Exhibit 10.1

SHAREHOLDER PROTECTION RIGHTS AGREEMENT

BETWEEN

MONTEREY GOURMET FOODS

AND

CORPORATE STOCK TRANSFER
as Rights Agent

Dated as of July 1, 2008

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

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SECTION 1.

 

DEFINITIONS

 

1

 

SECTION 2.

 

APPOINTMENT OF RIGHTS AGENT

 

4

 

SECTION 3.

 

ISSUE OF RIGHTS CERTIFICATES

 

4

 

SECTION 4.

 

FORM OF RIGHTS CERTIFICATES

 

6

 

SECTION 5.

 

COUNTERSIGNATURE AND REGISTRATION

 

6

 

SECTION 6.

 

TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES

 

7

 

SECTION 7.

 

EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS

 

8

 

SECTION 8.

 

CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES

 

9

 

SECTION 9.

 

AVAILABILITY OF PREFERRED SHARES

 

10

 

SECTION 10.

 

PREFERRED SHARES RECORD DATE

 

10

 

SECTION 11.

 

ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS

 

10

 

SECTION 12.

 

CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES

 

18

 

SECTION 13.

 

CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

 

19

 

SECTION 14.

 

FRACTIONAL RIGHTS AND FRACTIONAL SHARES

 

23

 

SECTION 15.

 

RIGHTS OF ACTION

 

24

 

SECTION 16.

 

AGREEMENT OF RIGHTS HOLDERS

 

24

 

SECTION 17.

 

RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

 

25

 

SECTION 18.

 

FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT

 

25

 

SECTION 19.

 

MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

 

26

 

SECTION 20.

 

DUTIES OF RIGHTS AGENT

 

26

 

SECTION 21.

 

CHANGE OF RIGHTS AGENT

 

29

 

SECTION 22.

 

ISSUANCE OF NEW RIGHTS CERTIFICATES

 

29

 

SECTION 23.

 

REDEMPTION

 

30

 

SECTION 24.

 

EXCHANGE

 

31

 

SECTION 25.

 

NOTICE OF CERTAIN EVENTS

 

32

 

SECTION 26.

 

NOTICES

 

33

 

SECTION 27.

 

SUPPLEMENTS AND AMENDMENTS

 

34

 

SECTION 28.

 

REGISTRATION OF SECURITIES

 

34

 

SECTION 29.

 

DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS; TIDE COMMITTEE

 

34

 

SECTION 30.

 

SUCCESSORS

 

35

 

SECTION 31.

 

BENEFITS OF THIS AGREEMENT

 

35

 

SECTION 32.

 

SEVERABILITY

 

36

 

SECTION 33.

 

GOVERNING LAW

 

36

 

-i-

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SECTION 34.

 

COUNTERPARTS

 

36

 

SECTION 35.

 

DESCRIPTIVE HEADINGS

 

36

 

 

EXHIBIT A - Certificate of Determination (§1(m))

 

EXHIBIT B - Form of Rights Certificate (§3(a)(2); §4)

 

EXHIBIT C - Summary of Rights (Letter to Shareholders) (§3(b))

-ii-

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SHAREHOLDER PROTECTION RIGHTS AGREEMENT

          This Shareholder Protection Rights Agreement (the “Agreement”), dated
as of July 1, 2008, is made between Monterey Gourmet Foods, Inc., a Delaware
corporation (the “Company”), and Corporate Stock Transfer, Inc., a Colorado
corporation (the “Rights Agent”).

          Pursuant to this Agreement, the Board of Directors of the Company has
authorized and declared a dividend of one preferred share purchase right (a
“Right”) for each Common Share (as hereinafter defined) of the Company
outstanding on July 11, 2008 (the “Record Date”), each Right representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).

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

SECTION 1.
DEFINITIONS

          For purposes of this Agreement, the following terms have the meanings
indicated:

          (a)           “Acquiring Person” shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 20% or more of the
Common Shares of the Company then outstanding, but shall not include the
Company, any Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company (including without limitation the
Employee Plans) or of any Subsidiary of the Company, or of any entity holding
Common Shares for or pursuant to the terms of any such plan, provided, however,
that any Person who first obtains the written approval of a majority of the
Board of Directors of the Company for the acquisition of 20% or more of the
Common Shares of the Company and therefore accumulates at least 20% of the
Common Shares, within six months of the date of such written approval shall not
be an “Acquiring Person.”

