Document:

ex10_2.htm

     

     

     

    
      

      

    

    Exhibit
10.2

     

     

    
 

    AMENDED
AND RESTATED LICENSE OF INTELLECTUAL PROPERTY

     

    This
AMENDED AND RESTATED LICENSE OF
INTELLECTUAL PROPERTY (the “License Agreement”) is
effective as of December 31, 2008 (the “Effective Date”) and is
entered into by and among Franklin Covey Co. (“FranklinCovey”), a Utah
corporation; Covey/Link, LLC (“CL”), a Utah limited
liability company; Greg Link, (“Link”), an individual
residing in Utah; and Stephen M. R. Covey (“Covey”), an individual
residing in Utah.  Each of FranklinCovey, CL, Link and Covey are
referred to herein as a “party” and collectively as the “parties.”

     

    RECITALS:

     

    WHEREAS, Covey is the author
of the book The Speed of
Trust, (as defined herein, the “Book”) published by
Simon & Schuster, Inc., and has conveyed to CL all right, title and
interest therein which he did not grant to Simon & Schuster, Inc.,
which retained rights include without limitation all Audio Rights (as defined
herein) and the right to create Workbooks (as defined herein);

     

    WHEREAS, Covey and Link have
(a) developed certain training courses based on the Book (as defined herein, the
“Courses”), (b)
registered trademarks (as defined herein and including certain unregistered
trademarks, the “CL
Trademarks”), (c) created collateral materials (as defined herein, “CL Copyrights”) and (d)
conveyed to CL all right, title and interest in the Courses, CL Trademarks and
CL Copyrights;

     

    WHEREAS, concurrently
herewith, CL, its affiliate CoveyLink Worldwide LLC (“CL Worldwide”), FranklinCovey
and Franklin Covey Client Sales, Inc. (“FC Client Sales”) a
wholly-owned subsidiary of FranklinCovey, have entered into that certain Asset
Purchase Agreement (the “Purchase Agreement”) pursuant
to which FC Client Sales has purchased certain assets of CL Worldwide related to
the Book, the Courses and other intellectual property of CL;

     

    WHEREAS, also concurrently
herewith, each of Covey and Link has entered into a consulting agreement with
FranklinCovey and FC Client Sales (the “Practice Leader Consulting
Agreements”), and each of Covey and Link has entered into a speaker
services agreement with FC Client Sales (the “Speaking Agreements”);
and

     

    WHEREAS, CL and FranklinCovey
previously entered into the Original Agreement (as defined below) pursuant to
which CL granted certain non-exclusive licenses relating to the Book and the
Courses and a desire to amend and restate the Original License to grant
exclusive licenses to the Licensed Materials, subject to all the terms and
conditions herein.

     

    NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants, terms and
conditions herein, the parties agree as follows:

     

    1. Defined
Terms.

     

    1.1. Use of Defined
Terms.  Capitalized terms used in this License Agreement and
not otherwise defined when used shall have the meanings set forth on Exhibit
A.

     

    

    
      
        
          
             

          

           

        

        
           

          
            

            

          

          
            

          

        

        
           

        

      

    

     

    
      2. Interpretation.

       

      2.1. Relationship of
Agreements.

       

      (a) This
License Agreement amends and restates that certain License of Intellectual
Property effective January 1, 2006 (the “Original Agreement”) by and
between FranklinCovey and CL.  As of the Effective Date, the Original
Agreement shall be amended and restated in its entirety to include, without
limitation, Covey and Link as parties and shall continue in full force and
effect without interruption.

       

      (b) In all
cases where possible, this License Agreement shall be interpreted consistently
with the Contemporaneous Agreements.  If any term of any
Contemporaneous Agreement conflicts with this License Agreement, this License
Agreement shall control unless otherwise stated in the Contemporaneous
Agreement.

       

      3. License
Grant.

       

      3.1. The Licensed
Materials.  Subject to the terms and conditions of this License
Agreement, each of CL, Covey and Link hereby grant to the FranklinCovey Entities
an exclusive, perpetual, worldwide, transferable, sublicensable, royalty-bearing
license to use, reproduce, display, distribute, sell, prepare derivative works
of, and perform the Licensed Materials in any format or medium and through any
market or distribution channel.  As used in this Section 3.1,
“exclusive” means that CL, Covey and Link may not, after the Effective Date,
grant to any third party the right to, and shall not themselves, use, reproduce,
display, distribute, sell, or prepare derivative works of the Licensed Materials
except as expressly permitted by this License Agreement.  The license
granted pursuant to this Section 3.1 shall be subject to that certain
Publishing Agreement by and between Covey and Simon & Schuster, Inc.
(the “Publishing
Agreement”) and to any permitted publishing agreement entered into by
Covey, Link or CL for any Sequel under Section 3.2(a).

       

      3.2. Reservations.

       

      (a) The Book;
Sequels.  Covey, Link and CL each reserves the exclusive right,
in their sole discretion, to write, publish and distribute, directly or through
third-party publishers, a Sequel or Sequels to the Book.  Any
publishing agreement for a Sequel (i) shall be on terms comparable to the
Publishing Agreement, (ii) shall exclude rights to Workbooks and Audio Rights,
except for a right of the Publisher to prepare and distribute a single audio
version of such Sequel, (iii) shall permit the FranklinCovey Entities all of the
same rights to distribute such Sequel as have been granted under this License
Agreement to distribute the Book.  Covey, Link and CL may negotiate
any commercially reasonable royalty rate with the third-party publisher and
shall have all rights to retain such royalties.  At least ten (10)
days prior to entering into a publishing agreement for a Sequel, Covey, Link or
CL, as appropriate, shall send to FranklinCovey a copy of the publishing
agreement in its final form, provided that the parties to the publishing
agreement may any needed non-substantive change.  During such period,
FranklinCovey may provide comments to Covey, Link or CL, as appropriate, if
FranklinCovey determines in good faith that any term may conflicts with this
License

       

      

      
        
          
             

          

          
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      Agreement
and Covey, Link or CL, as appropriate, shall consider such comments in good
faith.  

       

      (b) The
Courses.  Covey, Link and CL each reserves a non-exclusive
right to make derivative works of the Courses from time to time, provided that
any such modification by any of them to the Courses shall be automatically
deemed a part of the Courses and Licensed Materials and subject to the license
granted in Section 3.1.  

       

      (c) Allowed Actions Following
Term of Practice Leader Consulting Agreements.  Following the
term of either of the Practice Leader Consulting Agreements, Covey, Link and CL
may speak, consult, coach and advise with respect to the Book and the Speed of
Trust concepts, provided that each of them does so with the intent of (I) driving training to
FranklinCovey (and not to replace training nor to become a defacto substitute
for training), (II)
enhancing brand awareness of the Speed of Trust concepts, or (III) increasing sales of the
Book.

       

      (d) The CL Trademarks and CL
Copyrights.  CL, Covey and Link each reserves a non-exclusive
right to use the CL Trademarks and CL Copyrights in connection with any Sequel
and as necessary for biographical or historical reference and for speaking and
practice activities necessary to carry out their activities provided for or
allowed in the Speaking Agreements and Practice Leader Consulting
Agreements.

       

      (e) Scope of
Reservation.  As used in Sections 3.2(b) and 3.2(d),
“non-exclusive” means the reservation of rights permits each of Covey, Link and
CL to use the Courses, CL Trademarks and CL Copyrights as described therein and
does not restrict or limit the rights granted to the FranklinCovey Entities by
Covey, Link and CL in Section 3.1 to use the Courses, CL Trademarks and CL
Copyrights as permitted in this License Agreement.

       

      3.3. Restrictions on
Use.  The FranklinCovey Entities shall use the Licensed
Materials only in connection with the Practice and the business of
FranklinCovey.

       

      3.4. International
Markets.  Within six months following the Effective Date and on
terms reasonably acceptable to CL, FranklinCovey will use commercially
reasonable efforts to amend those certain license and distribution agreements
(collectively, the “International Licenses”) with
the International Licensees to permit Covey and Link to conduct the Practice as
permitted in the Contemporaneous Agreement in the geographical territories that
are the subject of such International Licenses.  The parties agree
that an amended International License will be deemed reasonable if Covey, Link
and CL, as appropriate, receive non-exclusive rights to conduct or promote
Courses in such territory in exchange for reasonable compensation payable to the
International Licensee.  If FranklinCovey is unable to amend any
International License as provided in this Section 3.4, FranklinCovey shall
forfeit the rights granted in Section 3.1 as those rights apply to the territory
of such International Licensee.  Notwithstanding the foregoing,
FranklinCovey shall have not be deemed to have breached this Section 3.4 if any
website owned or operated by the FranklinCovey Entities is visible in a
terminated territory or if a customer in a terminated territory makes incidental
purchases Books or Sequels through any such websites.  

       

      

      
        
          
             

          

          
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      3.5. Rights of
Publicity.  Covey and Link each hereby grants to the
FranklinCovey Entities a non-exclusive, worldwide, fully paid-up right to use
images of each of their persons and to use their names in connection with the
Practice.  At any time after Covey or Link, as applicable, ceases to
be a Practice Leader, such person may object in writing to the use of his own
name or image if Covey or Link, as applicable, reasonably determines that the
use undermines the commercial value of the Practice, the Book, Sequels or a New
Work.  The affected parties shall cooperate in good faith to resolve
any such disputes.  If this License Agreement terminates for any
reason, the license granted in this Section 3.5 shall survive termination with
respect to products, materials and designs in existence on the effective date of
the termination, but FranklinCovey shall have no right to place the images or
use names of Stephen M. R. Covey or Greg Link on any new product, material or
design.

       

      3.6. Distribution Rights for FC
Products, LLC.  The parties acknowledge that FranklinCovey has
entered into that certain Master License Agreement by and between FranklinCovey
and Franklin Covey Products, LLC (“FC Products, LLC”), pursuant
to which FranklinCovey may, under certain circumstances, be required to make
Licensed Materials available to FC Products, LLC for distribution in certain
channels.  Each of Covey, Link and CL agrees to permit FC Products,
LLC to distribute Licensed Materials according to the Master License Agreement
so long as doing so does not reduce any Payment under this License
Agreement.

       

      4. Ownership; Derivative
Works.

       

      4.1. CL
Property.  As between Covey, Link and CL on the one hand and
FranklinCovey on the other hand, Covey, Link and CL shall retain ownership of
all CL Intellectual Property.  “CL Intellectual Property” means the
Intellectual Property Rights to the Licensed Materials, all CL Derivative Works
and all New Works.

       

      4.2. FranklinCovey
Property.  As between Covey, Link and CL on the one hand and
FranklinCovey on the other hand, FranklinCovey shall retain ownership of all
FranklinCovey Intellectual Property.  “FranklinCovey Intellectual
Property” means all Intellectual Property Rights of FranklinCovey prior to the
Effective Date, all FC Derivative Works, and all Intellectual Property Rights of
FranklinCovey created or licensed after the Effective Date other than
Intellectual Property Rights that include the Licensed Materials and are owned
by Covey, Link or CL under this License Agreement.

       

      4.3. Creation of Derivative
Works.

       

      (a) By
FranklinCovey.  FranklinCovey may, at its option and at its own
expense, create derivative works, directly or through third parties, based on
the Licensed Materials, including without limitation derivative works that
include both the Licensed Materials and FranklinCovey Intellectual
Property.  Subject to Section 4.3(d), such derivative works shall be
deemed FC Derivative Works. 

       

      (b) By CL, Covey and
Link.  Each of Covey, Link and CL may, at their option and
their own expense, create derivative works (a) based solely on the Licensed
Materials or

       

      

      
        
          
             

          

          
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      (b) based
in part on the Licensed Materials and in part on FranklinCovey Intellectual
Property, subject to the provisions of Section 4.3(c).

       

      (c) Procedures.  If
any of Covey, Link or CL desires to create a new derivative work based solely on
the Licensed Materials, Covey, Link or CL, as appropriate, may do so without
FranklinCovey’s approval, provided that CL maintains reasonable records that
describe the project and other pertinent information and makes such records
available as reasonably requested by FranklinCovey.  If any of Covey,
Link or CL proposes to develop a new derivative work based in part of the
Licensed Materials and in part of FranklinCovey Intellectual Property (a “Proposed FC Derivative
Work”), Covey, Link or CL, as appropriate, shall deliver to FranklinCovey
a written request to FranklinCovey describing in reasonable detail the proposed
work, including the FranklinCovey Intellectual Property that would be used (a
“Proposal”).

       

      (i) If the
work described in the Proposal includes any FranklinCovey Intellectual Property,
FranklinCovey may, in its sole discretion, approve or reject the Proposal within
twenty one (21) days of its receipt of the Proposal.

       

      (ii) If
FranklinCovey accepts such a Proposal, Covey, Link or CL, as appropriate, shall
have the right to create the proposed derivative work and such derivative work
will be deemed part of the Licensed Materials.  If FranklinCovey
rejects such a Proposal, Covey, Link or CL, as appropriate, shall promptly cease
work on the Proposed FC Derivative Work and shall have no right to use the
FranklinCovey Intellectual Property for such Proposal.  If
FranklinCovey fails to respond such a Proposal within the twenty one (21) day
period, FranklinCovey will be deemed to have rejected the Proposal.

       

      (d) Ownership of Derivative
Works.  Any derivative work of the Licensed Materials that is
based solely upon the Licensed Materials shall be deemed a CL Derivative Work
and, for purposes of clarity, shall be deemed part of the Licensed Materials for
all purposes.  Any revision or customization of the Courses Listed in
Exhibit B, whether by FranklinCovey, Covey, Link or CL, shall be deemed part of
the Licensed Materials for all purposes.  Any permitted derivative
work created by Covey, Link or CL that is based in part on the Licensed
Materials and in part on FranklinCovey Intellectual Property shall be deemed an
FC Derivative Work, and Covey, Link and CL hereby convey to FranklinCovey, its
successors and assigns all right, title and interest it may have in such FC
Derivative Work; provided, however, that FranklinCovey’s rights to the
underlying Licensed Materials incorporated into such FC Derivative Works are
subject to the license of Licensed Materials granted to FranklinCovey in this
License Agreement.  Notwithstanding anything else in this License
Agreement, FC Derivative Works shall be subject to the license provided in
Section 4.3(e) and the royalty provisions set forth in Section
8.2(b).

