shares
of Common Stock and shares of Preferred Stock by registered or certified mail. In the
event the transfer agency relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to resign automatically on the effective date
of such termination; and any notice required to be provided pursuant to this

32

 

Agreement will be sent by the Company. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days’ prior written notice mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
shares of Common Stock and shares of Preferred Stock, by registered or certified mail. Any
notices required to be sent to the holders of shares of Common Stock, shares of Preferred
Stock or Rights Certificates pursuant to either of the preceding two sentences shall be
sent by the Company. 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 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 corporation or
trust company organized, doing business and in good standing under the laws of the United
States or of any state, having an office in the State of New York, the State of Texas or
the State of Delaware, that is authorized by law to exercise corporate trust and stock
transfer powers and is subject to supervision or examination by federal or state authority
and that has at the time of its appointment as Rights Agent a combined capital and surplus
of $50,000,000, or (b) an Affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer agent of the
shares of Common Stock and shares of Preferred Stock. 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
its Board of Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement. In addition,
in connection with the issuance, sale or delivery 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, sold or delivered pursuant to
the exercise of stock options, stock appreciation rights, grants or awards outstanding on
the Distribution Date under any benefit plan or arrangement for employees or directors, or
upon the exercise, conversion or exchange of securities outstanding on the Record Date or
hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the

33

 

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 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 day following a Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date), or (ii) the Final Expiration Date,
redeem all but not less than all 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”) and the Company may, at its
option, pay the Redemption Price either in shares of Common Stock (based on the “current
market price”, as defined in Section 11(d)(ii) hereof, of the shares of Common Stock at the
time of redemption) or cash; provided, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the right of
redemption hereunder but prior to any Triggering Event, (i) an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one transaction
or series of transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering Event or the Company
shall have issued additional equity securities, in either instance such that such Person is
thereafter a Beneficial Owner of 20% or less of the outstanding shares of Common Stock, and
(ii) there is no other Acquiring Person immediately following the occurrence of the event
described in clause (i), then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. 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.

          (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 shares of Common Stock. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the

34

 

holder receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.

          (c) In deciding whether or not to exercise the Company’s right of redemption
hereunder, the directors of the Company shall exercise their powers in good faith, with a
view to the interests of the Company and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under similar
circumstances.

     Section 24. Exchange.

          (a) The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and void pursuant
to the provisions of Section 7(e) hereof) for a number of shares of Common Stock having a
current market price equal to the Spread (such exchange ratio being hereinafter referred to
as the “Exchange Ratio”). Notwithstanding the foregoing, the Company’s Board of
Directors shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any Person organized, appointed or established by the
Company 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 shares of
Common Stock then outstanding.

          (b) Immediately upon the action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 24(a) and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only right thereafter
of the holders of such Rights shall be to receive that number of 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 shall promptly notify the Rights Agent of any
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 Rights for shares of Common Stock will be
effected and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null or void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.

          (c) In the event that there shall not be sufficient 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 may substitute,

35

 

to the extent of the insufficiency, cash, shares of a class of other equity securities
of the Company, debt securities of the Company or any combination of the foregoing.

          (d) The Company shall not be required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of Common Stock. In lieu of
such fractional shares 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 Common Stock. For the purposes of this Section 24(d), the current market
value of a whole Common Stock shall be the closing price of a Common Stock 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 shares of Preferred Stock
or to make any other distribution to the holders of shares of Preferred Stock (other than a
regular quarterly dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of shares 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 shares
of 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 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), 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 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 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 shares of Preferred Stock, whichever shall be the earlier.

          (b) Upon the occurrence of a Section 11(a)(ii) Event, (i) the Company shall as soon as
practicable thereafter give to each holder of a Right, to the extent feasible

36

 

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 (a) to shares
of Preferred Stock shall be deemed thereafter to refer to shares of 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 with the Rights Agent) as follows:

Contango Oil & Gas Company

3700 Buffalo Speedway, Suite 960

Houston, Texas 77098

Attention: President

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 with the Company) as follows:

Computershare Trust Company, N.A.

350 Indiana Street, Suite 800

Golden, Colorado 80401

Attention: Client Services

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any 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.

          (a) For so long as the Rights are then redeemable and except as provided in the last
sentence of this Section 27(a), 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 the Rights. From and after the date that the Rights are not redeemable, the
Company and the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of the Rights in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which may 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 that the Company may deem necessary or desirable and that shall not adversely affect
the interests of the holders of the Rights (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 that states that the

37

 

proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment, provided that such
supplement or amendment does not adversely affect the rights, duties or obligations of the
Rights Agent under this Agreement, and shall be fully protected hereunder by doing so.
Notwithstanding the foregoing, no supplement or amendment shall be made that reduces the
Redemption Price, it being understood that an adjustment of the Redemption Price pursuant
to Section 23 shall not be deemed a supplement or amendment of this Agreement.