          Notwithstanding the preceding paragraph, no Person shall become an
“Acquiring Person” as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an “Acquiring Person”.

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

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

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

 

 

 

 

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

 

 

 

                (ii)           Which such Person or any of such Person’s
Affiliates or Associates has

 

 

 

 

 

                (A)           The right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or

 

 

 

 

 

                (B)           The right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

 

 

 

                (iii)           Which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso in Section l(d)(ii)(B)) or disposing of any securities of the Company;
provided, however, that in no case shall an officer or director of the Company
be deemed the Beneficial Owner of securities held of record by the trustee of
any employee benefit plan of the Company (including without limitation the
Employee Plans) or any Subsidiary of the Company for the benefit of any employee
(other than the officer or director) of the Company or any Subsidiary of the
Company, by reason of any influence that such officer or director may have over
the voting of the securities held in the plan.

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          Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase “then outstanding,” when used with reference to a
Person’s Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

          (e)           “Business Day” shall mean any day other than a Saturday,
a Sunday, or a day on which business corporations in the States of California
and Colorado are authorized or obligated by law or executive order to close.

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

          (g)           “Common Shares” when used with reference to the Company
shall mean the shares of common stock, $.001 par value, of the Company. “Common
Shares” when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.

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

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

          (j)           “Employee Plans” shall mean the Monterey Gourmet Foods
Employee Stock Purchase Plan and any other tax-qualified employee benefit plan
of the Company or any Subsidiary, or any of them, and any successor plan to any
of them.

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

          (l)           “Person” shall mean any individual, firm, association,
partnership, joint venture, corporation, limited liability company or other
entity, and shall include any successor (by merger or otherwise) of such entity.

          (m)           “Preferred Shares” shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of the Company having
the rights and preferences set forth in the Certificate of Determination for
Series A Junior Participating Preferred Stock attached hereto as Exhibit A.

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

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

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

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          (q)           “Registered Common Shares” shall have the meaning set
forth in Section 13(b)(ii) hereof.

          (r)           “Shares Acquisition Date” shall mean the date of first
public announcement (which, for purposes of this definition, shall include,
without limitation, the date of filing of a report filed pursuant to Section
13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become an Acquiring Person, or such earlier date as a
majority of the directors of the Company shall become aware of the existence of
an Acquiring Person.

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

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

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

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

          (w)           A “Trigger Event” shall be deemed to have occurred when
any Person, together with all Affiliates and Associates of such Person, becomes
an Acquiring Person.

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. 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)           Except as provided in subsections (i) and (ii) below,
the Rights shall at all times be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and the right to receive
Rights Certificates will be transferable only in connection with the transfer of
Common Shares.

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             (i)          After the Close of Business on the earlier of (A) the
tenth day after the Shares Acquisition Date, or (B) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date when any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company, including without limitation the Employee Plans, or
of any Subsidiary of the Company or of any entity holding Common Shares for or
pursuant to the terms of any such plan) commences, or first publicly announces
an intention to commence, a tender or exchange offer which would result in such
Person becoming the Beneficial Owner of Common Shares aggregating 20% or more of
the then outstanding Common Shares (the earliest of such dates being herein
referred to as the “Distribution Date”), the Company shall distribute Rights
Certificates in accordance with subsection (ii). The provisions of this Section
3(a) shall control regardless of whether any Common Shares are actually
purchased pursuant to such offer, and the Distribution Date may include any date
which is after the date of this Agreement and prior to the issuance of the
Rights.

 

 

 

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

 

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

 

 

This certificate also evidences and entitles the holder hereof to certain rights
as set forth in an agreement between Monterey Gourmet Foods, Inc. and Corporate
Stock Transfer, Inc., as Rights Agent, dated as of July 1, 2008 (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of Monterey
Gourmet Foods, Inc. 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. Monterey Gourmet Foods, Inc. will mail
to the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may become null and void.

          With respect to such certificates containing the foregoing legend,
until the Distribution Date, such certificates alone shall evidence the Rights
associated with the Common Shares represented by such certificates, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with such Common Shares while
they are not outstanding.

