Exhibit 10.1 


SHAREHOLDER PROTECTION RIGHTS AGREEMENT 


BETWEEN 


MONTEREY GOURMET FOODS 


AND


CORPORATE STOCK TRANSFER 

as Rights Agent



Dated as of July 1, 2008






TABLE OF CONTENTS


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	




	
 

	
 

	
 

	
 

	
 

	
 


	
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-







	
 

	
 

	
 

	
 

	
 

	
 


	
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-







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. 


1






          (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.





2






          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. 


3






          (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. 


4






	
 

	
 


	
 

	
             (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. 


	
 





5






	
 

	
 


	
          (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.


6






          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.



7






          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;





8






	
 

	
 


	
 

	
              (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. 


9







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.


10






	
 

	
 

	
 

	
 


	
 

	
 

	
(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.


11






          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. 





12






	
 

	
 

	
 


	
 

	
          (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.


13






          (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.


14






	
 

	
 

	
 


	
 

	
(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.





15






          (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. 


16






          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.


17






          (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.


18






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; 





19






	
 

	
 

	
 


	
 

	
          (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; 





20






	
 

	
 

	
 


	
 

	
 

	
               (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 





21









	
 

	
 


	
 

	
          (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. 


22






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.


23






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 


24






          (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. 


25






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. 


26







          (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. 


27






          (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. 


28






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. 


29







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. 


30






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.


31






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. 


32






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. 


33






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. 


34






          (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). 


35






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

	
 





36