Document:

EX-10.1

 AUBURN NATIONAL BANCORPORATION, INC AND SUBSIDIARIES 

EXHIBIT 10.1 
 AGREEMENT,
DATED NOVEMBER 12, 2019, 
 BY AND BETWEEN MICHAEL J. KING AND AUBURNBANK 

SEVERANCE AGREEMENT 
 This
Severance Agreement and General Release (“Agreement”) is made between Michael J. King and AuburnBank and Auburn National Bancorporation, Inc. (collectively, “AuburnBank”) as follows: 

RECITALS 
 The
following recitals are adopted for purposes of this Agreement: 
  

	A.	 Mr. King is AuburnBank’s Senior Vice President, Mortgage Lending Division. 

 

	B.	 Mr. King intends to retire and resign from his employment at AuburnBank. 

C.        In recognition of the valuable service provided by Mr. King to AuburnBank during his
employment, in order to provide for the orderly transition of Mr. King’s duties, to set forth the respective rights and obligations of Mr. King and AuburnBank (collectively, “the Parties”) with respect to
Mr. King’s separation from AuburnBank, and to finally, fully and forever settle and resolve all matters concerning Mr. King’s past services to AuburnBank, the Parties enter into this Agreement as more fully described below. 

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the parties, intending to be legally
bound, acknowledge, covenant, and agree as follows: 
  

	1.	             Employment and Transition of
Duties. 

 (a)        Mr. King shall remain an employee of
AuburnBank from the date this Agreement becomes effective until December 31, 2019. The parties may mutually agree upon an earlier departure date for Mr. King, and in the case of such mutual agreement, Mr. King will receive the full
payments described in paragraph 2. 
 (b)        During the period from the date this
Agreement becomes effective until December 31, 2019, Mr. King will continue to perform his duties as directed by AuburnBank, including assisting in the transition of his duties to persons designated by AuburnBank. No later than
December 31, 2019 Mr. King’s employment by AuburnBank shall cease. 
  

	2.	             Payments.

 (a)        After this Agreement becomes effective, subject to ¶
1 (b), AuburnBank will pay Mr. King’s monthly salary, less withholdings required by law, and otherwise, as Mr. King may lawfully direct, through December 31, 2019. 

(b)        For 2020, Mr. King will receive a lump sum payment of $154,500, which represents
eight month of salary, less withholdings required by law, and as Mr. King otherwise designates, to be deposited in an account of his choosing by January 15, 2020. 

(c)        Following Mr. King’s departure as an AuburnBank employee, Mr. King
shall no longer participate as an employee in, and no amounts shall be contributed by or for the benefit of Mr. King to, or matched with respect to, any AuburnBank employee health, welfare, benefit or ERISA plan. The foregoing is not intended
to and does not limit Mr. King’s rights under COBRA. 
  

	3.	             Release.

 (a)        By signing this Agreement, Mr. King does irrevocably
extinguish, dismiss, release, and abandon finally and forever every claim (including but not limited to complaints, causes of action, charges of discrimination, grievances, and petitions of every form and type), with no exception, that Mr. King
did bring or could have brought, whether known or unknown, up to the date that this Agreement becomes effective, against AuburnBank, Auburn National Bancorporation, Inc., their respective related entities, and their respective Board members,
officers, administrators, employees, lawyers, insurers, assigns, and agents, as such (collectively, “the Released Parties”), and does end finally and irrevocably every claim by him, of any sort, arising from or related to his employment
with AuburnBank. This 

 
release includes, but is not limited to: 

●          all claims and rights arising under federal and state laws such as, but not
limited to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., 42 U.S.C. § 1981, the Civil Rights Act of 1991, 42 U.S.C. § 12101 et seq., including the Americans with Disabilities
Amendments Act, 29 U.S.C. § 201 et seq., the Age Discrimination in Employment Act, 29 USC § 621 et seq.; and the Alabama Age Discrimination in Employment Act, § 25-1-20 et seq., 
 ●          all
other legal and equitable claims regarding, relating to, or arising from Mr. King’ employment with AuburnBank, and 