SECTION 4.
FORM OF RIGHTS CERTIFICATES

          The Rights Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
be substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but do not affect the
rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or other
organization on which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Section 22 hereof, the Rights
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the “Purchase
Price”), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.

SECTION 5.
COUNTERSIGNATURE AND REGISTRATION

          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 of
its Executive Vice Presidents, either manually or by facsimile signature and
shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless 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 Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.

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          Following the Distribution Date, 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 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

          Subject to the provisions of Section 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Rights Certificate or Rights Certificates, other than Rights Certificates
representing Rights that have become null and void pursuant to Section 11(a)(ii)
hereof or that have been exchanged pursuant to Section 24 hereof, may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a Preferred Share as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase. Any registered
holders desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holder of such Rights of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates. Neither the Rights
Agent nor the Company shall have any duty or be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate or Certificates until the registered holder thereof shall have (i)
completed and signed the certificate contained in the form set forth on the
reverse side of each such Rights Certificate 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 the Affiliates and Associates of
such Beneficial Owner (or former Beneficial Owner) as the Company or the Rights
Agent shall reasonably request. The Rights Agent shall have no duty or
obligation to take any action under any Section of this Agreement which
requires, or under which the Company may request and does request (with prompt
written notice thereof to the Rights Agent), the payment by a Rights holder of
applicable taxes or governmental charges unless and until it is satisfied that
all such taxes and/or governmental charges have been paid.

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          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, at the request of the Company,
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 make and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.

SECTION 7.
EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS

          (a)          The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided in this
Rights Agreement) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share as to which the
Rights are exercised, at or prior to the earliest of (i) the Close of Business
on July 1, 2018 (the “Final Expiration Date”), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the “Redemption Date”), or (iii)
the time at which such Rights are exchanged as provided in Section 24 hereof.

          (b)          The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $11.70, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

 

 

 

          (c)           Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly and properly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable tax or charge required to be
paid by the holder of such Rights Certificate in accordance with Section 9
hereof by cash, certified check, cashier’s check or money order payable to the
order of the Company, subject to Section 20(i) hereof, the Rights Agent shall
thereupon promptly:

 

 

 

 

               (i)          Requisition (A) from any transfer agent of the
Preferred Shares, certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes each such transfer agent
of the Preferred Shares to comply with all such requests, or (B) from the
depository agent, depository receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depository agent) and the Company
hereby directs the depository agent to comply with such request;

 

 

 

 

              (ii)          When necessary to comply with this 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;

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              (iii)          After receipt of such certificates or depository
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 to comply with this Agreement, after
receipt, deliver such cash to or upon the order of the registered holder of such
Rights Certificate.

 

 

          (d)          In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, the Rights Agent
shall issue a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised to the registered holder of such Rights Certificate or to
his duly authorized assigns, subject to the provisions of Section 14 hereof.

 

 

          (e)          The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury the number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Section 7.

 

 

          (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
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Right Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) thereof and of the Rights evidenced thereby and of
the Affiliates and 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 to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no 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.

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SECTION 9.
AVAILABILITY OF PREFERRED SHARES

          The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid and nonassessable.

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

SECTION 10.
PREFERRED SHARES RECORD DATE

          Each person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable taxes or governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Shares transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the rights 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 OF SHARES OR NUMBER OF RIGHTS

          (a)          The Purchase Price, the number of Preferred Shares
covered by each Right and the number of Rights outstanding shall be subject to
adjustment from time to time as provided in this Section 11.

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(i)       In the event the Company shall at any time after the date of this
Agreement:

 

 

 

 

 

 

           (A)          Declare a dividend on the Preferred Shares payable in
Preferred Shares;

 

 

 

 

 

 

           (B)          Subdivide the outstanding Preferred Shares;

 

 

 

 

 

 

           (C)          Combine the outstanding Preferred Shares into a smaller
number of Preferred Shares; or

 

 

 

 

 

 

           (D)          Issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation),

 

 

 

 

 

except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Rights exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Rights had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.