       

      (e) Grant-back
License.  FranklinCovey hereby grants to Covey, Link and CL,
during the term of this License Agreement, a worldwide, royalty-free,
nontransferable, non-sublicenseable right to use FC Derivative Works in
connection with the Practice and, subject to the provisions of Section 4.3(c),
to create derivative works based on FC Derivative Works.

       

      4.4. Perfecting
Ownership.

       

      

      
        
          
             

          

          
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      (a) CL Intellectual
Property.  Upon CL’s reasonable request and at CL’s expense,
FranklinCovey shall assist CL in any action that may be necessary to record,
register or otherwise perfect CL’s rights in and to the CL Intellectual
Property, including without limitation CL Derivative Works.

       

      (b) FranklinCovey Intellectual
Property.  Upon FranklinCovey’s reasonable request and at
FranklinCovey’s expense, each of Covey, Link and CL shall assist FranklinCovey
in any action that may be necessary to record, register or otherwise perfect
FranklinCovey’s rights in and to FranklinCovey Intellectual Property, including
without limitation FC Derivative Works.

       

      5. Quality Control; Trademark
Notices.

       

      5.1. Quality
Standards.  The parties agree that the Licensed Materials are
distinctive and the goods and services associated therewith have distinctive
goodwill and a reputation for high quality and standards.  The parties
agree to maintain the high quality standards of the Licensed Materials and the
goods and services that incorporate or reference the Licensed
Materials.

       

      5.2. Right to
Inspect.  CL shall have the right to request samples of written
documents used in and distributed at the Courses.  If CL reasonably
determines that FranklinCovey’s use of the Licensed Materials undermines the
commercial value of the Licensed Materials or the Practice, the parties shall
cooperate in good faith to resolve the dispute.

       

      5.3. Marking and
Notice.  Subject to and in accordance with CL’s reasonable
written approval, FranklinCovey shall, on all significant Course materials
distributed to participants of the Course and all Workbooks, give written
attribution to CL for ownership of such Licensed Materials and provide copyright
notices that attribute ownership to CL and state that the Licensed Materials are
used by FranklinCovey pursuant to a license from CL.

       

      5.4. Trademark
Use.  If, after the Effective Date, CL, Covey or Link registers
or in any way designates its ownership of a new trademark in connection with the
Licensed Materials or a Sequel (a “New Trademark”), such New
Trademark will be deemed a CL Trademark subject to all the rights, terms and
conditions of this License Agreement .  All trademark rights, other
than trademark rights already obtained by FranklinCovey or CL prior to the
execution of this License Agreement, in and to any class of goods or services
developed by reason of FranklinCovey’s use of the Licensed Materials, within the
terms of and subject to the conditions of this License Agreement, shall be owned
by and inure to the benefit of either CL or FranklinCovey as
follows:  FranklinCovey shall give CL written notice of its desire to
pursue Federal registration of any New Trademark (the “Notice of Intent”) and CL
shall, within ten (10) business days after receiving such Notice of Intent,
notify FranklinCovey in writing (the “Response to Notice”) that it
will register the New Trademark in its own name, at CL’s expense, or that
FranklinCovey is entitled to register the New Trademark in FranklinCovey’s name,
at FranklinCovey’s expense.  CL’s failure to give FranklinCovey a
Response to Notice within ten (10) business days of the date of a Notice of
Intent, shall constitute CL’s permission to FranklinCovey to register the
subject New Trademark in FranklinCovey’s name, at FranklinCovey’s
expense.  If FranklinCovey obtains Federal registration of a New
Trademark pursuant to this Section 5.4, FranklinCovey shall grant to CL a
limited, worldwide, non-exclusive

       

      

      
        
          
             

          

          
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      and
royalty-free license to use the New Trademark in connection with the Licensed
Materials or any Sequel or CL Derivative Work, except as such right is
restricted herein.  Each party agrees to execute such documentation as
shall reasonably be required to effectuate the intent of this Section
5.4.

       

      5.5. No Inconsistent Contractors
or Relationships.  FranklinCovey shall not employ or contract
with any person or entity, including a government employee or representative, to
assist or become involved in developing a derivative work based upon the
Licensed Materials if that person or entity has a contractual or legal
relationship, the effect of which encumbers any proprietary rights to the
Licensed Materials or which purports to transfer any proprietary rights in the
Licensed Materials to another entity.  FranklinCovey shall not enter
into agreements to receive funding or grants which purport to transfer to a
third party any proprietary rights or which would result in any other entity
besides CL owning such proprietary rights.

       

      5.6. Action by Covey and
Link.  Notwithstanding anything to the contrary in this License
Agreement, so long as either Covey or Link remains a Practice Leader of the
Practice, FranklinCovey shall be deemed to have complied in all respects with
the requirements of this Section 5 and CL, Covey and Link shall be deemed to
have agreed to the actions of FranklinCovey under this Section 5.

       

      6. Distribution
Rights.

       

      6.1. Distribution
Rights.  Except as limited by the Publishing Agreement and
permitted publishing agreements for Sequels subject to the terms of Section
3.2(a), FranklinCovey shall have an exclusive, worldwide and transferable right
to distribute the Licensed Materials directly or through third
parties.  If Covey, Link or CL enters into any publishing agreement
for the distribution of a Sequel as provided in Section 3.2(a), such agreement
shall be limited by the rights of the FranklinCovey Entities to distribute the
Sequel on terms substantially the same as the FranklinCovey Entities may
distribute the Book.

       

      7. Website
Agreement.

       

      7.1. Website
Agreement.  The parties shall cooperate to establish protocols
and links to connect the CL Website to websites operated by FranklinCovey and to
set general website policies (“Website
Protocols”).  The initial Website Protocols are set forth on
Exhibit G,
which may be amended from time to time by mutual agreement of the
parties.

       

      7.2. CL Website
Sales.  During the term of this License Agreement, and for one
year after termination of this License Agreement, Covey, Link and CL shall not,
directly or indirectly, sell products or services relating to the Licensed
Materials through the CL Website or any other website operated by any of them
and shall direct all such inquiries to FranklinCovey, except as provided below
in this Section 7.2.  Nothing in this Section 7.2 shall prevent Covey,
Link or CL from (a) selling any New Book or offering services connected to any
New Course not subject to an agreement with FranklinCovey so long as Covey, Link
and CL, as applicable, have complied with all of the terms and conditions of
Sections 11, 12 and 13 of this License Agreement, or (b) following the term
of either of the Practice Leader Consulting Agreements, selling the Book or
Sequels or offering speaking, consulting, coaching or advisory services with
respect to the

       

      

      
        
          
             

          

          
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      Book and
the Speed of Trust concepts, provided that such services are provided with the
intent of (I) driving
training to FranklinCovey (and not to replace training nor to become a defacto
substitute for training), (II) enhancing brand awareness
of the Speed of Trust concepts, or (III) increasing sales of the
Book.

       

      8. Fees and
Royalties.

       

      8.1. Royalty
Formula.  Each month, FranklinCovey shall pay to CL a royalty
payment (the “Royalty”)
which shall be equal to the sum of 7.5% of FranklinCovey Gross Revenue accrued
during a given monthly period as provided in Section 9; plus 5% of Licensee
Gross Revenue accrued during a given monthly period as provided in Section 9;
plus an equitable royalty percentage as mutually agreed by FranklinCovey and CL,
acting in good faith, of Derivatives Gross Revenue.

       

      8.2. “FranklinCovey
Gross Revenue” means all revenues accrued according to its regular accounting
principles and practices by the FranklinCovey Entities during the applicable
month that derive from the Licensed Materials other than FC Derivative
Works.  However, “FranklinCovey Gross Revenues” does not include (i)
accruals of payments by FranklinCovey from International Licensees, or (ii)
revenues accrued by FranklinCovey relating to speeches given by Covey or Link
pursuant to their Speaking Agreements. For purposes of clarity, all revenue from
the 2006 Courses listed in Exhibit B as constituted on the Effective Date shall
be included as part of the FranklinCovey Gross Revenue in computing the Royalty
under Section 8.1 above.

       

      (a) “Licensee
Gross Revenue” means all revenues accrued according to its regular accounting
principles and practices by FranklinCovey by any International Licensee during
the applicable month that derive from the Licensed Materials.

       

      (b) “Derivatives
Gross Revenue” means all revenues accrued by the FranklinCovey Entities during
the applicable month that derive from FC Derivative Works.  However,
“Derivatives Gross Revenues” does not include (i) revenues accrued by
FranklinCovey from International Licensees, or (ii) revenues accrued by
FranklinCovey relating to speeches given by Covey or Link pursuant to their
Speaking Agreements.

       

      9. Royalty Reporting and
Payment.

       

      9.1. Reporting.  No
later than thirty (30) days after the close of every FranklinCovey month during
the Term, FranklinCovey shall submit a report to CL (in a format acceptable to
CL, in its reasonable discretion) identifying (a) FranklinCovey Gross Revenue
accrued during the period, (b) Licensee Gross Revenue accrued during the period,
(c) Derivatives Gross Revenue accrued during the period and the applicable
royalty rate agreed upon by CL and FranklinCovey, acting in good faith, and (d)
the Royalty owed to CL during the period.  The Royalty payment for
each month (“Payments”)
shall accompany each such report.  All Payments will be made in
immediately available U.S. dollars.   

       

      9.2. Payment.  FranklinCovey
will make all Payments free and clear of any tax, deduction, tax offset or
withholding of any kind.  All taxes and penalties (other than those
associated with the income of CL, Covey or Link) levied on any Payments will be
fully borne by

       

      

      
        
          
             

          

          
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      FranklinCovey.  If
FranklinCovey or any other person is required by law to make any deduction or
withholding on account of any tax, assessment, duty or levy charged against any
Payments, FranklinCovey will pay any such tax, assessment, duty or levy before
the date on which a penalty for nonpayment or late payment
attaches.  Payment of such tax, levy, duty or assessment is to be made
(if the liability to pay is imposed on FranklinCovey) for FranklinCovey’s own
account or (if the liability to pay is imposed on CL) on behalf of and in the
name of CL.  Payments by FranklinCovey in respect of which the
relevant deduction, withholding or payment (including any penalties) is required
will be increased to the extent necessary to ensure that, after the making of
the deduction, withholding or payment of such tax, levy, duty or assessment, CL
receives on the due date and retains (free from any liability in respect of the
deduction, withholding or payment) a net sum equal to what CL would have accrued
and retained had no such deduction, withholding or payment been required or
made.  FranklinCovey will promptly furnish to CL receipts showing the
payment of any deduction, withholding or payment made, on its account or CL’s
account.  FranklinCovey agrees to defend, indemnify and hold harmless
CL from all claims, suits, liabilities and expenses (including without
limitation legal fees) suffered or incurred by CL as a result of FranklinCovey’s
failure, for whatever reason, duly to pay any such taxes (other than those
associated with the income of CL, Covey or Link).

       

      9.3. Interest.  Interest
shall accrue on all undisputed Payments not paid by FranklinCovey when due under
this License from the due date until the date of payment, at the lesser of the
rate of one and one-half percent (1.5%) per month or the maximum legal rate
allowed under applicable law.  Interest shall accrue on all undisputed
Payments not paid by CL when due under this License from the due date until the
date of payment, at the lesser of the rate of one and one-half percent (1.5%)
per month or the maximum legal rate allowed under applicable law.

       

      9.4. Audit.  Except
during the period that Covey or Link remains a Practice Leader of the Practice,
and no more than once in any calendar year thereafter, CL shall have the right,
upon reasonable notice to FranklinCovey and at its own expense, to audit
FranklinCovey’s books and records reasonably necessary to determine the accuracy
of the Royalties made hereunder, provided that if CL engages an outside firm to
conduct the audit such firm shall first execute a confidentiality agreement
reasonably satisfactory to FranklinCovey.  In the event the audit
reveals an aggregate underpayment in excess of five percent (5 %) for the year,
FranklinCovey shall pay the costs incurred by CL in performing the
audit.

       

      9.5. Equitable Agreement on
Royalties for Derivative Gross Revenue.

       

      (a) FranklinCovey
and CL, through their respective authorized agents acting in good faith will
reasonably consider the facts and circumstances of each instance where
Derivative Gross Revenue is accrued and agree on the component of Derivative
Gross Revenue fairly attributable to the Licensed Materials and the reasonable
royalty rate attributable to such Licensed Materials component of Derivative
Gross Revenue.  If FranklinCovey’s and CL’s authorized agents are
unable to agree on the foregoing by the date the report required in Section 9.1
is due, the CEO of CL and the CEO of FranklinCovey will meet to attempt to reach
agreement on any disputed matters.  If they are unable to agree on
such matters within 30 days, either party may submit the matter to
arbitration.

       

      

      
        
          
             

          

          
            9

            
              

            

          

          
             

          

        

      

       

      (b) Arbitration.

       

      (i) In the
event that a party demands arbitration pursuant to Section 9.5(a) or Section
17.2(b), such dispute shall be finally settled by binding arbitration in Salt
Lake City, Utah under the Commercial Arbitration Rules of the American
Arbitration Association (the “Rules”) by one arbitrator
appointed in accordance with such Rules.  Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.

       

      (ii) The
arbitrator shall apply the laws of the State of Utah to the merits of the
particular dispute, without reference to rules of conflict of
law.  The arbitration proceedings shall be governed by the Rules,
without reference to any state arbitration law.

       

      (iii) Either of
the parties may apply to any court of competent jurisdiction for a temporary
restraining order, preliminary injunction, or other interim or conservatory
relief, as necessary, without breach of this arbitration provision and without
any abridgment of the powers of the arbitrator.  The arbitrator may,
in its discretion, award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees, including, without limitation,
administrative fees, arbitrator’s fees, attorneys’ fees, experts’ fees,
witnesses’ fees, travel expenses, and out-of-pocket expenses (including, without
limitation, such expenses as copying, telephone, facsimile, postage, and courier
fees); otherwise, the costs of the arbitration, including administrative and
arbitrator’s fees, shall be borne by the parties to the particular arbitration
in proportion their relative success, as determined by the arbitrator, in
connection with the resolution of the disputed claims, and each party shall bear
the cost of its own attorneys’ fees and expert witness fees.  The
parties agree that, any provision of applicable law notwithstanding, they will
not request, and the arbitrator shall have no authority to award, punitive or
exemplary damages against any party.