          (b) In deciding whether or not to supplement or amend this Agreement, the directors of
the Company shall exercise their powers in good faith, with a view to the interests of the
Company and with such care, including reasonable inquiry, skill and diligence, as a Person
of ordinary prudence would use under similar circumstances, and they may consider the
effects of any action upon employees, suppliers and customers of the Company and upon
communities in which offices or other establishments of the Company are located, and all
other pertinent factors.

     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
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. 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 or
supplement the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with respect to
the foregoing) that 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 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 shares of 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

38

 

Certificates (and, prior to the Distribution Date, registered holders of the shares of
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 for any purpose or under any set of circumstances or as
applied to any Person, such invalid, void or unenforceable term, provision, covenant or
restriction shall continue in effect to the maximum extent possible for all other purposes,
under all other circumstances and as applied to all other Persons; and 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 day following the date of such determination by the Board of Directors.

     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 jurisdiction applicable to contracts made and to be performed
entirely within such jurisdiction.

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

     Section 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.

     Section 35. Force Majeure. Notwithstanding anything to the contrary contained
herein, the Rights Agent shall not be liable for any delays or failures in performance
resulting from acts beyond its reasonable control, including, without limitation, acts of
God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, loss of data due to power failures or mechanical
difficulties with information storage or retrieval systems, labor difficulties, war or
civil unrest.

39

 

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

	 	 	 	 	 	 	 
	 	 	CONTANGO OIL & GAS COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kenneth R. Peak
 

Kenneth R. Peak
	 	 
	 

	 	Title:
	 	Chairman, President and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kellie Gwinn
 

Kellie Gwinn
	 	 
	 

	 	Title:
	 	Vice President	 	 

40

 

EXHIBIT A

CERTIFICATE OF DESIGNATIONS, PREFERENCES,

AND RELATIVE RIGHTS AND LIMITATIONS

OF

SERIES F JUNIOR PREFERRED STOCK

OF

CONTANGO OIL & GAS COMPANY

     It is hereby certified that:

1. The name of the corporation (hereinafter called the “Corporation”) is
Contango Oil & Gas Company.

2. The Certificate of Incorporation of the Corporation authorizes the issuance of preferred stock
of the Corporation in series and expressly vests in the Board of Directors of the Corporation the
authority provided therein to determine the rights, preferences, privileges of preferred stock and
to fix the number of shares and designation of such series.

3. At a
meeting of the Board of Directors of the Corporation held on
September 30, 2008, the
following resolutions were adopted authorizing the creation and issuance of 300,000 shares of a
series of preferred stock designated as “Series F Junior Preferred Stock”:

     NOW THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby create, authorize and
provide for the issuance of up to 300,000 shares of Series F Junior Preferred Stock, having the
designations, preferences and relative and other special rights, qualifications, limitations and
restrictions set forth on the Certificate of Designations attached hereto as Schedule A.

     FURTHER RESOLVED, that the statements contained in the foregoing resolutions creating and
designating the said Series F Junior Preferred Stock, and fixing the number, preferences and
relative, and other special rights, qualifications, limitations and restrictions thereof shall,
upon the effective date of said series, be deemed to be included in and be a part of the
certificate of incorporation of the Corporation pursuant to the provisions of Sections 104 and 151
of the General Corporation Law of the State of Delaware.

     IN
WITNESS WHEREOF, the undersigned has executed this Certificate on
September 30, 2008.

	 	 	 
	 

	 	Kenneth R. Peak, Secretary

A-1

 

Schedule A

CERTIFICATE OF DESIGNATIONS, PREFERENCES,

AND RELATIVE RIGHTS AND LIMITATIONS

OF

SERIES F JUNIOR CONVERTIBLE PREFERRED STOCK

OF

CONTANGO OIL & GAS COMPANY

     Section 1. Dividends and Distributions.