 

 

 

 

 

 

(ii)

Subject to Section 24 of this Agreement, in the event:

 

 

 

 

 

 

           (A)          A Trigger Event shall have occurred (other than through
an acquisition described in subparagraph (iii) of this paragraph (a)); or

 

 

 

 

 

 

           (B)          During such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock split),
or recapitalization or reorganization of the Company or other transaction or
series of transactions involving the Company which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of the Company or any of
its Subsidiaries beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof,

each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company (such number of
shares being referred to herein as the “Adjustment Shares”) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right is then
exercisable, and dividing that product by (y) 50% of the then current per share
market price of the Company’s Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of the earliest of the events
described in clauses (A) and (B) above.

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          From and after the occurrence of the earliest of the events described
in clauses (A) and (B) above, any Rights that are or were acquired or are or
were beneficially owned by any Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be null and void and any holder of such Rights
(including any subsequent transferee) shall thereafter have no right whatsoever
with respect to such Rights under any provision of this Agreement. No Rights
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be null and void
pursuant to the preceding sentence or any representative, nominee, Associate or
Affiliate thereof; no Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be null and
void pursuant to the preceding sentence or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Rights
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be null and void pursuant to the preceding sentence or any
representative, nominee, Associate or Affiliate thereof, shall be cancelled. The
Company shall give the Rights Agent written notice of the identity of any such
Acquiring Person, Associate or Affiliate, or the representative or 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 representative or nominee of any of the foregoing unless and until it
shall have received such notice.

 

 

 

 

          (iii)          The right to buy Common Shares of the Company pursuant
to subparagraph (ii) of this paragraph (a) shall not arise as a result of any
Person becoming an Acquiring Person through a purchase of Common Shares pursuant
to a tender offer made in the manner prescribed by Section 14(d) of the Exchange
Act and the rules and regulations promulgated thereunder; provided, however,
that such tender offer shall provide for the acquisition of all of the
outstanding Common Shares held by any Person other than such Acquiring Person
and its Affiliates or Associates at a price and on terms determined by at least
a majority of the members of the Board of Directors who are not officers of the
Company and who are not representatives, nominees, Affiliates or Associates of
an Acquiring Person, after receiving advice from one or more investment or
financial advisers, to be (A) fair to shareholders, taking into account all
factors which such members of the Board deem relevant including, without
limitation, prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value, and (B)
otherwise in the best interests of the Company and its shareholders, employees,
customers and communities in which the Company does business.

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          (iv)          In the event that there shall not be sufficient Common
Shares authorized but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall:

 

 

 

 

                (A)          Determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the “Current Value”),
over (2) the Purchase Price (such excess being hereinafter referred to as the
“Spread”); and

 

 

 

 

 

                (B)          With respect to each Right, make adequate provision
to substitute for such unavailable Adjustment Shares either (1) cash, (2) a
reduction in the Purchase Price, (3) other equity securities of the Company,
including without limitation, Preferred Shares, (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing having,
together with the Adjustment Shares issued upon exercise of such Right, an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of a
reputable investment banking firm selected by the Board of Directors of the
Company.

          Notwithstanding the provisions of the preceding paragraph, if, within
30 days following the date of the occurrence of the earliest of the events
described in clauses (A) and (B) of Section 11(a)(ii) above, the Company shall
have not made adequate provision to deliver value pursuant to clause (B) above,
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent such shares are available) and then, if necessary, cash or
Preferred Shares, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common Shares could be authorized
for issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 120 days
following the date of the occurrence of the earliest of the events described in
clauses (A) and (B) of Section 11(a)(ii) above, in order that the Company may
seek shareholder approval for the authorization of such additional shares (such
period, as it may be extended, hereinafter referred to as the “Substitution
Period”).

          To the extent that the Company determines that action needs be taken
pursuant to the first and/or second sentences of this Section 11(a)(iv), the
Company (x) shall provide, subject to Section 11(a)(ii) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement (with prompt written notice thereof to the
Rights Agent) stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement (with prompt written notice thereof
to the Rights Agent) at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iv), the value of the Common Shares shall be the
current per share market price (as determined pursuant to Section 11(d) hereof)
per Common Share on the date of the occurrence of the earliest of the events
described in clauses (A) and (B) of Section 11(a)(ii) above.