       

      (iv) The
decision of the arbitrator as to the validity and amount of any claim shall be
binding and conclusive upon the parties.  Such decision shall be
written and shall be supported by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order awarded by the
arbitrator.

       

      (v) The
requirements of this Section 9.5(b) will apply only to disputes raised pursuant
to this Section 9.5 and Section 17.2(b).

       

      10. Performance by
FranklinCovey.

       

      10.1. FranklinCovey Due
Diligence.  FranklinCovey shall use Best Efforts to exploit for
profit the Licensed Materials for the purpose of maximizing Royalty payments to
CL.  FranklinCovey shall, according to good business judgment and
based on market conditions and in keeping with FranklinCovey’s practices,
advertise its services associated with the Courses and Content in the United
States and in all direct offices in appropriate advertising media and in a
manner ensuring proper and adequate publicity for such
services.  FranklinCovey shall perform its duties and obligations set
forth in this License Agreement in a manner consistent with the highest industry
standards and shall do nothing that would materially and adversely affect the
reputation of CL.  During and following the period that either Covey
or Link remains a Practice Leader of the Practice, FranklinCovey shall be deemed
to have complied in all respects with this Section 10

       

      

      
        
          
             

          

          
            10

            
              

            

          

          
             

          

        

      

      

      if
FranklinCovey acts and performs in a manner substantially similar to its actions
and performance during the period that either Covey or Link remained a Practice
Leader of the Practice  For purposes of this License Agreement, “Best
Efforts” shall mean the efforts that a prudent person acting diligently and
desirous of achieving a result would use in similar circumstances to achieve
that result as expeditiously as reasonably practicable, provided, however, that a
Person required to use Best Efforts under this License Agreement will not be
thereby required to take actions that would result in a material adverse change
in the benefits to such person under this License Agreement or to dispose of or
make any material change to its business.

       

      10.2. Course
Materials.  In connection with each Course offered by
FranklinCovey, other than the Course entitled “Inspiring Trust,” FranklinCovey
will provide to each Course participant a participant kit consisting of, at a
minimum, a Workbook and a copy of the Book, provided that this Section 10.2
shall not apply if the Course is offered through the Internet or other medium
where delivery of the Workbook and Book is not commercially
practical.  

       

      11. New Books; New
Courses.

       

      11.1. New
Books.  During the Extended Restricted Period and thereafter,
each of Covey, Link and CL, or any of them together, shall have the right to
create a New Book.  Covey, Link and CL, as applicable, may negotiate
any commercially reasonable agreement with a third-party publisher for the New
Book and shall have all rights to retain all royalties thereunder.  If
the agreement with the third-party publisher is entered into during the Extended
Restricted Period, the third party publisher shall not be a Competitor or an
affiliate of a Competitor.  At least ten (10) days prior to entering
into a publishing agreement for a New Book, Covey, Link or CL, as appropriate,
shall send to FranklinCovey a notice indicating that a New Book may be
published, listing the working title to the New Book, and providing an abstract
of the contents of the New Book.  During such period, FranklinCovey
may provide comments to Covey, Link or CL, as appropriate, if FranklinCovey
reasonably believes that the proposed book may be a Sequel subject to the terms
of this License Agreement.

       

      11.2. New
Courses.  During the Extended Restricted Period and thereafter,
each of Covey, Link and CL, or any of them together, shall have the right to
create a New Course, subject to the terms and conditions of Section
12.

       

      12. Right of First Negotiation
for New Work.

       

      12.1. Right of First
Negotiation.  During the Extended Restricted Period and
thereafter if CL, Covey or Link, as applicable, desires to design, develop,
manufacture, market, promote, advertise, distribute, lease or sell or otherwise
commercialize such New Work (except for distribution of a New Book pursuant to a
publishing agreement with a third-party publisher), CL, Covey or Link, as
applicable, shall provide notice to FranklinCovey of such desire (a “New License
Notice”).  Upon receipt of the New License Notice,
FranklinCovey and CL, Covey or Link, as applicable, shall enter into exclusive
negotiations relating to a license for the New Work (a “New License”).  The
parties to such negotiation shall engage in exclusive, good-faith discussions
regarding a possible New License for a period of at least sixty (60) days (the
“Initial Negotiation
Period”), which Initial Negotiation Period may be extended as provided
in

       

      

      
        
          
             

          

          
            11

            
              

            

          

          
             

          

        

      

      

      Section 13
(the Initial Negotiation Period, together with any extension to the Initial
Negotiation Period, is referred to herein as the “Negotiation
Period”).  

       

      12.2. Third-Party
Agreement.  If the parties to such negotiation fail to reach an
agreement in principle for a New License within the Negotiation Period, CL,
Covey or Link, as applicable, may thereafter negotiate and enter into a final,
binding agreement with respect to the New Work with a third-party (a “Third-Party Agreement”),
provided, however, that CL, Covey or Link, as applicable, shall not (a) during
the Extended Restricted Period, enter into a Third-Party Agreement with a
Competitor or an affiliate of a Competitor or (b) enter into a Third-Party
Agreement on terms equal to or less favorable to CL, Covey or Link, as
applicable, than the final written offer, if any, made by
FranklinCovey.

       

      13. Option to Extend Negotiation
Period.

       

      13.1. Option
Grant.  If FranklinCovey, CL, Covey or Link, as applicable, are
unable to enter into an agreement in principle for a New License for a New Work
during the Initial Negotiation Period, FranklinCovey shall have the option (the
“Option”) in its sole
discretion to extend the Negotiation Period with respect to the applicable New
Work by following the procedures set forth in Sections 13.2 and
13.3.  CL, Covey or Link, as applicable, shall not, during such
extended Negotiation Period, discuss, negotiate with or enter into a binding
agreement with respect to the New Work with any third party.

       

      13.2. Option Exercise; Termination
of Option.  FranklinCovey may exercise the Option during the
Initial Negotiation Period by delivering to CL, Covey or Link, as applicable, a
written notice of exercise, effective upon delivery.  Once exercised,
FranklinCovey may terminate any Option immediately by delivering to CL, Covey or
Link, as applicable, a written notice of termination.  Neither the
exercise of an Option with regard to a particular New Work nor the termination
of any Option shall be deemed a waiver of FranklinCovey’s right to Option the
contents of any additional or other New Work.

       

      13.3. Option
Payments.  As consideration for the Option, FranklinCovey shall
make a payment (the “Option
Payment”) to CL (on behalf of CL, Covey or Link, as applicable) equal to:
(i) $5,000.00 per month, paid in advance, for each month during the first
year following the Initial Negotiation Period that FranklinCovey elects to
extend the Negotiation Period; (ii) $10,000.00 per month, paid in advance,
for each month during the second year following the Initial Negotiation Period
that FranklinCovey elects to extend the Negotiation Period; and
(iii) $15,000.00 per month, paid in advance, for each month during the
third year and each subsequent year that FranklinCovey elects to extend the
Negotiation Period.  Notwithstanding the foregoing, FranklinCovey’s
obligation to the make the Option Payment shall cease when (y) FranklinCovey
terminates the Option pursuant to Section 13.2, or (z) FranklinCovey and CL,
Covey and Link, as applicable, enter into a New License with respect to the New
Work with terms mutually agreeable to FranklinCovey and CL, Covey or Link, as
applicable.

       

      14. Representations and
Warranties.

       

      14.1. CL Representations and
Warranties and Covenants.  CL represents and warrants that
(a) it has (or with respect to Sequels will have) good and valid title to
all of the Licensed

       

      

      
        
          
             

          

          
            12

            
              

            

          

          
             

          

        

      

      

      Materials
and Sequels, if any, licensed herein, free and clear of all liens, encumbrances
and restrictions; (b) the Licensed Materials constitute all of the
intellectual property of CL, Covey and Link relating to the Book and the
Courses, except the Speed of Trust simulation board game co-owned with Tango
Learning; (c) the Licensed Materials and Sequels, if any, licensed under this
License Agreement do not and, to the knowledge of CL, will not infringe upon or
violate any copyright, trademark, right of privacy, right of publicity, trade
secret or any other intellectual property right of any third party; (d) no
agreement it has or will have with any other party will conflict with the terms
of this License Agreement or prevent CL’s performance of any of its obligations
hereunder, (e) its performance hereunder will not violate any other
agreement, whether oral or written, to which it is a party, and (f) it has
complied and will comply with all applicable laws and regulations relating to
the Licensed Materials and Sequels, if any, and its performance
hereunder.  CL makes no warranties of merchantability or fitness for a
particular purpose of the Course or any other warranty other than that
explicitly stated herein.

       

      14.2. Covey and Link
Representations, Warranties.  Each of Covey and Link, severally
and not jointly, represent and warrant that (a) he has transferred to CL all his
rights to the Licensed Materials and will transfer to CL all rights to any
Sequel and, if applicable, any New Work, (b) to his knowledge, the Licensed
Materials do not violate any copyright, trademark, right of privacy, right of
publicity, trade secret or any other intellectual property right of any third
party and (c) he will take all such actions as may be necessary to perfect
ownership of any Licensed Materials, Sequel in CL if requested by
FranklinCovey.

       

      14.3. FranklinCovey
Representations, Warranties and Covenants.  FranklinCovey
agrees, represents and warrants that (a) it will use the Licensed Materials and
Sequels, if any, licensed herein in a manner conforming to the terms and
conditions of this License Agreement, and (b) the FranklinCovey Intellectual
Property appropriate for the creation of FC Derivative Works does not, as of the
Effective Date of this License Agreement, violate any copyright, trademark,
right of privacy, right of publicity, trade secret or any other intellectual
property right of any third party.

       

      14.4. FranklinCovey
Covenant.  FranklinCovey will not, during the term of this
License Agreement, authorize any FranklinCovey employee or contractor to design
or create a work that is primarily intended to allow FranklinCovey to avoid
paying royalties to CL under this License Agreement.  Notwithstanding
the foregoing, FranklinCovey may, without violating this
Section 14.4:  (a) refresh, redesign or relaunch the “Speed of
Trust” Practice product and service offerings through its Speed of Trust
Practice Leaders and employees from time to time; (b) acquire other
companies, businesses, assets, product lines, service offerings, licensed
content or works that contain “trust” or “trust-related” concepts, content,
works, products, services or offerings; (c) offer products and services and
create practice groups that contain “trust” and “trust-related” concepts and
ideas in their respective materials and offerings; or (d) take actions
substantially similar in nature to those actions permitted under clauses (a) –
(c) of this Section 14.4.

       

      15. Confidentiality.

       

      15.1. Definition.  For
purposes of this License Agreement, “Confidential Information” of a party (the
“Disclosing Party”)
means any non-public, commercially sensitive information in

       

      

      
        
          
             

          

          
            13

            
              

            

          

          
             

          

        

      

      

      its
broadest context, including without limitation all programs, courses, manuals,
electronic works, data, samples, computer records, specifications, processes,
strategies, plans, know-how related to the business of such Disclosing
Party.  Confidential Information shall not include any information
known generally to the public (other than as a result of unauthorized disclosure
by the party obtaining such information from the Disclosing Party (the “Receiving Party”)) or in the
Receiving Party’s possession prior to disclosure or independently developed by
the Receiving Party without use of the Confidential Information.

       

      15.2. Obligation.  The
parties acknowledge that the Confidential Information of the other parties
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or
use.  The parties agree that, except for the disclosure and use of
Confidential Information contemplated within the scope of this License
Agreement, they (i) shall at all times keep the Confidential Information
strictly confidential and shall not divulge, furnish, or make accessible the
Confidential Information to any third party (except as set forth below), (ii)
shall not use the Confidential Information for its benefit or the benefit of any
third party, and (iii) shall use the Confidential Information solely and
exclusively for the purpose of carrying out the purposes of this License
Agreement.

       

      15.3. Legal
Proceedings.  In the event the Receiving Party is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, the Receiving Party will
notify the Disclosing Party promptly of the request or requirement so that the
Disclosing Party may seek an appropriate protective order or waive compliance
with the provisions of this Section 15.  If, in the absence of a
protective order or the receipt of a waiver from the Disclosing Party, the
Receiving Party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal, the Receiving Party may disclose the
Confidential Information to the tribunal; provided, however, that the Receiving
Party will use its Best Efforts to obtain, at the request of the Disclosing
Party, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Disclosing Party designates.

       

      15.4. Injunctive
Relief.  The parties acknowledge that the Confidential
Information constitutes a unique and valuable asset of the Disclosing Party, and
that any disclosure or use of the Confidential Information by the Receiving
Party, except as expressly permitted herein, would be wrongful and would cause
irreparable harm to the Disclosing Party.  Accordingly, in the event
of any actual or threatened breach of such provisions, the Disclosing Party
shall (in addition to any other remedies that it may have) be entitled to
temporary and/or permanent injunctive relief to enforce such provisions, and
such relief may be granted without the necessity of proving actual damages or
posting a bond.

       

      16. Indemnification; Limitation
of Liability.

       

      16.1. Indemnification by
CL.  CL, Covey and Link, jointly and severally, will indemnify
and hold FranklinCovey harmless from and against any and all actions, suits,
proceedings (including by third parties), losses, liabilities, damages, costs,
and expenses (including attorneys’ fees) that FranklinCovey may incur or suffer
by reason of any breach of any

       

      

      
        
          
             

          

          
            14

            
              

            

          

          
             

          

        

      

      

      of CL’s,
Covey’s or Link’s respective agreements, warranties or representations under
this License Agreement or any action by a third party against FranklinCovey by
reason of any breach by CL, Covey or Link of any of their respective agreements,
warranties or representations under this License Agreement.