          (a) The rate of dividends payable per share of Series F Junior Preferred Stock on the
first day of January, April, July and October in each year or such other quarterly payment
date as shall be specified by the Board of Directors (each such date being referred to
herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of the Series F
Junior Preferred Stock, shall be (rounded to the nearest cent) equal to the greater of
(i) $200 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in cash, based upon the fair market value at the time the non-cash dividend
or other distribution is declared or paid as determined in good faith by the Board of
Directors) of all non-cash dividends or other distributions other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, $.04 par value per share, of
the Corporation since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of the Series F Junior Preferred Stock. Dividends on the Series F
Junior Preferred Stock shall be paid out of funds legally available for such purpose. In
the event the Corporation shall at any time after September 30, 2008 (the “Rights Dividend
Declaration Date”), (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, then in each such case
the amounts to which holders of Series F Junior Preferred Stock were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be adjusted by
multiplying each such amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to such event.

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

A-2

 

of such shares, or (ii) the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of Series F Junior Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be cumulative from
such quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the Series F Junior Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

     Section 2. Voting Rights. In addition to any other voting rights required by
law, the holders of Series F Junior Preferred Stock shall have the following voting rights:

          (a) Subject to the provision for adjustment hereinafter set forth, each Series F
Junior Preferred Stock shall entitle the holder thereof to 1 vote on all matters submitted
to a vote of the stockholders of the Corporation. In the event the Corporation shall at
any time after the Rights Dividend Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of Series F
Junior Preferred Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.

          (b) In the event that dividends upon the Series F Junior Preferred Stock shall be in
arrears to an amount equal to six full quarterly dividends thereon, the holders of such
Series F Junior Preferred Stock shall become entitled to the extent hereinafter provided to
vote noncumulatively at all elections of directors of the Corporation, and to receive
notice of all stockholders’ meeting to be held for such purpose. At such meetings, to the
extent that directors are being elected, the holders of such Series F Junior Preferred
Stock voting as a class shall be entitled solely to elect two members of the Board of
Directors of the Corporation. Notwithstanding the foregoing, if the holders of such Series
F Junior Preferred Stock have elected two members of one class of the Board of Directors,
they shall not have the right to elect additional members of the Board of Directors until
the term of the two directors previously elected has expired. All other directors of the
Corporation shall be elected by the other stockholders of the Corporation entitled to vote
in the election of directors. Such voting rights of the holders of such Series F Junior
Preferred Stock shall continue until all accumulated and unpaid dividends thereon shall
have been paid or funds sufficient therefor set aside, whereupon all such voting rights of
the holders of shares of such series shall cease, subject to being again revived from time
to time upon the reoccurrence of the conditions above described as giving rise thereto.

     At any time when such right to elect directors separately as a class shall have so vested, the
Corporation may, and upon the written request of the holders of record of not less than 15%

A-3

 

of the then outstanding total number of shares of all the Series F Junior Preferred Stock
having the right to elect directors in such circumstances shall, call a special meeting of holders
of such Series F Junior Preferred Stock for the election of directors. In the case of such a
written request, such special meeting shall be held within 90 days after the delivery of such
request, and in either case, at the place and upon the notice provided by law and in the Bylaws of
the Corporation; provided, that the Corporation shall not be required to call such a special
meeting if such request is received less than 120 days before the date fixed for the next ensuing
annual or special meeting of stockholders of the Corporation. Upon the mailing of the notice of
such special meeting to the holders of such Series F Junior Preferred Stock, or, if no such meeting
be held, then upon the mailing of the notice of the next annual or special meeting of stockholders
for the election of directors, the number of directors of the Corporation, shall, ipso facto, be
increased to the extent, but only to the extent, necessary to provide sufficient vacancies to
enable the holders of such Series F Junior Preferred Stock to elect the two directors hereinabove
provided for, and all such vacancies shall be filled only by vote of the holders of such Series F
Junior Preferred Stock as hereinabove provided. Whenever the number of directors of the
Corporation shall have been increased, the number as so increased may thereafter be further
increased or decreased in such manner as may be permitted by the Bylaws and without the vote of the
holders of Series F Junior Preferred Stock, provided that no such action shall impair the right of
the holders of Series F Junior Preferred Stock to elect and to be represented by two directors as
herein provided.

     So long as the holders of Series F Junior Preferred Stock are entitled hereunder to voting
rights, any vacancy in the Board of Directors caused by the death or resignation of any director
elected by the holders of Series F Junior Preferred Stock, shall, until the next meeting of
stockholders for the election of directors, in each case be filled by the remaining director
elected by the holders of Series F Junior Preferred Stock having the right to elect directors in
such circumstances.

     Upon termination of the voting rights of the holders of any series of Series F Junior
Preferred Stock the terms of office of all persons who shall have been elected directors of the
Corporation by vote of the holders of Series F Junior Preferred Stock or by a director elected by
such holders shall forthwith terminate.