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

          In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such record date is fixed; and in
the event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

          (c)          In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or rights, options 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
then current per share market price of the Preferred Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

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(d)

For the purpose of any computation hereunder:

 

 

 

 

           (i)          The “current per share market price” of any security (a
“Security” for the purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of such Security for the
20 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to, but not including, such date. In the event that the current per share
market price of the Security is determined:

 

 

 

 

 

 

               (A)          During a period following the announcement by the
issuer of such Security of:

 

 

 

 

 

 

 

                              (1)          A dividend or distribution on such
Security payable in shares of such Security or
               securities convertible into such Security; or

 

 

 

 

 

 

 

                              (2)          Any subdivision, combination or
reclassification of such Security, and

 

 

 

 

 

 

               (B)          Prior to, but not including, the expiration of 20
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,

 

 

 

 

 

then, and in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share equivalent
of such Security. The closing price for each day shall be the last sale price
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices 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 Security is 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 Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last reported trade in the
over-the-counter market, as reported by the Nasdaq Global Market (“Nasdaq”) or
such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Security, the fair value of the Security
on such date as determined in good faith by the Board of Directors of the
Company shall be used.

 

 

 

          The term “Trading Day” shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day.

 

 

 

          (ii)          For the purpose of any computation hereunder, if the
Preferred Shares are publicly traded, the “current per share market price” of
the Preferred Shares shall be determined in accordance with the method set forth
in Section 11(d)(i). If the Preferred Shares are not publicly traded but the
Common Shares are publicly traded, the “current per share market price” of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, “current per share market price” shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

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

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

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

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

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

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          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 Agent
in the manner provided for herein and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.

          (j)          Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates previously and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred 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 one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.

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

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          (m)          Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
shareholders.

          (n)          The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) 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)), (ii) permit or cause any Person to
consolidate with the Company, or merge with and into the Company (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)), or
(iii) sell or otherwise transfer (or permit any Subsidiary to sell or transfer),
in one or more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person 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)), if 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.

          (o)          The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary of the Company 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)          In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.

SECTION 12.
CERTIFICATE OF ADJUSTED
PURCHASE PRICE OR NUMBER OF SHARES

          Whenever an adjustment is made or any 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 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
or describing such event, and a brief, reasonably detailed statement of the
facts, computation and methodology accounting for any adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Sections 25 and 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 OR EARNING POWER

 

 

 

 

(a)

If, following the Distribution Date, directly or indirectly:

 

 

 

 

          (i)          The Company shall consolidate with, or merge with and
into, any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger;

 

 

 

 

         (ii)          Any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property;

 

 

 

 

         (iii)          Any Person shall acquire all or a majority of the Common
Shares pursuant to a statutory plan of exchange; or

 

 

 

 

         (iv)          The Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries,

 

 

 

 

then, and in each such case, proper provision shall be made so that:

 

 

 

 

         (A)          Each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Principal Party (as hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product by (2) 50% of the
then current per share market price of the Common Shares (determined pursuant to
Section 11(d) hereof) of such Principal Party on the date of consummation of
such consolidation, merger, sale or transfer;

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          (B)          Such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;

 

 

 

 

          (C)          The term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party after the first occurrence
of an event described in this Section 13(a);

 

 

 

 

          (D)          Such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights; and

 

 

 

 

          (E)          The provisions of Section 11(a)(ii) shall be of no
further effect following the first occurrence of any event described in this
Section 13(a).

 

 

 

 

(b)

“Principal Party” shall mean:

 

 

 

 

          (i)          In the case of any transaction described in clause (i),
(ii) or (iii) of Section 13(a):

 

 

 

 

 

              (A)          The Person that is the issuer of any securities into
which Common Shares of the Company are converted in such merger, consolidation
or for which they are exchanged in such statutory plan of exchange, or, if there
is more than one such issuer, the issuer of Common Shares that has the highest
aggregate current market price (determined in accordance with Section 11(d));
and

 

 

 

 

 

              (B)          If no securities are so issued, the Person that is
the other party to such merger, consolidation or statutory plan of exchange, or,
if there is more than one such Person, the Person whose Common Shares have the
highest aggregate current market price (determined in accordance with Section
11(d)); and

 

 

 

 

          (ii)          In the case of any transaction described in clause (iv)
of Section 13(a), the Person that is the party receiving the largest portion of
the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person whose Common Shares have the highest aggregate
current market price (determined in accordance with Section 11(d)); provided,
however, that in any such case:

 

 

 

 

 