       

      16.2. Indemnification by
FranklinCovey.  FranklinCovey will indemnify and hold CL, Covey
and Link harmless from and against any and all actions, suits, proceedings
(including by third parties), losses, liabilities, damages, costs, and expenses
(including attorneys’ fees) that CL, Covey or Link may incur or suffer by reason
of any breach of any of FranklinCovey’s agreements, warranties or
representations under this License Agreement or any action by a third party
against CL, Covey or Link based upon an actual or alleged use of the Licensed
Materials by FranklinCovey in violation of the terms of this License Agreement
or by reason of any breach by FranklinCovey of any of its respective agreements,
warranties or representations under this License Agreement.

       

      16.3. No Consequential
Damages.  In no event shall either party be liable under any
contract negligence, strict liability or other legal or equitable theory to the
other for any incidental, consequential, special, punitive, exemplary or other
indirect damages, or for lost profits, lost revenues, or loss of business
arising out of the subject matter of this License Agreement, regardless of the
cause of action, even if the party has been advised of the likelihood of
damages.

       

      16.4. Limitations of
Liability.

       

      (a) IF ANY
PARTY IS HELD OR FOUND TO BE LIABLE TO ANY OTHER PARTY FOR ANY MATTER RELATING
TO OR ARISING FROM ANY BREACH OF THIS LICENSE AGREEMENT, WHETHER BASED ON AN
ACTION OR CLAIM IN CONTRACT, NEGLIGENCE, TORT OR OTHERWISE, THE AMOUNT
RECOVERABLE FROM THE BREACHING PARTY WILL NOT EXCEED $200,000 FOR EACH INCIDENT
OR SERIES OF RELATED INCIDENTS GIVING RISE TO SUCH LIABILITY, PROVIDED THAT THIS
SECTION 16.4(a) SHALL NOT APPLY TO ANY CLAIM FOR PAYMENT OF ROYALTIES UNDER
SECTION 8 OR ANY CLAIM ARISING FROM A BREACH OF A REPRESENTATION OR WARRANTY BY
CL, COVEY, OR LINK RELATING TO CL’S TITLE TO, OR ABILITY TO LICENSE TO
FRANKLINCOVEY, THE LICENSED MATERIALS.

       

      (b) IF ANY OF
CL, COVEY OR LINK IS HELD OR FOUND TO BE LIABLE TO ANY OTHER PARTY FOR ANY
MATTER RELATING TO OR ARISING FROM ANY BREACH OF A REPRESENTATION OR WARRANTY BY
ANY OF CL, COVEY OR LINK RELATING TO CL’S TITLE TO, OR ABILITY TO LICENSE TO
FRANKLINCOVEY, THE LICENSED MATERIALS, THE AMOUNT RECOVERABLE FROM THE BREACHING
PARTY WILL NOT EXCEED THE CAP AMOUNT FOR EACH INCIDENT OR SERIES OF RELATED
INCIDENTS GIVING RISE TO SUCH LIABILITY.  AS USED IN THIS PARAGRAPH
16.4(b), “THE CAP AMOUNT” SHALL MEAN THE AGGREGATE OF THE AMOUNTS (1) PAID BY
THE BUYER TO THE SELLER UNDER SECTION 2.3(a) OF THE PURCHASE AGREEMENT, (2) THE
EARNOUT PAID TO THE SELLER UNDER SECTION 2.8 OF THE PURCHASE

       

      

      
        
          
             

          

          
            15

            
              

            

          

          
             

          

        

      

      

      AGREEMENT,
AND (3) THE DIRECT COSTS AND DAMAGES INCURRED BY FRANKLINCOVEY IN CONNECTION
WITH SUCH BREACH OF REPRESENTATION OR WARRANTY BY CL, COVEY OR LINK RELATING TO
CL’S TITLE TO, OR ABILITY TO LICENSE THE LICENSED MATERIALS TO FRANKLIN
COVEY.

       

      17. Term;
Termination.

       

      17.1. Effectiveness;
Term.  This License Agreement shall become effective upon the
Effective Date and shall continue perpetually in full force and effect unless
and until terminated according to the provisions of this Section
17.

       

      17.2. FranklinCovey’s
Breach.

       

      (a) CL shall
have the right to terminate this License Agreement upon the occurrence of a
FranklinCovey Material Breach.

       

      (b) A
“FranklinCovey Material Breach” means exclusively a failure by FranklinCovey to
pay any royalties due and payable pursuant to this License Agreement (and such
failure is not cured within the ninety (90) day period following delivery of
written notice by CL (a “Breach Notice”)); provided,
however, that the following shall not be a FranklinCovey Material
Breach:  FranklinCovey’s failure to (A) pay any portion of a payment
that is the subject of a good faith, bona fide dispute, so long as FranklinCovey
pays any undisputed portion of such payment, or (B) make a payment that in its
entirety is the subject of a good faith, bona fide dispute.  Franklin
Covey shall provide a notice (a “Dispute Notice”) to CL if
FranklinCovey disputes a payment, or any portion of a payment, within thirty
(30) days after receipt of a Breach Notice from CL relating to such
payment.  Such Dispute Notice shall contain a description of the
reasons why such payment is disputed and a certification by the CEO of
FranklinCovey that such dispute is a good faith, bona fide
dispute.  FranklinCovey and CL, through their respective authorized
agents and acting in good faith, will work to resolve the dispute relating to
the payment, or the portion of a payment, to which the Dispute Notice
relates.  If FranklinCovey’s and CL’s authorized agents are unable to
resolve such dispute within thirty (30) days after CL receives a Dispute Notice,
the CEO of CL and the CEO of FranklinCovey will meet to attempt to reach
agreement on any disputed matters.  If they are unable to agree on
such matters within thirty (30) days, either party may submit the matter to
arbitration as provided in Section 9.5(b).

       

      17.3. CL’s
Breach.  FranklinCovey shall have the right to terminate this
License Agreement in the event of a CL Material Breach that is not cured within
ninety (90)  days after FranklinCovey provides written notice to CL of
the alleged breach.  A “CL Material Breach” means a breach by CL,
Covey or Link of any of their respective representations, warranties, covenants
or agreements in this License Agreement, a breach of Section 4 or Section 7 of
the Practice Leader Consulting Agreements, or a breach of Section 9 of the
Speaker Agreements.  

       

      17.4. Insolvency.  If
either of CL or FranklinCovey becomes insolvent, files for bankruptcy, ceases to
do business or is generally unable to meet its financial obligations, the other
party may terminate this License Agreement immediately by providing written
notice to the other party.

       

      

      
        
          
             

          

          
            16

            
              

            

          

          
             

          

        

      

       

      17.5. Effect of
Termination.

       

      (a) The
expiration or termination of this License Agreement shall not discharge or
relieve either party from any obligation which accrued before expiration or
termination and shall not relieve any breaching party from liability for actual
damages resulting from such breach.

       

      (b) Within
sixty (60) days of the termination of this License Agreement, FranklinCovey
shall deliver to CL any unpaid Payment following the applicable procedures of
Section 9, less any Termination Setoffs.  If within thirty (30)
days after receipt of the final Payment and the accompanying report, CL, Covey
and Link do not object in writing to the calculations and amounts, all Royalties
under this License Agreement will be deemed satisfied and fully
paid.

       

      (c) Within
sixty (60) days of the termination of this License Agreement, FranklinCovey
shall return to CL all merchantable Course materials, and Workbooks and shall
destroy all other Licensed Materials except for Books and
Sequels.  FranklinCovey shall have the right to set off against the
final Payment its fully allocated costs of acquiring the Workbooks, and
merchantable Course Materials (“Termination Setoffs”),
provided that FranklinCovey shall describe its calculations in reasonable
detail.

       

      (d) Within
thirty (30) days after the termination of this License Agreement, FranklinCovey
shall deliver to CL a written inventory of its Books and Sequels (“Termination
Inventory”).  CL shall have the option, exercisable within ten
(10) days after receipt of the written inventory to purchase all or any portion
of the items in the inventory for a purchase price equal to FranklinCovey’s
fully allocated cost, which shall be set forth on the written
inventory.  FranklinCovey shall deliver to CL the items of Termination
Inventory to be purchased, within five (5) days after receipt of notice from CL
exercising its option to purchase.  If CL purchases any Termination
Inventory, no payment shall be made to FranklinCovey and the purchase price for
the Termination Inventory shall be included in Termination Setoffs.

       

      (e) During
the six (6) month period following the expiration or exercise of CL’s option to
purchase Termination Inventory, FranklinCovey shall have the right to distribute
and sell any remaining Termination Inventory in a commercially reasonable
manner.

       

               (f) Upon termination
of this Agreement, except for FC Derivative Works, each party may continue to
use its own intellectual property, including the portion each party contributed
to all derivative works created pursuant to this Agreement.

       

      18. Remedies. The parties
agree that money damages may not be an adequate remedy for any breach of the
provisions of this License Agreement and that any party may, in its discretion,
apply to any court of law or equity of competent jurisdiction for specific
performance and injunctive relief in order to enforce or prevent any violations
this License Agreement, and any party against whom such proceeding is brought
hereby waives the claim or defense that such party has an adequate remedy at law
and agrees not to raise the defense that the other party has

       

      

      
        
          
             

          

          
            17

            
              

            

          

          
             

          

        

      

      

      an
adequate remedy at law.  The rights and remedies of the parties to
this License Agreement are cumulative and not alternative.

       

      19. Miscellaneous.

       

      19.1. Notices.  All
notices under this License Agreement are completed upon mailing, if mailed by
registered or certified mail, postage prepaid or by confirmed receipt facsimile
transmission, with proof of receipt.  The addresses of the parties,
unless subsequently changed by written notice to the other, are as given
hereunder. 

       

      

       

      
        
          
            	
                    If
      to FranklinCovey:

                  	
                    Franklin
      Covey Co.

                    2200
      West Parkway Blvd.

                    Salt
      Lake City, Utah 84119

                    Attn:  Robert
      A. Whitman

                    Fax:  (801)
      817-8069

                     

                  
	
                    With
      a copy to (which shall not constitute notice):

                     

                  
	 
      	
                    Nolan
      S. Taylor, Esq.

                    Dorsey
      & Whitney LLP

                    136
      South Main Street, Suite 1000

                    Salt
      Lake City, Utah 84101

                    Fax:  (801)
      933-7373

                     

                  
	
                    If
      to CL:

                  	
                    Covey/Link,
      LLC

                    175
      West Canyon Crest Road

                    Alpine,
      Utah 84004

                    Attn:  Greg
      Link

                    Fax:  (801)
      880-7744

                     

                  
	
                    If
      to Stephen M. R. Covey:

                  	
                    175
      West Canyon Crest Road

                    Alpine,
      Utah 84004

                    Fax:  (801)
      880-7744

                     

                  
	
                    If
      to Greg Link:

                  	
                    175
      West Canyon Crest Road

                    Alpine,
      Utah 84004

                    Fax:  (801)
      880-7744

                     

                  
	
                    With
      a copy to (which shall not constitute notice):

                     

                  
	 
      	
                    Richard
      L. Hill

                    Hill,
      Johnson & Schmutz, L.C.

                    RiverView
      Plaza, Suite 300

                    4844
      North 300 West

                    Provo,
      Utah 84604

                    Fax:  (801)
      375-3865

                  

          

        

      

      

       

      

      
        
          
             

          

          
            18

            
              

            

          

          
             

          

        

      

       

      19.2. Survival.  The
provisions of Sections 3.5, 4.1, 4.2, 7.2, 14, 15, 16, 17, 18, and 19, and
all defined terms, shall survive termination of this License
Agreement.

       

      19.3. Independent
Entities.  The parties are independent contractors and not
partners, joint venturers, or otherwise affiliated.  FranklinCovey and
CL are independent entities engaged in independent businesses.  Each
shall bear all the costs and expenses incurred in the performance of their
respective duties under this License Agreement.  Neither FranklinCovey
nor CL, nor any agent or employee of either, is an agent or employee of the
other, nor shall anything contained herein be deemed to create a partnership or
joint venture between the parties.  Neither party has the right to
control the other, except as expressly provided in this License Agreement and
any Consulting Agreement.  Neither party to this License Agreement has
the right or authority to make any promise or representation or to assume or
incur any liability or other obligation against or on the behalf of the
other.

       

      19.4. Complete Agreement,
Amendment.  This License Agreement expressly amends and
restates the Original Agreement.  This License Agreement and the
Contemporaneous Agreements are the complete and exclusive statement of the
agreement by and among CL, Covey, Link and FranklinCovey and together they
supersede all proposals or prior or contemporaneous agreements and
understandings, whether oral or written, and all other communications relating
to the specific subject matters of this License Agreement and the
Contemporaneous Agreements.  This License Agreement may only be
amended, or any provision herein waived, by written instrument executed by each
party.  No waiver of any provision hereof shall constitute a waiver of
any other provision, nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.  The invalidity or unenforceability of
any provision of this License Agreement shall not affect the validity or
enforceability of any other provision of this License Agreement.

       

      19.5. Captions.  The
captions of the various sections and subsections of this License Agreement are
for the convenience of reference only and are not binding provisions of this
License Agreement, nor shall they have any limiting effect or interpretive
weight hereunder.

       

      19.6. Assignment.  FranklinCovey
may assign this License to (a) any entity it controls or which controls or is
under common control with FranklinCovey now or in the future, or (b) any entity
that acquires all of or substantially all of its capital stock or its assets,
whether through purchase, merger, consolidation or otherwise.  Except
as allowed by the foregoing sentence, this License is personal and specific to
FranklinCovey and shall not be transferred or assigned by FranklinCovey except
upon the express prior written consent of CL.  CL shall not transfer
or assign this License except upon the express prior written consent of
FranklinCovey.  Any such attempt to transfer or assign this License in
violation of this Section 19.6 shall be null and void.  This License
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

       

      19.7. Applicable Law and
Forum.  This License Agreement shall be governed by and
construed in accordance with the applicable federal laws of the United States
and with Utah law, without regard to Utah’s rules regarding conflicts of
law.  Each of the parties consents to the jurisdiction of the courts
located in the State of Utah with respect to all matters relating to this
License Agreement.