●          all claims which may be available under any constitution, law, regulation,
executive order, policy, practice, or other basis for a claim. 
 (b)      This Agreement does not bar
Mr. King from participating in an investigation or proceeding against any of the Released Parties instigated by the EEOC or other agency at its own initiative, although Mr. King waives his right to monetary relief related to such a charge
or complaint. 
 (c)      Excluded from this general release of claims are Mr. King’s right
to enforce this Agreement, claims or rights arising out of events occurring after the date when this Agreement becomes effective, claims to benefits made under Alabama workers’ compensation laws (other than retaliatory discharge under Ala. Code
§ 25-5-11.1), and claims that Mr. King cannot waive by law. 

4.                Ongoing Matters.
Notwithstanding any other provision of this Agreement, after Mr. King leaves AuburnBank the Parties will continue to cooperate with respect to and jointly defend against, any pending and other legal matters arising while Mr. King was an
AuburnBank employee, until such matters are resolved by a final order or judgment, and AuburnBank will continue to defend Mr. King in such matters, contingent upon Mr. King’s continued cooperation in the defense and absent a conflict
of interest between the Parties. 

5.                No Other Obligation to Pay or
Defend. Mr. King agrees that except as described in ¶¶ 2 and 4, the Released Parties have no obligation to make any other payment of any type to him or on his behalf for to anyone else, including but not limited to his
spouse, other family members, lawyers, friends, or agents. 

6.                
Non-disparagement and Confidentiality of the Agreement. 

(a)        After this agreement becomes effective the Parties agree not to make disparaging
remarks or other disparaging communications about each other. 
 (b)        The Parties also
agree that the terms of this Agreement shall remain confidential except where disclosure is required of AuburnBank by state or federal law or regulation. Otherwise, the existence of this Agreement and its terms shall remain confidential, and they
each agree to take reasonable actions to maintain this confidentiality regardless of such mandatory disclosures. 

(c)        Notwithstanding the above, Mr. King and AuburnBank may discuss this Agreement
on a need-to-know, confidential basis with his or its respective accountants, financial planners, legal counsel, Board members, and administrators. 

(d)        The obligations imposed by this ¶ 6 are for an indefinite period. 

7.                Confidentiality and Non-Solicitation Agreement. 
 (a)      Confidential
Information and Trade Secrets. Mr. King agrees that he will keep confidential and will not, directly or by assisting others, use, disclose, confirm, or otherwise act upon confidential information and trade secrets of AuburnBank that he
learned while he was employed by AuburnBank. 
 (b)      Nonsolicitation of Customers. For a
period of one year after Mr. King’s employment with AuburnBank 

 
ends, Mr. King agrees that he will not, directly or by assisting others, solicit, attempt to solicit, call upon, divert, or initiate contact or communication with any Restricted Customer for
the purpose of selling or providing, or attempting to sell or provide, any service or product competitive or potentially competitive with any product or service sold or provided by AuburnBank. As used herein, “Customer” shall mean a person
or entity (i) to whom AuburnBank has sold or provided products or services in connection with AuburnBank’s business; or (ii) who AuburnBank has actively solicited for the purpose of selling or providing products or services in
connection with AuburnBank. As used herein, “Restricted Customer” shall mean any Customer (a) with whom Mr. King and Mortgage Loan Officers (“MLOs”) working under him communicated on behalf of AuburnBank; (b) whose
dealings with AuburnBank were coordinated or supervised by Mr. King or such MLOs during Mr. King’s employment with AuburnBank; (c) about whom Mr. King or such MLOs obtained confidential information in the ordinary course of
business as a result of their employment with AuburnBank; or (d) who receives or received products or services authorized by AuburnBank, the sale or provision of which results or resulted in compensation, commissions, or earnings for
Mr. King or any such MLO within the one-year period prior to the end of Mr. King’s employment; provided, however, that such definition shall not apply to a Customer who expressly terminates her,
his, or its relationship with AuburnBank prior to any communication or solicitation prohibited hereunder or any other breach by Mr. King or such MLOs of this Agreement. 