               (A)          If the Common Shares of such Person are not at such
time and have not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act (“Registered Common Shares”), or
such Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Shares outstanding,
“Principal Party” shall refer to such other Person;

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               (B)          If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Shares
outstanding, “Principal Party” shall refer to the ultimate parent entity of such
first-mentioned Person;

 

 

 

 

 

               (C)          If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Shares outstanding, “Principal Party”
shall refer to whichever of such other Persons is the issuer of the Registered
Common Shares having the highest aggregate current market price (determined in
accordance with Section 11(d)); and

 

 

 

 

 

               (D)          If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and none of such
other Persons have Registered Common Shares outstanding, “Principal Party” shall
refer to whichever ultimate parent entity is the corporation having the greatest
shareholders’ equity or, if no such ultimate parent entity is a corporation,
shall refer to whichever ultimate parent entity is the entity having the
greatest net assets.

 

 

 

           (c)         The Company shall not consummate any such consolidation,
merger, statutory plan of exchange, sale or transfer unless prior thereto the
Company and the Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that:

 

 

 

 

              (i)          Such Principal Party shall, upon consummation of such
consolidation, merger, statutory plan of exchange or sale or transfer of assets
or earning power, assume this Agreement in accordance with Section 13;

 

 

 

 

              (ii)         All rights of first refusal or preemptive rights in
respect of the issuance of Common Shares of such Principal Party upon exercise
of outstanding Rights have been waived;

 

 

 

 

              (iii)        Any provision of the authorized securities of such
Principal Party or of its charter, bylaws or other instruments governing its
corporate affairs which would obligate such Principal Party to issue in
connection with, or as a consequence of, the consummation of a transaction
referred to in Section 13(a), Common Shares of such Principal Party at less than
the then-current per share market price (determined in accordance with Section
11(d)(i)) or securities exercisable for, or convertible into, such Common Shares
at less than such then- current per share market price (other than to the
holders of Rights pursuant to this Section 13) have been waived or canceled; and

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          (iv)          Such transaction shall not result in a default by such
Principal Party under this Agreement, and further providing that, as soon as
practicable after the date of any consolidation, merger, statutory plan of
exchange or sale or transfer of assets or earning power referred to in Section
13(a), such Principal Party will:

 

 

 

                (A)          Prepare and file a registration statement under the
Securities Act of 1933, as amended, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act until the Final Expiration Date
of the Rights), and similarly comply with applicable state securities laws;

 

 

 

                (B)          Use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights or to meet the eligibility requirements for quotation of the Rights and
such securities on Nasdaq or other system then in use; and

 

 

 

                (C)          Deliver to holders of the Rights historical
financial statements for such Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act.

          In the event that at any time after the occurrence of an event
described in Section 11(a)(ii) hereof some or all of the Rights shall not have
then been exercised at the time of the occurrence of an event described in
Section 13(a) hereof, the Rights which have not theretofore been exercised shall
thereafter be exercisable in the manner described in Section 13(a) (without
taking into account any prior adjustment required by Section 11(a)(ii)).

          (d)          The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers.

          (e)          Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
Section 13(a)(i), (ii) or (iii) if: (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a tender offer
described in Section 11(a)(iii) (or with a wholly-owned Subsidiary of any such
Person or Persons), (ii) the price per Common Share offered in such transaction
is not less than the price per Common Share paid to all holders of Common Shares
whose shares were purchased pursuant to such tender or exchange offer, and (iii)
the form of consideration being offered to the remaining holders of Common
Shares pursuant to such transaction is the same as the form of consideration
paid pursuant to such tender offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights shall expire.

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SECTION 14.
FRACTIONAL RIGHTS AND FRACTIONAL SHARES

          (a)          The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Right would have been otherwise issuable. The closing price for any
day shall be the last sale price, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, 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
reported trade in the over-the-counter market, as reported by Nasdaq or such
other system then in use or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company.

          (b)          The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the Company and a
depository selected by it; provided, that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depository receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall 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 Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d) hereof) for the Trading Day immediately prior to the date of such
exercise.

          (c)          The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as expressly provided above).

          (d)          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.

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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
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach by the Company of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations by the Company of the obligations of any Person subject
to, this Agreement.

          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 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, that the Company must use all reasonable efforts to have any such
injunction, order, judgment, decree or ruling lifted or otherwise overturned as
soon as possible.