       

      

      
        
          
             

          

          
            19

            
              

            

          

          
             

          

        

      

       

      19.8. Prevailing Party
Recovery.  Except as provided in Section 9.5(b), if a party
brings an action in any court of law to enforce any of the terms of this License
Agreement, the prevailing party shall be entitled to recover its attorney’s
fees, costs and expenses incurred in connection with such action in addition to
any other or further relief awarded by the court.

       

      19.9. Signatures,
Counterparts.  This License Agreement may be executed in one or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same instrument.  A facsimile signature will be considered an original
signature.

       

       

       

      [signature page
follows]

       

      

       

      

       

      

      
        
          
             

          

          
            20

            
              

            

          

          
             

          

        

      

      

      IN
WITNESS WHEREOF, the parties have signed and entered into the Agreement as of
the Effective Date.

       

      

       

      
        
          	
                  FRANKLIN
      COVEY CO.

                	 
      	
                  COVEY/LINK,
      LLC

                   

                
	
                  /s/
      Robert A. Whitman

                	 
      	
                  /s/
      Stephen M.R. Covey

                
	
                  Robert
      A. Whitman

                  President

                	 
      	
                  Stephen
      M. R. Covey

                  Its
      Manager

                
	 
      	 
      	 
      
	
                  STEPHEN
      M. R. COVEY

                	 
      	
                  GREG
      LINK

                   

                
	
                  /s/
      Stephen M.R. Covey

                	 
      	
                  /s/
      Greg Link

                
	
                  Stephen
      M.R. Covey

                	 
      	
                  Greg
      Link

                

        

         

         

         

         

      

      

      

      

      
        
          
            
              [Signature Page to Amended and
Restated License Agreement]

            

             

          

          
             

            
              

            

          

          
             

          

        

      

    

     

    EXHIBIT
A

     

    

     

    DEFINED
TERMS

    

     

    “2006
Courses” means the Courses based on the Book and listed on Exhibit
B.

     

    “2006
Licensed Materials” means the Book and all rights thereto, including its Audio
Rights and the right to create Workbooks, the 2006 Courses, the 2006 Workbooks
and any derivative work based on the foregoing, including, without limitation,
the 2006 Courses as constituted on the Effective Date.

     

    “2006
Workbooks” means any Workbook based on the Book and in existence as of the
Effective Date.

     

    “Audio
Rights” means all rights to create, use and perform an audio version of a book
in any media, including without limitation through a website.

     

    “Best
Efforts” has the meaning set forth in Section 10.1.

     

    “CL” has
the meaning set forth in the first paragraph of this License
Agreement.

     

    “CL
Copyrights” means the copyrighted materials relating to the Licensed Materials
and listed on Exhibit
D.

     

    “CL
Derivative Work” means derivative works that are based solely on the Licensed
Materials, whether created by CL, Covey, Link or FranklinCovey.

     

    “CL
Intellectual Property” has the meaning set forth in Section 4.1.

     

    “CL
Material Breach” has the meaning set forth in Section 17.3.

     

    “CL
Trademarks” means registered and unregistered trademarks relating to the
Licensed Materials and listed on Exhibit C and any New
Trademark.

     

    “CL
Websites” means the websites registered to CL and located at the domain names
www.speedoftrust.com
and www.coveylink.com
along with all related web pages under the control of CL.

     

    “CL
Website Content” means the content, records and data available on the CL
Websites.

     

    “CL
Worldwide” has the meaning set forth in the Recitals.

     

    “Competitor”
means those entities listed on Exhibit E and any
successor to such entities.

     

    “Contemporaneous
Agreements” means the Purchase Agreement, the Speaking Agreements, and the
Practice Leader Consulting Agreements.

     

    

    
      
        
          
            A-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Courses”
means all Workbooks, CL Website Content and other assessments, profiles, slides,
posters, audios, videos and other materials created by Covey, Link or CL and
based on the Book or a Sequel.

     

    “Covey”
has the meaning in set forth in the first paragraph.

     

    “Derivatives
Gross Revenue” has the meaning set forth in Section 8.1.

     

    “Disclosing
Party” has the meaning set forth in Section 15.1.

     

    “Dispute
Notice” has the meaning set forth in Section 17.2(b).

     

    “Effective
Date” has the meaning set forth in the first paragraph of this License
Agreement.

     

    “Extended
Restricted Period” has the meaning set forth in the Practice Leader Consulting
Agreements.

     

    “FC
Client Sales” has the meaning set forth in the Recitals.

     

    “FC
Derivative Work” means derivative works based in part on the Licensed Materials
and in part on FranklinCovey Intellectual Property, whether created by CL,
Covey, Link or FranklinCovey directly or through third parties.

     

    “FC
Products, LLC” has the meaning set forth in Section 3.6.

     

    “FranklinCovey”
has the meaning set forth in the first paragraph of this License
Agreement.

     

    “FranklinCovey
Entities” means FranklinCovey and its wholly owned subsidiaries.

     

    “FranklinCovey
Gross Revenue” has the meaning set forth in Section 8.1.

     

    “FranklinCovey
Intellectual Property” has the meaning set forth in Section 4.2.

     

    “FranklinCovey
Material Breach” has the meaning set forth in Section 17.2(b).

     

    “International
Licensee” means all independent entities outside the United States, excluding
direct offices, which have a current right to offer training services under
licenses from FranklinCovey or its affiliates, as set forth on Exhibit
F.

     

    “International
Licensee Gross Revenues” has the meaning set forth in Section 8.1.

     

    “Initial
Negotiation Period” has the meaning set forth in Section 12.1.

     

    “Licensed
Materials” means the 2006 Licensed Materials, the CL Trademarks, the CL
Copyrights, the CL Website Content, any Sequel and any derivative works based on
the Sequel, including for purposes of clarity, Courses and Workbooks, CL
Derivative Works and FC Derivative Works.

     

    “Link”
has the meaning set forth in the first paragraph.

     

    

    
      
        
          
            A-2

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Negotiation
Period” has the meaning set forth in Section 12.1.

     

    “New
Book” means any book written by Covey or Link after the Effective Date that is
not a Sequel.

     

    “New
Course” means any new course, training program, product, service, seminar,
webinar or similar offering that is not a derivative work of the Courses, the
Book or any Sequel.

     

    “New
License” has the meaning set forth in Section 12.1.

     

    “New
License Notice” has the meaning set forth in Section 12.1.

     

    “New
Trademark” has the meaning set forth in Section 5.4.

     

    “New
Work” means any New Book and/or any New Course.

     

     “Notice
of Intent” has the meaning set forth in Section 5.4.

     

    “Option”
has the meaning set forth in Section 13.1.

     

    “Option
Payment” has the meaning set forth in Section 13.3.

     

    “Original
Agreement” has the meaning set forth in Section 2.1.

     

    “Payments”
has the meaning set forth in Section 9.1.

     

    “Practice”
has the meaning set forth in the Practice Leader Consulting
Agreements.

     

    “Practice
Leader Consulting Agreements” has the meaning set forth in the
Recitals.

     

    “Proposal”
has the meaning set forth in Section 4.3.

     

    “Proposed
FC Derivative Work” has the meaning set forth in Section 4.3.

     

    “Publishing
Agreement” has the meaning set forth in Section 3.1.

     

    “Purchase
Agreement” has the meaning set forth in the Recitals.

     

    “Receiving
Party” has the meaning set forth in Section 15.1.

     

    “Response
to Notice” has the meaning set forth in Section 5.4.

     

    “Royalty”
has the meaning set forth in Section 8.1.

     

    “Rules”
has the meaning set forth in Section 9.5(b)(i).

     

    “Sequel”
means an e-book or a book in printed form that substantially incorporates the
concepts of the Book and that uses a derivation of the words “Speed of Trust” in
its title or subtitle.

     

    

    
      
        
          
            A-3

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Speaking
Agreements” has the meaning set forth in the Recitals.

     

    “Termination
Inventory” has the meaning set forth in Section 17.5.

     

    “Termination
Setoffs” has the meaning set forth in Section 17.5.

     

    “Third
Party Agreement” has the meaning set forth in Section 12.2.

     

    “Website
Protocols” has the meaning set forth in Section 7.1 and are set forth on Exhibit G, as amended
from time to time by mutual agreement of the parties.

     

    “Workbook”
means any bound or unbound set of materials that is organized around the Book or
a Sequel and is intended as a teaching tool in a Course or other
training-oriented setting.

     

    

     

    

     

    

    
      
        
          
            A-4

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    EXHIBIT
B

     

    

     

    2006
COURSES

    

    

    Course
titles:

    

    “The
Speed of Trust”

    “Leading
at the Speed of Trust”

    “Leading
at the Speed of Trust – Individual Contributor Kit”

    “Working
at the Speed of Trust”

    “Selling
at The Speed of Trust”

    “Inspiring
Trust”

    

    

    

    

    
      
        
          
            B-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

     

     

    EXHIBIT
C

     

    

     

    CL
TRADEMARKS

    

    CL
Trademarks are all trademarks covered by US and foreign trademark laws
associated with the 2006 Courses, including the following federal trademark
applications and registrations and foreign trademark registrations:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          US
      Trademark Registrations:

                                           

                                        
	
                                          2,984,853

                                        	
                                          class
      41

                                        	
                                          Reg.
      Aug 16, 2005

                                        	
                                          THE
      SPEED OF TRUST

                                        
	
                                          3,087,015

                                        	
                                          class
      16

                                        	
                                          Reg.
      May 2, 2006

                                        	
                                          THE
      SPEED OF TRUST

                                        
	
                                          3,209,914

                                        	
                                          class
      41

                                        	
                                          Reg.
      Feb 20, 2007

                                        	
                                          Ripple
      logo

                                        
	 
      	 
      	 
      	 
      
	
                                          US
      Trademark Applications:

                                           

                                        
	
                                          77/447,459

                                        	
                                          class
      9

                                        	
                                          Filed
      Apr. 14, 2008

                                        	
                                          THE
      SPEED OF TRUST

                                        
	
                                          77/567,575

                                        	
                                          class
      35

                                        	
                                          Filed
      Sep. 11, 2008

                                        	
                                          THE
      SPEED OF TRUST

                                        
	 
      	 
      	 
      	 
      
	
                                          Foreign
      Trademark Registrations:

                                           

                                        
	
                                          Japan
      – 4,986,064

                                        	
                                          class
      16

                                        	
                                          Reg.
      Sep 8, 2006

                                        	
                                          THE
      SPEED OF TRUST

                                        
	
                                          Europe
      – 004650181

                                        	
                                          classes
      16, 35, 41

                                        	
                                          Reg.
      Sep 20, 2005

                                        	
                                          THE
      SPEED OF
TRUST

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    

    

    

    

    

    

    
      
        
          
            C-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

     

     

    EXHIBIT
D

     

    CL
COPYRIGHTS

     

    

     

    CL
Copyrights are all works covered by the US and foreign copyright laws associated
with the 2006 Courses, including course materials, marketing materials and sales
materials.

     

    

     

    

    

    
      
        
          
            D-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

     

     

    EXHIBIT
E

     

    

     

    COMPETITORS

    

     

    Vital
Smarts

     

    The Ken
Blanchard Companies

     

    The
Center for Creative Leadership

     

    True
North

     

    Gallup

     

    Inside-Out

     

    Character
Counts

     

    Tom
Peters

     

    Achieve
Global

     

    DDI

     

    Center
for Creative Link

     

    AMA

     

    Colleges,
Universities executive training programs

     

    

     

    

    
      
        
          
            E-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
F

     

    

     

    INTERNATIONAL
LICENSEES

    

     

    LFCA,
SA

    DOOR
Nederland B.V.

    Martha
Kirkland

    Chromart,
S.R.L.

    Franklin
Covey Brazil, Ltda.

    FCPL
Ltd.

    Leadership
Technologies Latin America, Inc.

    CLC
Columbia

    Covey
Leadership Center

    Egyptian
Leadership Training Center

    CEGOS
(France)

    Leadership
Institut GmbH

    DMS
Hellas Group S.A.

    Leadership
Knowledge Consulting Private Limited

    P.T.
Dunamis Intermaster

    Momentum
Training Ltd.

    CEGOS
(Italy)

    Korea
Leadership Center

    Starmanship
& Associate

    360
Acumen Group F2, LLC

    Leadership
Resources (Malaysia) Sdn. Bhd.

    Leadership
Technologies Latin America, Inc.

    Fola
Adeola

    Nordic
Approach Finance APS

    Leadership
Technologies, Inc.

    Center
for Leadership and Change, Inc.

    CEGOS
(Portugal)

    Advantage
Management International Puerto Rico, Inc.

    Retiro
Holdings Limited

    Leadership
Skills Development Company d/b/a Qiyaada Consultants

    Covey
Leadership Center (S) Pte Ltd.

    FCSA
Organisation Services (Pty) Ltd.

    CEGOS
(Spain)

    PacRim
Leadership Center Co., Ltd.

    BilgiLink
Ltd.

    Covey
Leadership Centre Limited

    Leadership
Resources (Malaysia) sdn. Bhd.

    

    

    
      
        
          
            F-1

          

           

        

        
           

          
            

          

        

        
           

        

      

    

     

     

    EXHIBIT
G

     

    

     

    WEBSITE
PROTOCOLS

    

     

    To be
agreed upon by the parties.

     

    

    
      
        
          
            G-1Exhibit 4.1

 

Execution Copy

 

 

 

SOUTHWESTERN ENERGY COMPANY

 

and

 

COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

 

Second Amended and Restated Rights Agreement

Dated as of April 9, 2009

 

	
             
 	
             
 	
             
 

 

 

TABLE OF CONTENTS

 

Page

 

 

	
            Section 1.
 	
            Certain Definitions
 	
            1
 

	
            Section 2.
 	
            Appointment of Rights Agent
 	
            7
 

	
            Section 3.
 	
            Issuance of Rights Certificates
 	
            7
 

	
            Section 4.
 	
            Form of Rights Certificates
 	
            9
 

	
            Section 5.
 	
            Countersignature and Registration
 	
            10
 

	
            Section 6.
 	
            Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates            10
 	 

	
            Section 7.
 	