          (c) Except as otherwise provided herein, in the Certificate of Incorporation of the
Corporation or by law, the holders of Series F Junior Preferred Stock and the holders of
Common Stock (and the holders of shares of any other series or class entitled to vote
thereon) shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

     Section 3. Reacquired Shares. Any Series F Junior Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of the Board of
Directors.

A-4

 

     Section 4. Liquidation, Dissolution or Winding Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the
holders of Series F Junior Preferred Stock shall be entitled to receive the greater of
(a) $100.00 per share, plus accrued dividends to the date of distribution, whether or not
earned or declared, or (b) an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of Common Stock. In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in each such
case the amount to which holders of Series F Junior Preferred Stock were entitled
immediately prior to such event pursuant to clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to
such event.

     Section 5. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the Series F Junior Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series F Junior Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

     Section 6. No Redemption. The Series F Junior Preferred Stock shall not be
redeemable.

     Section 7. Ranking. The Series F Junior Preferred Stock shall rank junior to,
and subordinate to, all other series of the Corporation’s Preferred Stock as to the payment
of dividends and the distribution of assets.

     Section 8. Fractional Shares. Series F Junior Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series F Junior
Preferred Stock.

A-5

 

EXHIBIT B

[Form of Rights Certificate]

	 	 	 
	Certificate No. R-

	 	                     Rights

NOT EXERCISABLE AFTER SEPTEMBER 30, 2011 (OR SUCH LATER DATE AS THE BOARD OF
DIRECTORS OF THE COMPANY MAY DESIGNATE BY AMENDMENT OF THE RIGHTS AGREEMENT) OR
AFTER EARLIER REDEMPTION BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.01 PER RIGHT (SUBJECT TO ADJUSTMENT AS PROVIDED IN
THE RIGHTS AGREEMENT) ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [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.]*

 

			
	*	 	The bracketed portion of the legend shall be inserted only if
applicable and shall replace the preceding sentence.

B-1

 

CONTANGO OIL & GAS COMPANY

RIGHTS CERTIFICATE

     This
certifies that
                                        ,
or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of
September 30, 2008 (the
“Rights Agreement”), between Contango Oil & Gas Company, a Delaware corporation (the “Company”),
and Computershare Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any
time prior to 5:00 P.M. (New York, New York time) on September 30, 2011 (or such later date as the
Board of Directors of the Company may designate by amendment of the Rights Agreement) at the office
or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, nonassessable Series F Junior Preferred Stock (the “Preferred
Stock”) of the Company, at a purchase price (the “Purchase Price”) of $ 200 per one one-hundredth
of a Preferred Stock (such fraction, a “Preferred Stock Fraction”), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related Certificate duly
executed. Except as provided in Sections 11(q) and 13(e) of the Rights Agreement, the Purchase
Price shall be paid in cash. The number of Rights evidenced by this Rights Certificate (and the
number of Preferred Stock Fractions that may be purchased upon exercise thereof) set forth above,
and the Purchase Price per Preferred Stock Fraction set forth above, are the number and Purchase
Price as of September 30, 2008, based on the shares of Preferred Stock as constituted at such date.

     Except as otherwise provided in the Rights Agreement, upon the occurrence of any
Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall
become null and void and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of any such Section 11(a)(ii) Event.

     As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities that may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and adjustment upon the happening of certain
events, including Triggering Events.

     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
office of the Rights Agent and are also available upon written request to the Company.

B-2

 

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

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $.01 per Right (subject to
adjustment as provided in the Rights Agreement) at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement), and (ii) the Final Expiration Date.

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

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

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

B-3

 

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

Dated as
of                     , 20           

	 	 	 
	ATTEST

	 	CONTANGO OIL & GAS COMPANY
	 
	 	 
	Secretary

	 	By:
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	Countersigned
	 	 
	 
	 	 
	Computershare Trust Company, N.A.
	 	 