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 the Common Shares;

          (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

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          (c)          Each of the Company and the Rights Agent may deem and
treat the person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated Common Shares 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 Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.

SECTION 17.
RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

          No holder of any Rights Certificate, by reason only of being a holder
of such Rights Certificate, shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, by reason only of being a holder of such Rights Certificate, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (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.
FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT

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

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

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SECTION 19.
MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

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

          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.

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          (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 an Acquiring Person and the
determination of the current per share market price of any Security)be proved or
established by the Company prior to taking or 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 any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice President, or the
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 for
any action taken, suffered or omitted by it under the provisions of this
Agreement in reliance upon such certificate.

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

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

          (e)          The Rights Agent shall not have any liability for or be
under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any 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
Sections 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 hereof, 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 Preferred Shares to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any Preferred
Shares will, when issued, be duly and 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.

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          (g)          The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, or the Secretary 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 any action taken or suffered
or omitted to be taken 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 by any such officer.

          (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 it were not Rights Agent or any such any stockholder, Affiliate,
director, officer or employee under this Agreement. Nothing herein shall
preclude the Rights Agent or any such any stockholder, Affiliate, director,
officer or employee from acting in any other capacity for the Company or for any
other Person.

          (i)          If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof has not been completed, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.

          (j)          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 (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction).

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

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SECTION 21.
CHANGE OF RIGHTS AGENT

          The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ prior notice in
writing mailed to the Company and to each transfer agent of the Common Shares or
Preferred Shares known to the Rights Agent by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days’ prior notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the 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 the 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 of the United States so long as such Person is authorized to
do business as a banking institution, is authorized under such laws to exercise
corporate trust or stock transfer powers, is in good standing, and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million, or (b) an Affiliate of any such Person described in part (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose.

          Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares or Preferred Shares, and 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 its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement.

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SECTION 23.
REDEMPTION

          (a)          The Board of Directors of the Company may, at its option,
at any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the “Redemption Price”); provided,
however, that if, following the occurrence of a Shares Acquisition Date and
following the expiration of the right of redemption hereunder but prior to any
event described in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii)
or (iv) of Section 13(a) hereof:

 

 

 

          (i)          A Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Shares in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of an
event described in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii)
or (iv) of Section 13(a) hereof such that such Person is thereafter a Beneficial
Owner of less than 15% of the outstanding Common Shares; and

 

 

 

          (ii)         There are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons,

then the right of redemption shall be reinstated and thereafter be subject to
the provisions of this Section 23. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Company may, in its discretion, round up the redemption price to be paid to any
holder of Rights to the nearest whole cent.

          (b)          Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption (with prompt written notice
thereof to the Rights Agent); provided, however, that the failure to give, or
any defect in, any such notice shall not affect the legality or validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice that 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.

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SECTION 24.
EXCHANGE

          (a)          The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing,
the Board of Directors 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, including without limitation the
Employee Plans, or of any such Subsidiary, or of any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.

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

          (c)          In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred shares,
as such term is defined in Section 11(b) hereof) for Common Shares exchangeable
for Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.

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

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

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SECTION 25.
NOTICE OF CERTAIN EVENTS

 

 

 

(a)          In case the Company shall propose to:

 

 

 

              (i)         Pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend);

 

 

 

              (ii)        Offer to the holders of its Preferred Shares rights,
options or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights, options
or warrants;

 

 

 

              (iii)       Effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of outstanding
Preferred Shares);

 

 

 

              (iv)       Effect any consolidation or merger into or with, or to
effect any sale, disposition or other transfer (or to permit one or more of its
Subsidiaries to effect any sale, disposition or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person;

 

 

 

              (v)        Effect the liquidation, dissolution or winding up of
the Company; or

 

 

 

              (vi)       Declare or pay any dividend on the Common Shares
payable in Common Shares or effect a subdivision, combination or consolidation
of the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares);

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

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

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SECTION 26.
NOTICES

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

 

 

 

Monterey Gourmet Foods

 

1528 Moffett Street

 

Salinas, CA 93905

 

Attn: Chief Financial Officer

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

 

 

 

Corporate Stock Transfer

 

3200 Cherry Creek South Drive

 

# 430

 

Denver, CO 80209

 

Attention: Carylyn Bell

 

 

 

With a copy to:

 

 

 

Corporate Stock Transfer

 

3200 Cherry Creek South Drive

 

# 430

 

Denver, CO 80209

 

Attention: General Counsel

          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 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.