            Exercise of Rights; Purchase Price; Expiration Date of Rights
 	
            11
 

	
            Section 8.
 	
            Cancellation and Destruction of Rights Certificates
 	
            13
 

	
            Section 9.
 	
            Reservation and Availability of Capital Stock
 	
            14
 

	
            Section 10.
 	
            Preferred Stock Record Date
 	
            15
 

	
            Section 11.
 	
            Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights                                          
                                          
                                          
                                    15
 

	
            Section 12.
 	
            Certificate of Adjusted Purchase Price or Number of Shares
 	
            23
 

	
            Section 13.
 	
            Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power                                          
                                          
                                          
                 23
 

	
            Section 14.
 	
            Fractional Rights and Fractional Shares
 	
            26
 

	
            Section 15.
 	
            Rights of Action
 	
            27
 

	
            Section 16.
 	
            Agreement of Rights Holders
 	
            27
 

	
            Section 17.
 	
            Rights Certificate Holder Not Deemed a Stockholder
 	
            28
 

	
            Section 18.
 	
            Concerning the Rights Agent
 	
            28
 

	
            Section 19.
 	
            Merger or Consolidation or Change of Name of Rights Agent
 	
            29
 

	
            Section 20.
 	
            Duties of Rights Agent
 	
            30
 

	
            Section 21.
 	
            Change of Rights Agent
 	
            32
 

	
            Section 22.
 	
            Issuance of New Rights Certificates
 	
            33
 

	
            Section 23.
 	
            Redemption and Termination
 	
            33
 

	
            Section 24.
 	
            Exchange
 	
            34
 

	
            Section 25.
 	
            Notice of Certain Events
 	
            35
 

	
            Section 26.
 	
            Notices
 	
            36
 

	
            Section 27.
 	
            Supplements and Amendments
 	
            37
 

	
            Section 28.
 	
            Successors
 	
            37
 

 

	
             
 	
            i
 	
             
 

 

 

 

TABLE OF CONTENTS

(continued)

Page

 

 

	
            Section 29.
 	
            Determinations and Actions by the Board of Directors, etc.
 	
            37
 

	
            Section 30.
 	
            Benefits of this Agreement
 	
            37
 

	
            Section 31.
 	
            Severability
 	
            38
 

	
            Section 32.
 	
            Governing Law
 	
            38
 

	
            Section 33.
 	
            Counterparts
 	
            38
 

	
            Section 34.
 	
            Interpretation
 	
            38
 

 

 

	
             
 	
            ii
 	
             
 

 

 

 

SECOND AMENDED AND RESTATED RIGHTS AGREEMENT

This SECOND AMENDED AND RESTATED RIGHTS AGREEMENT (the “Agreement”), dated as of April 9, 2009 (the “Rights Amendment Date”), between Southwestern Energy Company, a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”), amends, restates, supersedes and replaces the Amended and Restated Rights Agreement dated as of April 12, 1999, as amended March 15, 2002 and June 30, 2006 (the “Amended and Restated Rights Agreement”).

W I T N E S E T H

WHEREAS, on May 5, 1989, the Board of Directors of the Company (the “Board”) authorized and declared a dividend distribution of one right for each share of common stock, par value $0.01 per share, of the Company (the “Common Stock”) outstanding at the Close of Business on May 5, 1989 (the “Record Date”) upon the terms and subject to the conditions set forth in the Rights Agreement dated May 5, 1989 (the “1989 Rights Agreement”);

WHEREAS, in April 1999 the Board authorized and approved the Amended and Restated Rights Agreement as an amendment and restatement in its entirety of the 1989 Rights Agreement;

WHEREAS, the Board has authorized and approved the amendment and restatement in its entirety of the Amended and Restated Rights Agreement to make changes that they have determined are necessary or desirable and do not adversely affect the interests of the holders of the Rights and has authorized and approved that each right initially representing the right to purchase one share of Common Stock shall be amended to instead represent the right to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock of the Company (the “Rights”), upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, in compliance with the terms of Section 27 of the Amended and Restated Rights Agreement, the Company has (i) delivered to the Rights Agent a certificate from an appropriate officer of the Company which states that this Agreement has been approved by the Board and is in compliance with the terms of Section 27 of the Amended and Restated Rights Agreement and (ii) instructed the Rights Agent to execute this Agreement;

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

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

(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 15% or more of the Common Stock then outstanding or any Person who is declared to be an Adverse Person (as hereinafter defined), but shall not include:

(i)       the Company;

 

	
             
 	
             
 	
             
 

 

 

(ii)      any Subsidiary of the Company;

(iii)      any employee benefit plan of the Company, or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan; or

 (iv)      any Person who becomes the Beneficial Owner of 15% or more of the Common Stock then outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of 15% or more of the then outstanding Common Stock, acquires beneficial ownership of additional shares of Common Stock representing 1% or more of the Common Stock then outstanding; 

provided, however, that if the Board determines in good faith that a Person who would otherwise be an “Acquiring Person” as defined pursuant to the foregoing provisions of this subsection (a) has become such inadvertently, and such Person promptly (and in any event within five Business Days after being so requested by the Company) divests or enters into an irrevocable commitment satisfactory to the Board promptly (and in any event within five Business Days or such shorter period as shall be determined by the Board) to divest, and thereafter divests as required by such commitment, a sufficient number of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this subsection (a), 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)       “Adverse Person” shall mean any Person declared to be an Adverse Person by the Board upon a determination that such Person, alone or together with its Affiliates and Associates, has, at any time after the Rights Amendment Date, become the Beneficial Owner of a number of shares of Common Stock that the Board determines to be substantial (which amount shall in no event be less than 10% of the shares of Common Stock then outstanding) and a determination by a majority of the Board after reasonable inquiry and an investigation, including consultation with such persons as the Board shall deem appropriate, that (i) such Beneficial Ownership by such Person is intended to cause the Company to repurchase the shares of Common Stock beneficially owned by such Person or to cause pressure on the
  Company to take action or enter into a transaction or series of transactions intended to provide such Person with short-term financial gain under circumstances where the Board determines that the best long-term interest of the Company and its shareholders would not be served by taking such action or entering into such transaction or series of transactions at that time or (ii) such Beneficial Ownership is causing or reasonably likely to cause a material adverse impact on the business or prospects of the Company.  The failure by the Board to declare a Person to be an Adverse Person following such Person becoming the Beneficial Owner of 10% or more of the outstanding shares of Common Stock shall not imply that such Person is not an Adverse Person or limit the Board’s right at any time in the future to declare such Person to be an Adverse Person.

 

	
             
 	
            2
 	
             
 

 

 

 

(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 Exchange Act.

(e)       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 or upon the satisfaction of one or more conditions (whether or not within the control of such Person)) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise, and including any securities of the Company represented by “when-issued” trading thereof; provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” (A)
securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event (as hereinafter defined), or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date (as hereinafter defined) or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights;

(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 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 clause (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

(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 

 

	
             
 	
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the proviso to clause (ii) of this subsection (e)) or disposing of any voting securities of the Company; 

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

(f)        “Board” shall have the meaning set forth in the preamble of this Agreement.

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

(h)       “Capital Stock” shall mean, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting and/or nonvoting) of the Company and any rights (other than debt securities convertible into capital stock), warrants or options to acquire such capital stock, whether now outstanding or issued after the date of this Agreement.

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

(j)        “Common Stock” shall mean the common stock, par value $0.01 per share, of the Company at the Rights Amendment Date or any other stock resulting from successive changes or reclassifications of the common stock, except that “Common Stock” when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person.

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

(l)        “Company” shall have the meaning set forth in the preamble of this Agreement.

(m)      “Current Market Price” shall have the meaning determined in accordance with Section 11(d)(i) hereof.

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

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

 

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

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

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

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

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

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

(v)       “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company, having the rights, powers and preferences set forth in the form of Certificate of Designation, Preferences and Rights attached hereto as Exhibit A and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of preferred stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating Preferred Stock.

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

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

(y)       “Record Date” shall have the meaning set forth in the preamble of this Agreement.

(z)       “Rights” shall have the meaning set forth in the preamble of this Agreement.

(aa)     “Rights Agent” shall have the meaning set forth in the preamble of this Agreement.

(bb)     “Rights Amendment Date” shall have the meaning set forth in the preamble of this Agreement.

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

 

	
             
 	
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(dd)     “Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii) hereof.

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

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

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

(hh)     “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall include a report filed or amended pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.

(ii)       “Subsidiary” shall mean, with reference to any Person, any Person of which an amount of voting securities sufficient to elect at least a majority of the directors of such Person is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person.

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

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

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

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

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

Section 3.       Issuance of Rights Certificates.

 (a)       Until the earlier of (i) the Close of Business on the 10th Business Day after the Stock Acquisition Date and (ii) the Close of Business on the 10th Business Day (or such later date as the Board shall determine) after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity 

 

	
             
 	
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organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if, upon consummation thereof, such Person would become an Acquiring Person (the earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of subsection (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights), and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company).  As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested and provided with all necessary information, send) by first-class, insured, postage-prepaid mail, to each record holder of the Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company or the transfer agent or registrar for the shares of Common Stock, 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, and the Rights will be transferable separately from the transfer of Common Shares.  The Company shall promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if such notification is given orally, the Company shall confirm same in writing on or prior to the Business Day next following.  Until such notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not occurred.

(b)       The Company will make available, as promptly as practicable following the Rights Amendment Date, a copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary of Rights”) to any holder of Rights who may so request from time to time prior to the Expiration Date.  With respect to certificates for the Common Stock outstanding as of the Record Date, or issued subsequent to the Record Date, unless and until the Distribution Date shall occur, the Rights will be evidenced by such certificates for the Common Stock and the registered holders of the Common Stock shall also be the registered holders of the associated Rights.  Until the earlier of the Distribution Date and the Expiration Date, 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.

(c)       Rights shall be issued in respect of all shares of Common Stock which are issued (whether originally issued or from the Company’s treasury or transferred to third parties by wholly owned Subsidiaries of the Company) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date.  Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear a legend in 

 

	
             
 	
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substantially the following form if such certificates are issued after the Rights Amendment Date but prior to the earlier of the Distribution Date and the Expiration Date:

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Second Amended and Restated Rights Agreement between Southwestern Energy Company (the “Company”) and Computershare Trust Company, N.A., as Rights Agent, dated as of April 9, 2009, as it may be supplemented or amended from time to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the office of the Company designated for such purpose.  Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate.  The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge, promptly after receipt of a
written request therefor.  Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are 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 and (ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone and registered holders of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates.

Section 4.      Form of Rights Certificates.

 (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 (but which shall not, in any case, affect the rights, duties or responsibilities of the Rights Agent).  Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of one one-thousandths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-thousandth of a share, the “Purchase Price”), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.

(b)       Any Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring 

 

	
             
 	
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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 agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer that the Board has determined is part of a plan, arrangement or understanding that has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6, Section 11 or Section 22 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible, and only if the Company has provided specific written instructions to the Rights Agent) a legend in substantially the following form:

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

Section 5.      Countersignature and Registration.

 (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, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature.  The Rights Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature and shall not be 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 Rights Agreement any such person was not such an officer.

(b)       Following the Distribution Date, upon receipt by the Rights Agent of notice to that effect and all other relevant information referred to in Section 3(a), the Rights Agent will keep, or cause to be kept, at its office designated for such purpose, 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 

 

	
             
 	
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evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates.

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

(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 (other than Rights Certificates representing Rights that may have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitles such holder (or former holder in the case of a transfer) to purchase.  Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose.  The Right Certificates are transferable only on the registry books of the Rights Agent.  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, shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced thereby and the Affiliates and Associates of such Beneficial Owner (or former Beneficial Owner) as the Company or the
Rights Agent shall reasonably request and shall have paid a sum sufficient to cover any tax or charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.  Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested, registered in such name or names as may be designated by the surrendering registered holder.  The Rights Agent shall promptly forward any such sum collected by it to the Company or to such Persons as the Company shall specify by written notice.  The Rights Agent shall have no duty or obligation under any Section of this Agreement which requires the payment of taxes or charges unless and until it is satisfied that all such taxes and/or charges have been paid.

(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 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.

 

	
             
 	
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(a)       Subject to Section 7(e) hereof, at any time after the Distribution Date the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof properly completed and duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one one-thousandths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, and an
amount equal to any tax or charge required to be paid under Section 9(e), at or prior to the earlier of (i) 5:00 P.M., New York City time, on April 8, 2019, or such earlier or later date as may be established by the Board prior to the expiration of the Rights (such date, as it may be extended by the Board, the “Final Expiration Date”), and (ii) the time at which the Rights are redeemed or exchanged as provided in Section 23 and Section 24 hereof (the earlier of (i) and (ii) being herein referred to as the “Expiration Date”).  Except for those provisions herein which expressly survive the termination of this Agreement, this Agreement shall terminate upon the earlier of the Expiration Date and such time as all outstanding Rights have been exercised hereunder (other than Rights which have become null and void pursuant to the provisions of Section 7(e) hereof).

(b)       The Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right initially shall be $150.00, and shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) hereof and shall be payable in lawful money of the United States of America in accordance with subsection (c) below.

(c)       Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate properly completed  and duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-thousandth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased as set forth below and an amount equal to any applicable tax or charge required to be paid under Section 9(e), the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes each such transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-thousandths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs each such depositary agent to comply with such request, (ii) when necessary to comply with this Rights Agreement, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) 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) when necessary 

 

	
             
 	
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to comply with this Rights Agreement, after receipt thereof, deliver such cash 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) and any taxes or charges required to be paid under Section 9(e) hereof, shall be made in cash or by certified check, cashier’s check or bank draft payable to the order of the Company.  In the event that the Company is obligated to issue other securities (including Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with this Agreement.  The Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be issued.

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

(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 any of the following Persons shall be 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: (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 agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board has determined is part of a plan, arrangement or understanding that has as a primary purpose or effect the avoidance of this Section 7(e).  The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates or transferees hereunder.