	 
	 	 
	By:
	 	 
	Authorized Signature
	 	 

B-4

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED                                                             hereby sells, assigns and transfers
unto                                         

 

(Please print name and address of transferee)

 

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

Dated:
                                        , 20             

Signature

Signature Guaranteed:

Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

	 	 	 	 	 
	Dated:                                         , 20           

	 	Signature
	 	 
	 
	 	 	 	 
	Signature Guaranteed:
	 	 	 	 

B-5

 

NOTICE

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

B-6

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)

To: CONTANGO OIL & GAS COMPANY:

     The
undersigned hereby irrevocably elects to exercise                      Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the
Rights (or shares of Common Stock or such other securities of the Company or of any other person
that may be issuable upon the exercise of the Rights) and requests that certificates for such
shares be issued in the name of and delivered to:

Please insert social security

or other identifying number

 

(Please print name and address)

 

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

Please insert social security

or other identifying number

 

(Please print name and address)

	 	 	 
	Dated:                     , 20            
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	Signature Guaranteed:
	 	 

B-7

 

Certificate

     The undersigned hereby certifies by checking the appropriate boxes that

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

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

	 	 	 
	 

	 	        
                                                         
               

	Dated:  
             
            
   , 20
            

	 	Signature
	 
	 	 
	Signature Guaranteed:
	 	 

NOTICE

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

B-8

 

EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK

     On
September 30,
2008, the Board of Directors of Contango Oil & Gas Company (the “Company”)
declared a dividend distribution of one Right for each outstanding share of Common Stock, $.04 par
value (each, a “Common Stock”), of the Company to stockholders of record at the close of business
on October 1, 2008. Each Right entitles the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a “Unit”) of the Series F Junior Preferred Stock,
par value $.01 per share, of the Company (the “Preferred Stock”), or a combination of securities
and assets of equivalent value, at a Purchase Price of $200 per Unit, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”)
between the Company and Computershare Trust Company, N.A., as Rights Agent.

     Initially,
ownership of the Rights will be evidenced by the Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will be distributed. The
Rights will separate from the shares of Common Stock and a Distribution Date will occur upon the
earlier of (i) 10 days following a public announcement that a person or group of affiliated or
associated persons (an “Acquiring Person”) has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock (the “Stock
Acquisition Date”), or (ii) the close of business on such date as may be fixed by the Board of
Directors, which date shall not be more than 65 days following the commencement of a tender offer
or exchange offer that would result in a person or group beneficially owning 20% or more of the
outstanding shares of Common Stock. Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after October 1, 2008 will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of
any certificates for shares of Common Stock outstanding will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such certificate.

     The Rights are
not exercisable until the Distribution Date and will expire at the close of
business on September 30, 2011, unless the Rights Agreement is extended by the Board by amendment
to the Rights Agreement, unless earlier redeemed by the Company as described below or unless a
transaction under Section 13(d) of the Rights Agreement has occurred.

     As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the shares of Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, and except in connection with the exercise of
employee stock options or stock appreciation rights or under any other benefit plan for employees
or directors or in connection with the exercise of warrants or the conversion of convertible
securities, only shares of Common Stock issued after October 1, 2008 and prior to the earlier of
the Distribution Date or the Expiration Date will be issued with Rights.

C-1

 

     Except in the circumstances described below, after the Distribution Date each Right will be
exercisable for one one-hundredth of a Preferred Stock (a “Preferred Stock Fraction”). The voting
and dividend rights of the shares of Preferred Stock are subject to adjustment in the event of
dividends, subdivisions and combinations with respect to the shares of Common Stock of the Company.
In lieu of issuing certificates for Preferred Stock Fractions which are less than an integral
multiple of one Preferred Stock (i.e., 100 Preferred Stock Fractions), the Company may pay cash
representing the current market value of the Preferred Stock Fractions.

     In the event that at any time following the Stock Acquisition Date, (i) the Company is the
surviving corporation in a merger with an Acquiring Person and its shares of Common Stock remain
outstanding, (ii) a Person becomes the beneficial owner of more than 20% of the then outstanding
shares of Common Stock other than pursuant to a tender offer that provides fair value to all
stockholders, (iii) an Acquiring Person engages in one or more “self-dealing” transactions as set
forth in the Rights Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs that results in such Acquiring Person’s ownership interest being increased by more than 1%
(e.g., a reverse stock split), each holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of
the Company) having a value equal to two times the exercise price of the Right. In lieu of
requiring payment of the Purchase Price upon exercise of the Rights following any such event, the
Company may permit the holders simply to surrender the Rights, in which event they will be entitled
to receive Common Stock (and other property, as the case may be) with a value of 50% of what could
be purchased by payment of the full Purchase Price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in clauses (i), (ii), (iii) or (iv) of this
paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person who was involved in the transaction giving rise to
any such event will be null and void.

     For example, assuming an exercise price of $200 per Right, each Right not otherwise voided
following an event set forth in the preceding paragraph would entitle its holder to purchase $400
worth of shares of Common Stock (or other consideration, as noted above) for $200. Assuming that
the shares of Common Stock had a per share value of $100 at such time, the holder of each valid
Right would be entitled to purchase four shares of Common Stock for $200. Alternatively, the
Company could permit the holder to surrender each Right in exchange for stock or cash equivalent to
two shares of Common Stock (with a value of $200) without the payment of any consideration other
than the surrender of the Right.