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SECTION 27.
SUPPLEMENTS AND AMENDMENTS

          The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing signed
by the Company and the Rights Agent; provided, however, that from and after such
time as any Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests of the holders
of Rights. Without limiting the foregoing, the Company at any time prior to such
time as any Person becomes an Acquiring Person may amend this Agreement to raise
or lower the thresholds set forth in Sections l(a) and 3(a), provided the
threshold may not be lowered to less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common Shares then known
by the Company to be beneficially owned 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 holding Common Shares for or
pursuant to the terms of any such plan or a person excluded from the definition
of “Acquiring Person” by such definition), and (ii) 10%. 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 executing any amendments or supplements, the Rights
Agent shall be entitled to request and rely on a certificate from an appropriate
officer of the Company and, if requested by the Rights Agent, an opinion of
counsel, that states that the proposed supplement or amendment complies with
this Section 27.

SECTION 28.
REGISTRATION OF SECURITIES

          The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare
and file, if deemed necessary by the Company, such registration statements and
other filings under the Securities Act and the securities or “blue sky” laws of
any state, with respect to any securities purchasable upon the exercise of the
Rights, and to permit the same to become effective. Upon any such suspension,
the Company shall issue a public announcement (with prompt written notice
thereof to the Rights Agent) stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement (with prompt
written notice thereof to the Rights Agent) at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction has been obtained.

SECTION 29.
DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS;
TIDE COMMITTEE

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

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          (b) It is understood that the TIDE Committee (as described below) of
the Board of Directors shall review and evaluate this Agreement in order to
consider whether the maintenance of this Agreement continues to be in the best
interests of the Company, its stockholders and other relevant constituencies of
the Company at least once every three years, or sooner than that if any Person
shall have made a proposal to the Company or its stockholders, or taken any
other action that, if effective, could cause such Person to become an Acquiring
Person hereunder, if a majority of the members of the TIDE Committee shall deem
such review and evaluation appropriate after giving due regard to all relevant
circumstances. Following each such review, the TIDE Committee shall communicate
its conclusions to the full Board of Directors, including any recommendation in
light thereof as to whether this Agreement should be modified or the Rights
should be redeemed. If the Company has a non-executive chairman, the TIDE
Committee shall be chaired by the non-executive chairman and comprised of all
members of the Board of Directors who are not officers, employees or Affiliates
of the Company. If the Company does not have a non-executive chairman, the TIDE
Committee shall be comprised of the members of the Corporate Governance and
Nominating Committee of the Board of Directors (or any successor committee) who
are not officers, employees or Affiliates of the Company

          (c) The TIDE Committee and the Board of Directors, when considering
whether this Agreement should be modified or the Rights should be redeemed,
shall have the power to set their own agenda and to retain at the expense of the
Company their choice of legal counsel, investment bankers and other advisors.
The TIDE Committee and the Board of Directors, when considering whether this
Agreement should be modified or the Rights should be redeemed, shall have the
authority to review all information of the Company and to consider any and all
factors they deem relevant to an evaluation of whether this Agreement should be
modified or the Rights should be redeemed.

SECTION 30.
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 31.
BENEFITS OF THIS AGREEMENT

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

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SECTION 32.
SEVERABILITY

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

SECTION 33.
GOVERNING LAW

          This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such
State, provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of Colorado applicable to contracts made and to be
performed entirely within such State.

SECTION 34.
COUNTERPARTS

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

SECTION 35.
DESCRIPTIVE HEADINGS

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

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

 

 

 

 

 

MONTEREY GOURMET FOODS, INC.

 

 

 

 

 

 

/s/ VAN TUNSTALL

 

 

--------------------------------------------------------------------------------

 

 

Van Tunstall

 

 

Chairman of the Board

 

 

 

 

 

 

 

 

 

 

CORPORATE STOCK TRANSFER, INC.

 

 

 

 

 

 

By:

/s/ CARYLYN BELL

 

 

 

--------------------------------------------------------------------------------

 

 

 

Title: President

 

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