(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 of Rights or other securities upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) properly completed and duly executed 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) thereof and of the Rights evidenced thereby and of the Affiliates and 

 

	
             
 	
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Associates of such Beneficial Owner (or former Beneficial Owner) as the Company or the Rights Agent shall reasonably request.

Section 8.        Cancellation and Destruction of Rights Certificates.

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

Section 9.        Reservation and Availability of Capital Stock.

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

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

(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, a registration statement under the Act, with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the 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 90 days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the 

 

	
             
 	
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Rights in order to prepare and file such registration statement and permit it to become effective.  Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension has been rescinded.  The Company shall notify the Rights Agent whenever it makes a public announcement pursuant to this Section 9(c) and give the Rights Agent a copy of such announcement.  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.

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

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

Section 10.      Preferred Stock Record Date.  Each Person in whose name any certificate for a number of one one-thousandths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable taxes or charges) was duly made; provided, however, that if the date of such surrender and payment
is a date upon which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the 

 

	
             
 	
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record holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are open.  Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

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

(a)                   (i)        In the event that the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification.  If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.

(ii)       In the event any Person shall, at any time after the Record Date, become an Acquiring Person, unless the event causing such Person to become an Acquiring Person is a transaction set forth in Section 13(a) hereof, then, promptly following the later of the occurrence of such event and the Record Date, proper provision shall be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-thousandths of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the 

 

	
             
 	
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then current Purchase Price by the then number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which, following such first occurrence, shall thereafter be referred to as the “Purchase Price” for each such Right and for all purposes of this Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d) hereof) per share of Common Stock on the date of such first occurrence (such number of shares, the “Adjustment Shares”).  The Company shall give the Rights Agent written notice of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing, and the Rights Agent may rely
on such notice in carrying out its duties under this Agreement and shall be deemed not to have any knowledge of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing, unless and until it shall have received such notice.

(iii)      In the event that the number of treasury shares plus the number of shares of Common Stock that are authorized by the Company’s Certificate of Incorporation, as amended, but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing clause (ii) of this Section 11(a), the Company shall (A) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”), and (B) with respect to each Right (subject to Section 7(e) hereof), make adequate provision to substitute for the Adjustment Shares, upon the exercise of a Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock, such as the Preferred Stock that the Board has deemed to have essentially the same value or economic rights as shares of Common Stock (such shares of other equity securities, including preferred stock, being referred to as “Common Stock Equivalents”)), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current Value (less the amount of any reduction in the Purchase Price), where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment banking firm selected by the Board; provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 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.  For purposes of the preceding sentence, the term “Spread” shall mean the excess of (i) the Current Value over (ii) the Purchase Price.  If the Board determines in good faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance 

 

	
             
 	
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upon exercise in full of the Rights, the 30-day period set forth above may be extended to the extent necessary, but not more than 90 days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such 30-day period, as it may be extended, is herein called the “Substitution Period”).  To the extent that the Company determines that action should be taken pursuant to the first and/or third sentences of this Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and (2) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such stockholder approval for such authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof.  In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect.  The Company shall notify the Rights Agent whenever it makes a public announcement pursuant to this Section 11(a)(iii) and give the Rights Agent a copy of such announcement.  For purposes of this Section 11(a)(iii), the value of each Adjustment Share shall be the Current Market Price per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent shall be deemed to equal the Current Market Price per share of the Common Stock on such date.

(b)       In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within 45 calendar days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock (“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or per share of Equivalent Preferred Stock (or having a conversion price per share, if a security convertible into Preferred Stock or Equivalent Preferred Stock) less than the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock that the aggregate offering price of the total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible).  In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.  Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.  Such 

 

	
             
 	
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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.

(c)       In case the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including without limitation any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or evidences of indebtedness, or of subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the
Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board, 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 share of Preferred Stock, and the denominator of which shall be such Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock.  Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price that would have been in effect if such record date had not been fixed.

(d)       (i)  The Current Market Price per share of Common Stock on any date shall be deemed to be (1) for the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the average of the daily closing prices per share of such Common Stock for the 30 consecutive Trading Days immediately prior to, but not including, such date, and (2) for purposes of computations made pursuant to Section 11(a)(iii) hereof, the average of the daily closing prices per share of such Common Stock for the 10 consecutive Trading Days immediately following, but not including, such date; provided, however, that in the event that the Current Market Price per share of the Common Stock is determined during a period following the announcement
by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification shall not have occurred prior to, but not including, the commencement of the requisite 30 Trading Day or 10 Trading Day period, as set forth above, then, and in each such case, the Current Market Price shall be properly adjusted to take into account ex-dividend trading.  The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are 

 

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

(ii)       For the purpose of any computation hereunder, the Current Market Price per share of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof).  If the Current Market Price per share of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the Current Market Price per share of Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the Current Market Price
per share of the Common Stock.  If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, Current Market Price per share of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

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

(f)        If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of 

 

	
             
 	
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such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11 (a), 

(b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares.

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

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

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

 

	
             
 	
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Agent, in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement.

(j)        Irrespective of any adjustment or change in the Purchase Price or the number of one one-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-thousandth of a share and the number of one one-thousandth of a share 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 value, if any, of the number of one one-thousandths of a share of Preferred Stock 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 fully paid and nonassessable such number of one one-thousandths of a share of Preferred Stock at such adjusted Purchase Price.

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

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

(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 that complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction that complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets, cash flow or earning power aggregating 

 

	
             
 	
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more than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or 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 that 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 Amendment 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 share of 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 share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event
by a fraction the numerator which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event.

Section 12.      Certificate of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made or an event affecting the Rights or their exercisability (including without limitation an event which causes Rights to become null and void) occurs as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment or describing such event, and a brief, reasonably detailed statement of the facts, computations and methodology accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate, and (c) if a Distribution Date has occurred, mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 25 and Section 26 hereof.  The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall have no duty or liability with respect to, and shall not be deemed to have knowledge of, any adjustment or any such event unless and until it shall have received such a certificate.

 

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

(a)       In the event that any Person shall become an Acquiring Person and, 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 that 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 that 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 that complies with Section 11(o) hereof), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one one-thousandths of a share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such one one-thousandths of a share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence of a Section 11(a)(ii) Event), and (2) dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d)(i) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event.

 

	
             
 	
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(b)       “Principal Party” shall mean:

 (i)        in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a) hereof, 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 Section 13(a) hereof, 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 described in clause (i) or (ii), (1) if the Common Stock of such Person is not at such time or has not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, “Principal Party” shall refer to such other Person; and (2) if such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of two or more of which are and have been so registered, “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value.

(c)       The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock 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 subsections (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in subsection (a) of this Section 13, the Principal Party will:

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

(ii)       take all such other action as may be necessary to enable the Principal Party to issue the securities purchasable upon exercise of the Rights, including but not limited to the registration or qualification of such securities under all requisite securities laws of jurisdictions of the various states and the listing of such securities on such exchanges and trading markets as may be necessary or appropriate; and

(iii)      will deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that 

 

	
             
 	
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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 in the manner described in Section 13(a).

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

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

 

	
             
 	
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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 shall be used.

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

(c)       Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates 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 Section 14(c), the current market value of one share of Common Stock shall be the closing price per share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to the date of such exercise.

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

 (e)       Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.

Section 15.      Rights of Action.  All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 and Section 20, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution 

 

	
             
 	
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Date, of the Common Stock), may, in its own behalf and for its own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, its right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.

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

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

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

(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 shall be affected by any notice to the contrary; and

(d)       notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory, self-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
injunction, order, judgment, 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 one one-thousandths of a share of Preferred Stock or any other securities of the Company 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 

 

	
             
 	
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construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof.

Section 18.      Concerning the Rights Agent.

 (a)       The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and to reimburse the Rights Agent for all reasonable expenses, counsel fees and disbursements and other disbursements incurred in the preparation, delivery, amendment, 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, judgment, fine, penalty, claim, demand, settlement, damage, cost, liability or expense, including, without limitation, the reasonable fees and expenses of legal counsel, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for any action taken, suffered or omitted by the Rights Agent pursuant to this Agreement or in
connection with the acceptance, administration, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim of liability in the premises.  The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.  Any liability of the Rights Agent under this Agreement will be limited to the amount of fees paid by the Company to the Rights Agent.  The provisions of this Section 18 and Section 20 below shall survive the termination of this Agreement, the exercise or expiration of the Rights, and the resignation, replacement or removal of the Rights Agent.

(b)       The Rights Agent shall be fully protected and authorized and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its acceptance and administration of this Agreement and the exercise and performance of its duties hereunder, in reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20.  The Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith unless and until it has received such notice.

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

 (a)       Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services business of the Rights Agent or any 

 

	
             
 	
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successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; but only if such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.  In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the 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 Rights Agent 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 to perform only the duties and obligations expressly imposed by this Agreement (and no implied duties), upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

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

(b)       Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered by it under the provisions of this Agreement in reliance upon such certificate.

(c)       The Rights Agent shall be liable hereunder to the Company and any other Persons only for its own gross negligence, bad faith or willful misconduct.  In no 

 

	
             
 	
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case, however, will the Rights Agent be liable for special, indirect, punitive, incidental or consequential losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the possibility or likelihood of such losses or damages.

(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 have any liability for or 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 change in the exercisability of the Rights (including the Rights becoming null and void pursuant to Section 11(a)(ii) hereof) or any change or adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt of the certificate described in Section 12, upon which the Rights Agent may rely); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable.

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

(g)       The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such instructions shall be full authorization and protection to the Rights Agent and the Rights Agent shall not be liable for or in respect of any action taken, suffered or omitted by it in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions.  The Rights Agent shall be fully authorized and protected in relying upon the most recent instructions received from any such officers.  Any application by
the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or suffered or such omission shall be effective.  The Rights Agent shall not be liable for any action taken or suffered by, or omission of, the Rights Agent in accordance with a 

 

	
             
 	
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proposal included in any such application on or after the date specified in such application (which date shall not be less than five Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken, suffered or omitted.

(h)       The Rights Agent and any stockholder, affiliate, 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 the Rights Agent were not Rights Agent under this Agreement.  Nothing herein shall preclude the Rights Agent or any such stockholder, affiliate, director, officer or employee of the Rights Agent from acting in any other capacity for the Company or for any other Person.

(i)        The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its directors, officers and employees) or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct 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 any of its rights or powers if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

(k)       If, with respect to any 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 at least 30 days’ notice in writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock known to the Rights Agent, by registered or certified mail.  In the event the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice.  The Company may remove the Rights Agent or any successor Rights Agent upon at least 30 days’ notice in writing, mailed to
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Preferred Stock, by registered or certified mail, and, if such removal occurs after the Distribution Date, to the holders of the Rights Certificates by first-class mail.  If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such appointment within a period of 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 Person organized and doing business under the laws of the United States or any State thereof, in good standing, which is authorized under such laws to exercise corporate trust, stock transfer or stockholder services powers and which at the time of its appointment as Rights Agent has, or with its parent has, a combined capital and surplus of at least $25,000,000 or (b) an affiliate of a Person described in clause (a) of this sentence.  After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent under this Agreement without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and, if such appointment occurs after the Distribution Date, mail a notice thereof in writing to the registered holders of the Rights Certificates.  Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

Section 22.      Issuance of New Rights Certificates.  Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board 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 or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, 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.

 

	
             
 	
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Section 23.     Redemption and Termination.

 (a)       The Board may, at its option, at any time prior to the earlier of (i) the Stock Acquisition Date, and (ii) the Final Expiration Date, (x) redeem all but not less than all of the then outstanding Rights at a redemption price of $0.01 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Rights Amendment Date (such redemption price being hereinafter referred to as the “Redemption Price”) or (y) amend this Agreement to change the Final Expiration Date to another date, including an earlier date.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price, as defined in Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board.

(b)       Immediately upon the action of the Board ordering the redemption of the Rights, written evidence of which shall promptly have been delivered to 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 ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder’s last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.

Section 24.    Exchange.

 (a)       The Board 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 Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Rights Amendment Date (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board 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 holding Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.

(b)       Immediately upon the action of the Board ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice of any such exchange (with prompt written notice 

 

	
             
 	
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thereof to the Rights Agent); provided, however, that the failure to give, or any defect in, such notice shall not affect the legality or validity of such exchange.  The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent.  Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of exchange will state the method by which the exchange of the Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become null and 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 shall take all such action as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights.  In the event the Company shall, after good faith effort, be unable to take all such action as may be necessary to authorize such additional shares of Common Stock, the Company shall substitute, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or fraction thereof such that the Current Market Price of one share of Preferred Stock multiplied by such number or fraction is equal to the Current Market Price of one share
of Common Stock as of the date of issuance of such share of Preferred Stock or fraction thereof.

(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 share of Common Stock.  For the purposes of this subsection (d), the current market value of a whole share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

Section 25.   Notice of Certain Events.

 (a)       In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction that
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 

 

	
             
 	
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related transactions, of more than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or 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 the Rights Agent and to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 20 days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock, whichever shall be the earlier.

(b)       In case any Section 11(a)(ii) Event or Section 13 Event shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, and to the Rights Agent 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 this Agreement, and (ii) all references in the preceding subsection to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities.  The failure to give notice required by this Section 25 or any defect therein shall not affect the legality or validity of the action taken by the Company or the vote upon any such action.

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 overnight delivery service or first-class mail, postage prepaid, addressed (until another address is delivered in writing to the Rights Agent by the Company) as follows:

Southwestern Energy Company

2350 N. Sam Houston Parkway E., Suite 125

Houston, Texas  77032

Attention: Chief Executive Officer

 

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 overnight delivery service or first-class mail, postage prepaid, addressed (until another address is delivered in writing by the Rights Agent to the Company) as follows:

 

	
             
 	
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Computershare Trust Company, N.A.

2 North LaSalle Street

Chicago, Illinois  60602

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.  Prior to the Stock Acquisition Date, the Company and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any holders of certificates representing shares of Common Stock.  From and after the Stock Acquisition Date, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or (iii) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person).  Upon the delivery of a certificate from an appropriate officer of the Company and, if requested by the Rights Agent, an opinion of counsel, which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment.  Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or immunities under this Agreement.  Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock.  