     In the event that, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the Company is not the
surviving corporation (other than a merger that is described in, or that follows a tender offer or
exchange offer described in, the second preceding paragraph), or (ii) 50% or more of the Company’s
assets or earning power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right to receive, upon
exercise, common shares of the acquiring company having a value equal to two times the exercise
price of the Right. Again, provision is made to permit surrender of the Rights in exchange for
one-half of the value otherwise purchasable. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the “Triggering Events.”

C-2

 

     The Purchase Price payable and the number of Units of shares of Preferred Stock or other
securities or property issuable upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Preferred Stock, (ii) if holders of the shares of Preferred
Stock are granted certain rights or warrants to subscribe for shares of Preferred Stock or
convertible securities at less than the current market price of the shares of Preferred Stock, or
(iii) upon the distribution to holders of the shares of Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly dividends) or of subscription rights or
warrants (other than those referred to above).

     With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional Units will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market price of the shares of
Preferred Stock on the last trading date prior to the date of exercise.

     At any time after a Person becomes an Acquiring Person and prior to the acquisition by such
Person or group of fifty percent (50%) or more of the outstanding shares of Common Stock, the Board
may exchange all or part of the Rights (other than Rights held by such Person or group which may
have become void), in whole or in part, for shares of Common Stock having a value equal to the
spread between the value of shares of Common Stock issuable upon exercise of a Right and the
exercise price.

     At any time until ten days following the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, subject to adjustment. That ten
day redemption period may be extended by the Board of Directors so long as the Rights are still
redeemable. Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights will be to receive
the redemption price.

     Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event that the Rights become
exercisable for shares of Preferred Stock (or other consideration) of the Company or for common
shares of the acquiring company as set forth above.

     Any of the provisions of the Rights Agreement may be amended by the Board of Directors of the
Company so long as the rights are redeemable by the Board except to reduce the redemption price.
After such time, the provisions of the Rights Agreement may be amended by the Board in order to
cure any ambiguity, to make changes that do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) or to shorten or lengthen any time period under
the Rights Agreement.

C-3

 

     A copy of the Rights Agreement is being filed with the Securities and Exchange Commission as
an Exhibit to a Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.

C-4exv4w1

Exhibit 4.1

     THIS NOTE IS A GLOBAL SECURITY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (THE “DEPOSITORY”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

	 	 	 	 	 
	REGISTERED	 	PRINCIPAL AMOUNT
	No: 1
	 	  $400,000,000	 

CUSIP: 037411 AU 9

ISIN: US037411AU90

Apache Corporation

6.000% NOTES DUE 2013

     APACHE CORPORATION, a Delaware corporation (the “Company”, which term includes any successor
corporation under the Indenture hereinafter referred to), for value received hereby promises to pay
to Cede & Co., or registered assigns, the principal sum of Four Hundred Million Dollars on
September 15, 2013 (“Stated Maturity”) and to pay interest thereon from October 1, 2008 or from the
most recent date in respect of which interest has been paid or duly provided for, on March 15 and
September 15 of each year (each, an “Interest Payment Date”), commencing March 15, 2009, and at
Stated Maturity or upon such other date on which the principal of this Note becomes due and
payable, whether by declaration of acceleration, notice of redemption or otherwise, and including
any Redemption Date or Change in Control Purchase Date (each such date, “Maturity”), at the rate of
6.000% per annum, until the principal hereof is paid or duly made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will,
as provided in the Indenture referred to below, be paid to the Person in whose name this Note (or
one or more Predecessor Securities) is registered as of the close of business on March 1 or
September 1, as the case may be (whether or not a Business Day), next preceding such Interest
Payment Date (each such date, a “Regular Record Date”). Any such interest which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder of this Note on such Regular Record Date, and shall be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee,
notice whereof shall be given to the Holder of this Note not less than 10 days prior to such
Special Record Date, or may be paid in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.

     Payment of the principal of, and premium, if any, and interest on, this Note will be made at
the office or agency maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the Person in whose name this Note is registered at
the close of business on the related record date; provided further, that, notwithstanding anything
else contained herein, if this Note is a Global Security and is held in book-entry form through the
facilities of the Depository, payments on this Note will be made to the Depository or its nominee
in accordance with the arrangements then in effect between the Trustee and the Depository.

     Reference is hereby made to the further provisions of this Note set forth on the succeeding
pages hereof, which further provisions shall for all purposes have the same effect as if set forth
herein.

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein, referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, N.A.,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 

 

 

	 	 	 	 	 

Apache Corporation

6.000% NOTES DUE 2013

     This Note is one of a duly authorized issue of Securities of the Company issued under an
Indenture, dated as of February 15, 1996, between the Company and The Bank of New York Mellon Trust
Company, N.A. (formerly known as The Bank of New York Trust Company, N.A., as successor-in-interest
to JP Morgan Chase Bank, N.A., formerly known as The Chase Manhattan Bank), as trustee (the
“Trustee”, which term includes any successor trustee under the Indenture), as supplemented
by that certain First Supplemental Indenture, dated November 5, 1996, between the Company and the
Trustee (the “Indenture”), designated as the 6.000% Notes due 2013 (the “Notes”), limited
to $400,000,000 aggregate principal amount, subject to the provisions of the Indenture. Reference
is made to the Indenture for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered. All terms used in this Note
set forth below which are not defined herein and which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

     The Indenture provides for the defeasance of the Notes and certain covenants in certain
circumstances.

     This Note is unsecured as to payment of principal and premium, if any, and interest, and ranks
pari passu with all other unsecured unsubordinated indebtedness of the Company.

     Interest payments on this Note will include interest accrued to but excluding the applicable
Interest Payment Date or Maturity hereof, as the case may be. Interest payments for this Note
shall be computed and paid on the basis of a 360-day year of twelve 30-day months.

     In the case where the applicable Interest Payment Date or Maturity with respect hereto, as the
case may be, does not fall on a Business Day, payment of principal, premium, if any, or interest
otherwise payable on such day need not be made on such day, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment Date or at Maturity
and, unless the Company defaults on such payment, no interest shall accrue with respect to such
payment for the period from and after the Interest Payment Date or such Maturity, as the case may
be, to the date of payment. “Business Day” means any day other than a Saturday, Sunday or other
day on which banking institutions in The City of New York are authorized or obligated by law,
regulation or executive order to close.

     The Notes will not be subject to any sinking fund and, except as provided in the Indenture or
herein, will not be redeemable or repayable prior to their Stated Maturity.

     The Notes are redeemable as a whole or in part, at the Company’s option at any time, at a
Redemption Price equal to the greater of (i) 100 percent of their principal amount or (ii) the sum
of the present values of the remaining scheduled payments of principal and interest thereon (not
including any portion of such payments of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued interest
to the Redemption Date. The Company will, however, pay the interest installment due on any
Interest Payment Date that occurs on or before a Redemption Date to the Holders as of the close of
business on the Regular Record Date immediately preceding that Interest Payment Date.

     “Treasury Rate” means, with respect to any Redemption Date, (a) the yield, under the heading
which represents the average for the immediately preceding week, appearing in the most recently
published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined and the
Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month); or (b) if such release (or any successor release) is not published
during the week preceding the Calculation Date or does not contain such yields, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Redemption Date.

     The Treasury Rate will be calculated on the third Business Day next preceding the date fixed
for redemption (the “Calculation Date”).

     “Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the
Notes to be redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.

2

 

     “Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of
five Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means either Goldman, Sachs & Co. or J.P. Morgan Securities
Inc., or their respective successors, as specified by the Company, or, if those firms are unwilling
or unable to select the comparable treasury issue, an independent investment banking institution of
national standing appointed by the Company.

     “Reference Treasury Dealer” means each of (1) Goldman, Sachs & Co. and J.P. Morgan Securities
Inc., and their respective successors, provided, however, that if either of the foregoing shall
cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury
Dealer”), the Company will substitute therefor another Primary Treasury Dealer and (2) any three
other Primary Treasury Dealers selected by the Company after consultation with the Independent
Investment Banker.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the Calculation Date.

     Holders of Notes to be redeemed will be given notice of redemption, at their addresses as set
forth in the Security Register for the Notes, by first-class mail at least 30 and not more than 60
days prior to the date fixed for redemption, as provided in the Indenture.

     Unless the Company defaults in payment of the Redemption Price, on and after the Redemption
Date interest will cease to accrue on the Notes or portions thereof called for redemption.

     If any Event of Default with respect to the Notes shall occur and be continuing, the principal
of the Notes may be declared due and payable in the manner and with the effect provided in the
Indenture.