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

Section 29.      Determinations and Actions by the Board of Directors, etc.  For all purposes of this Agreement, any calculation of the number of shares of Common Stock or any other class of capital stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.  The Board 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 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, declare a Person an Adverse Person or to amend the Agreement).  All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all 

 

	
             
 	
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omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board, or any of the directors on the Board to any liability to the holders of the Rights.  The Rights Agent is entitled always to assume that the Board acted in good faith and shall be fully protected and incur no liability in reliance thereon.

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

Section 31.      Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board 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 10th Business Day following the date of such determination by the Board; and provided further, that if any such excluded term, provision, covenant or restriction shall adversely affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately.

Section 32.      Governing Law.  This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State.

Section 33.      Counterparts.  This Agreement may be executed 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.  A signature to this Agreement transmitted electronically shall have the same authority, effect, and enforceability as an original signature.

Section 34.      Interpretation.  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.  Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, paragraph and exhibit references are to the articles, sections, paragraphs and exhibits of this Agreement unless 

 

	
             
 	
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otherwise specified.  The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders.  Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

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 malfunction, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war or civil unrest. 

[Signature page follows.]

 

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

 

SOUTHWESTERN ENERGY COMPANY

 

By:    /s/ Greg D. Kerley 

Name:  Greg D. Kerley

Title:  Executive Vice President & Chief Financial Officer

 

COMPUTERSHARE TRUST COMPANY, N.A., as Rights Agent

 

By:             /s/ Dennis V. Moccia 

Name:  Dennis V. Moccia

Title Managing Director

 

 

	
             
 	
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EXHIBIT A

 

FORM OF

CERTIFICATE OF DESIGNATION, PREFERENCES AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

SOUTHWESTERN ENERGY COMPANY

Pursuant to Section 151 of the General Corporation Law

of the State of Delaware

We, the undersigned, [____] , [TITLE], and [_____] , [TITLE], of Southwestern Energy Company, a Delaware corporation (hereinafter called the “Corporation”), pursuant to the provisions of Sections 103 and 151 of the General Corporation Law of the State of Delaware, do hereby make this Certificate of Designation and do hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Certificate of Incorporation, the Board of Directors duly adopted the following resolutions:

RESOLVED, that, pursuant to Section FOURTH of the Certificate of Incorporation (which authorizes 10,000,000 shares of preferred stock, $0.01 par value per share (“Preferred Stock”) of which none have already been designated), the Board of Directors hereby fixes the designations, powers, preferences and rights, and the qualifications, limitations and restrictions, of a series of Preferred Stock;

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

Section 1.        Designation and Amount.  The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number of shares constituting such series shall be 1,000,000.

	
             
 	
            Section 2.
 	
            Dividends and Distributions.
 

 (a)                               Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the 1st day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the 

 

	
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greater of (i) $0.10 or (ii) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock 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 Series A Junior Participating Preferred Stock.  In the event the Corporation shall at any time after April 9, 2009 (the “Rights Amendment Date”) (A) declare any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b)                               The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in Section 2(a) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, that in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.10 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(c)                               Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

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

 

	
             
 	
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(a)                                 Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation.  In the event the Corporation shall at any time after the Rights Amendment Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b)                               Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(c)                      (i)        If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to 6 quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment.  During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to 6 quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect 2 directors.

(ii)       During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to Section 3(c)(iii) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of directors shall be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding shall be present in person or by proxy.  The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right.  At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an
existing default period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to 2 directors or, if such right is exercised at an annual meeting, to elect 2 directors.  If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of directors as shall be necessary to permit the election by them of the required number.  After the holders of the Preferred Stock shall have exercised their right to elect directors in any default period and during the continuance of such period, the number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to 

 

	
             
 	
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the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock.

(iii)      Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation.  Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Section 3(c)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to such holder at its last address as the same appears on the books of the Corporation.  Such
meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding.  Notwithstanding the foregoing provisions of this Section 3(c)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(iv)      In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right to elect 2 directors voting as a class, after the exercise of which right (x) the directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in Section 3(c)(ii)) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock which elected the director whose office shall have become vacant.  References in this Section 3(c) to directors elected by the
holders of a particular class of stock shall include directors elected by such directors to fill vacancies as provided in clause (y) of the foregoing sentence.

(v)       Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect directors shall cease, (y) the term of any directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of directors shall be such number as may be provided for in the certificate of incorporation or bylaws of the Corporation irrespective of any increase made pursuant to the provisions of Section 3(c)(ii) (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or bylaws).  Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining directors.

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

 

	
             
 	
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Section 4.        Certain Restrictions.

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

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

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

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

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

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

Section 5.        Reacquired Shares.  Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued 

 

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

Section 6.        Liquidation, Dissolution or Winding Up.  (a) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received an amount equal to $1.00 per share of Series A Participating Preferred Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”).  Following the payment of the
full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in Section 6(c) below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”).  Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

(b)                               In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences.  In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.

(c)                               In the event the Corporation shall at any time after the Rights Amendment Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment 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.

Section 7.        Consolidation, Merger, etc.  In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same 

 

	
             
 	
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time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.  In the event the Corporation shall at any time after the Rights Amendment Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

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

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

Section 10.      Amendment.  At any time when any shares of Series A Junior Participating Preferred Stock are outstanding, the Certificate of Incorporation of the Corporation shall not be amended (whether by merger or otherwise) in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class.

Section 11.      Fractional Shares.  Series A Junior Participating 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 A Junior Participating Preferred Stock.

Section 12.      Certain Definitions.  As used herein with respect to the Series A Junior Participating Preferred Stock, the term “Common Stock” means the common stock, par value $0.01 per share, of the Corporation at the Rights Amendment Date or any other class of stock resulting from successive changes or reclassification of the common stock.

 

	
             
 	
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IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 9th day of April, 2009.

ATTEST:

	_______________________________

      Name:

    Title:    	_______________________________

      Name:

Title: 
	 	 

 

 

 

	
             
 	
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EXHIBIT B

[Form of Rights Certificate]

	
            Certificate No. R-
 	
            __________ Rights
 

NOT EXERCISABLE AFTER APRIL 8, 2019, UNLESS EXTENDED PRIOR THERETO BY THE BOARD OF DIRECTORS OF THE COMPANY, OR EARLIER IF REDEEMED BY THE COMPANY.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS ARE 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 SUCH AGREEMENT.]1

Rights Certificate

SOUTHWESTERN ENERGY COMPANY

This certifies that ____________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Second Amended and Restated Rights Agreement, dated as of April 9, 2009 (the “Rights Agreement”), by and between Southwestern Energy 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 City time) on April 8, 2019 (unless such date is extended prior thereto by the Board of Directors) at the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth of a fully paid, non-assessable share of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of $150.00 per one one-thousandth of a share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate properly completed and duly executed.  The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of April 9, 2009, based on the Preferred Stock as constituted at such date.  

Upon the occurrence of a 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

_________________________

1 The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence.

 

 

	
             
 	
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 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 (as such term is defined in the Rights Agreement) 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 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 which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, 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 above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent.

This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-thousandths of a share of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase.  If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another 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 $0.01 per Right at any time prior to the earlier of (i) the Stock Acquisition Date, and (ii) the Final Expiration Date (as each such term is defined in the Rights Agreement).  In addition, under certain circumstances following the Stock Acquisition Date, the Rights may be exchanged, in whole or in part, for shares of the Common Stock, or shares of preferred stock of the Company having essentially the same value or economic rights as such shares.  Immediately upon the action of the Board of Directors of the Company authorizing any such exchange, and without any further action or any notice, the Rights (other than Rights which are not subject to such exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.

The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions that are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions that are integral multiples of one one-thousandth of a share of Preferred Stock).  In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth of a share 

 

	
             
 	
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of Preferred Stock, the Company may pay to the registered holder of this Rights Certificate at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-thousandth of a share of Preferred Stock.  The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term is defined in the Rights Agreement) that a number of Rights be exercised so that only whole shares of Preferred Stock will be issued.

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 which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give consent to or withhold consent from 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.

 

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

Dated as of ___________, ____

ATTEST:

  	 	SOUTHWESTERN ENERGY COMPANY
	 	 
	_______________________________

                                Secretary	_______________________________

                                    Title: 
	 	 

 

Countersigned:

Computershare Trust Company, N.A.,

as Rights Agent

 

	
            By
 	
                                                                 
 

Authorized Signature

 

	
             
 	
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[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:__________, ____

	 	                                                    

                      Signature 

      

Medallion Signature Guaranteed:

 

	
             
 	
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Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

(1)       this Rights Certificate o is o 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 o did o did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: _________, ____

	 	                                                    

                      Signature 

 

Medallion Signature Guaranteed:

 

 

 

 

NOTICE

The signature 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.

 

	
             
 	
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FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights

represented by the Rights Certificate.)

To:  Southwestern Energy 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 such other securities of the Company or of any other Person which 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: _________, ____

	 	                                                    

                      Signature 

 

Medallion Signature Guaranteed:

 

 

	
             
 	
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Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

(1)       the Rights evidenced by this Rights Certificate o are o 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 o did o 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: _________, ____

	 	                                                    

                      Signature 

 

Medallion Signature Guaranteed:

 

 

 

NOTICE

The signature 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.

 

	
             
 	
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EXHIBIT C

 

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK

On April 8, 2009, the Board of Directors (the “Board”) of Southwestern Energy Company (the “Company”) approved, and the Company has entered into, a Second Amended and Restated Rights Agreement (the “Rights Agreement”), dated as of April 9, 2009, between the Company and Computershare Trust Company, N.A. (the “Rights Agent”).  The Rights Agreement amends, restates, supersedes and replaces the Amended and Restated Rights Agreement dated as of April 12, 1999, as amended March 15, 2002 and June 30, 2006.  The rights outstanding under the Rights Agreement (the “Rights”) are currently evidenced (on the basis of one Right for each outstanding share) by the
existing certificates for outstanding shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), and are not exercisable and do not trade separately from such shares.  The summary below describes the Rights as so amended by the Rights Agreement.

(a)       Each Right, when exercisable, entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth of a share (a “Unit”) of Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), at a Purchase Price of $150.00 per Unit, subject to adjustment.  The Series A Preferred Stock is established pursuant to a Certificate of Designation, Preferences and Rights (the “Certificate of Designation”) filed with the Secretary of State of the State of Delaware on April 9, 2009.

Subject to certain exceptions specified in the Rights Agreement, the Rights will not separate from the Common Stock until the earlier of (i) 10 business days following a public announcement by the Company or an Acquiring Person (as defined below) that an Acquiring Person has become such (the “Stock Acquisition Date”) or (ii) 10 business days (or such later date as the Board shall determine) following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person (the earlier of (i) and (ii) being herein referred to as the “Distribution Date”).  An “Acquiring Person” is any person or group of affiliated and associated persons that has acquired beneficial ownership
of 15% or more of the outstanding shares of the Common Stock or any person who is declared by the Board to be an Adverse Person (as defined in the Rights Agreement).  

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 will contain a notation incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for the Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.  Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Series A Preferred Stock will be issued.

 

	
             
 	
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The Rights are not exercisable until the Distribution Date and will expire at 5:00 P.M. (New York City time) on April 8, 2019 (the “Final Expiration Date”), unless the Rights Agreement is earlier terminated or such date is extended or the Rights are earlier redeemed or exchanged by the Company as described below.

As soon as practicable after the Distribution Date, Rights certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and, thereafter, the separate Rights certificates alone will represent the Rights.

In the event that a person becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise, shares of the Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value (as determined pursuant to the Rights Agreement) equal to two times the exercise price of the Right.  Notwithstanding any of the foregoing, following the occurrence of the event described in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.  

In the event that a person becomes an Acquiring Person and (i) the Company engages in a merger or other business combination transaction in which the Company is not the surviving corporation, (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the Common Stock of the Company is changed or exchanged, or (iii) 50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights which have previously been voided as set forth above) shall thereafter have the right to receive, upon exercise, shares of common stock of the acquiring company having a value equal to two times the exercise price of the Right.  The events set forth in this paragraph and in the preceding paragraph are referred to as the “Triggering
Events.”

At any time after a person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board may exchange the Rights (other than Rights owned by such person or group which have become null and void), in whole or in part, for the Common Stock at an exchange ratio of one share of the Common Stock per Right (subject to adjustment).  If an insufficient number of shares of the Common Stock are available for such exchange despite the Company’s good faith efforts to authorize additional shares of Common Stock, the Company will substitute a number of shares of the Series A Preferred Stock or a fraction thereof for each share of the Common Stock that would otherwise be issuable.

The Purchase Price payable, and the number of Units of the Series A 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 Series A Preferred Stock, (ii) if holders of the Series A Preferred Stock are granted certain rights or warrants to subscribe for the Series A Preferred Stock or convertible securities at less than the current market price of the Series A Preferred Stock, or (iii) upon the distribution to holders of the Series A Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).

 

	
             
 	
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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 Series A Preferred Stock on the last trading date prior to the date of exercise.

At any time prior to the Stock Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board) or amend the Rights Agreement to change the Final Expiration Date to another date, including without limitation an earlier date.  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 $0.01 redemption price. 

Until a Right is exercised, the holder thereof, as such, will have no separate rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends in respect of the Rights.  While the amendment to 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 Common Stock (or other consideration) of the Company or for common stock of the acquiring company or in the event of the redemption of the Rights as set forth above.

Any of the provisions of the Rights Agreement may be amended by the Board prior to the Stock Acquisition Date.  After the Stock Acquisition Date, the provisions of the Rights Agreement may only be amended by the Board in order to cure any ambiguity, to correct any defect or inconsistency or to make changes which do not adversely affect the interests of holders of Rights.  

Copies of the form of Certificate of Designation and the Rights Agreement have been or will be filed with the Securities and Exchange Commission as an Exhibit to an amended Registration Statement on Form 8-A of the Company and as an Exhibit to a Current Report on Form 8-K.  A copy of the Rights Agreement is available free of charge from the Rights Agent.  This description of the Rights Agreement and the Rights does not purport to be complete and is qualified by reference to the Rights Agreement.  

 

	
             
 	
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