     As set forth in, and subject to the provisions of, the Indenture, no Holder of any Note will
have any right to institute any proceeding with respect to the Indenture, the Notes, or for any
remedy thereunder, unless (i) such Holder shall have previously given to the Trustee written notice
of a continuing Event of Default with respect to the Notes, (ii) the Holders of not less than 25%
in principal amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with
such request, to the Trustee to institute such proceeding as Trustee, (iii) the Trustee shall have
failed to institute such proceeding within 60 days after receipt of such written notice, request
and offer of indemnity and (iv) the Trustee shall not have received from the Holders of a majority
in principal amount of the Outstanding Notes a direction inconsistent with such request within such
60 day period; provided, however, that such limitations do not apply to a suit instituted by the
Holder hereof for the enforcement of payment of the principal of or premium, if any, and any
interest on this Note on or after the respective due dates expressed herein or to require the
purchase of this Note by the Company upon the occurrence of a Change in Control in accordance with
the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series thereunder to be affected under the Indenture at any time by the Company
and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal
amount of such Securities then Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of not less than a majority in principal amount of the
Securities of each series thereunder at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain restrictive provisions
of the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of any Note issued upon the registration of transfer hereof or in exchange
for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

     No reference to the Indenture and no provision of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to pay the principal of
and premium, if any, and any interest on this Note at the times, places and rate, and in the coin
or currency, herein prescribed.

     The Notes are issuable only in fully registered form in denominations of $2,000 and integral
multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of
Notes of this series and of like tenor of any authorized denomination, as requested by the Holder
surrendering the same. As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this

3

 

Note is registrable in the Security Register, upon surrender of this Note for registration of
transfer at the office or agency of the Company in any place where the principal of and any
interest on this Note are payable or at such other offices or agencies as the Company may
designate, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to, the Company and the Security Registrar or any transfer agent duly executed by the
registered owner hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes of this series and of like tenor, of authorized denominations and for the same aggregate
principal amount and Stated Maturity will be issued to the designated transferee or transferees.

     Subject to the terms and conditions of the Indenture, if any Change in Control occurs prior to
the Stated Maturity of the Notes, the Company shall, at the option of the Holders thereof, purchase
all Notes for which a Change in Control Purchase Notice shall have been delivered as provided in
the Indenture and not withdrawn, by a date which shall be 35 Business Days after the occurrence of
such Change in Control, at a Change in Control Purchase Price equal to 100% of the principal amount
thereof plus accrued interest to the Change in Control Purchase Date, which Change in Control
Purchase Price shall be paid in cash.

     Holders have the right to withdraw any Change in Control Purchase Notice by delivering to the
paying agent a written notice of withdrawal in accordance with the provisions of the Indenture.

     If cash sufficient to pay the Change in Control Purchase Price of all Notes or portions
thereof to be purchased on the Change in Control Purchase Date is deposited with the Trustee on the
Change in Control Purchase Date, interest shall cease to accrue on such Notes (or portions thereof)
and on and after the Change in Control Purchase Date the Holders thereof shall have no other rights
as such (other than the right to receive the Change in Control Purchase Price upon surrender of
such Notes).

     Subject to the terms of the Indenture, prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all purposes, whether or not
this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.

     No service charge shall be made for any registration of transfer or exchange of this Note,
but, subject to certain limitations set forth in the Indenture, the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

     The Indenture and this Note shall be governed by and construed in accordance with the laws of
the State of New York without regard to the conflicts of laws principles thereof.

     This Note shall not be valid or become obligatory for any purpose until the Trustee’s
Certificate of Authentication hereon shall have been executed by the Trustee.

     IN WITNESS WHEREOF, APACHE CORPORATION has caused this instrument to be duly executed under
its corporate seal.

	 	 	 	 	 
	 	APACHE CORPORATION

 	 
	[SEAL] 	By:  	 	 
	 	 	Name:  	Matthew W. Dundrea 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

Attest:

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name: Cheri L. Peper

Title: Corporate Secretary
	 	 

Date: October 1, 2008

4

 

ASSIGNMENT

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

 

Please insert Social Security or other identifying number of assignee

 

(please print or type name and address of assignee)

the within Security and all rights thereunder and does hereby irrevocably constitute and appoint
the aforesaid assignee attorney to transfer the within Security on the books kept for registration
thereof, with full power of substitution in the premises.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 

In the presence of:

NOTICE: The signature to this assignment must correspond with the name as it appears upon the face
of the within Security in every particular, without alteration or enlargement or any change
whatever. When assignment is made by a guardian, trustee, executor or administrator, an officer of
a corporation, or anyone in a representative capacity, proof of his or her authority to act must
accompany the Security. The signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent
Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The
Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.

5

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