(c)      Nonsolicitation of AuburnBank Employees. For a period of one year following the end of
Mr. King’s employment with AuburnBank, he agrees not to, either directly or indirectly, solicit, recruit, or otherwise encourage any Restricted Person to discontinue employment with AuburnBank. As used herein, a “Restricted
Person” shall mean a person employed by AuburnBank and with whom Mr. King had contact in the course of employment with AuburnBank. 

8.             Liability Denied. This Agreement is not an
admission of liability or wrongdoing by any of the Released Parties, and it shall not be deemed as such. Any such liability is denied expressly. 

9.              Binding Terms of the Agreement. This
Agreement shall be binding upon Mr. King’ successors, heirs, and assigns. Mr. King further expressly agrees, represents, and warrants that all agreements and understandings relating in any way to, or arising from, the
subject matter of this Agreement are expressed herein. Mr. King further represents that there are no oral agreements or understandings of any nature whatever which contradict, vary, modify, supplement, or add in any way to the express
written terms of this Agreement. Mr. King enters into this Agreement for the purpose of making full and final compromise, adjustment, and settlement of his claims, as more fully described above. 

10.             No Other Claims. Mr. King agrees he has
not filed a claim against, relating to, or arising from his employment at AuburnBank, or the Released Parties, with respect to the matters addressed in this Agreement, or if he has filed such a claim, he will withdraw and dismiss it to the fullest
extent that he is able to do so. Should there be any other such claim, Mr. King agrees that it is settled and released by this Agreement, which may be asserted as a bar and estoppel against any such claim. 

11.            Response to Lawful Subpoena or Request. Should
Mr. King be subpoenaed or receive a request for information or documents concerning this Agreement, he shall, prior to responding to the subpoena or request, provide Mr. Bob Dumas or Mr. David Hedges with a copy of the subpoena or
request, and allow AuburnBank sufficient time to oppose the subpoena or request, should it decide to do so. 

12.            Interpretation. Should any provision of this
Agreement require interpretation or construction, it is agreed that the entity interpreting or construing it shall not construe the provisions of the Agreement more strictly against any party who prepared the Agreement. Both parties have fully
participated in the negotiation and preparation of all provisions of this Agreement. 

13.            No Additional Employment. Mr. King agrees that
he will not seek or accept employment or engagement with or at AuburnBank (including its respective affiliated or related entities) absent a written invitation to do so, specifically addressed to him and referencing this Agreement, and signed by the
President of AuburnBank. 
 14.            OWBPA Statements. Mr.
King agrees, represents, and warrants that he: 

 (a)      has been advised to review this Agreement with
his attorney, and understands and freely consents to the terms and conditions contained in the Agreement; 

(b)      understands that he is releasing any claim that he may have under the state and federal Age
Discrimination in Employment Acts and the other provisions identified in ¶ 3, and that he is not waiving any rights or claims that might arise after the date of this Agreement; 

(c)      has been provided a period of 21 days within which to consider this Agreement; 

(d)      has been provided valuable consideration to which he was not otherwise entitled; and 

(e)      has a period of seven days following the execution of this Agreement to revoke his agreement to
settle any age discrimination claims, and the Agreement shall not become effective or enforceable until this revocation period has expired. To be effective, the rescission must be in writing and delivered by 12:00 noon (12:00 p.m.) on the seventh
calendar day following the execution of this Agreement to: 
 Mr. Bob Dumas 

Chairman and President 
 AuburnBank

 100 N Gay St 
 Auburn, AL 36830

 To be effective, the written rescission must state clearly and unequivocally that Mr. King intends to revoke his waiver and release
of age discrimination claims. The notice of rescission may be delivered by email, hand delivery, or pre-paid overnight delivery (FedEx or UPS). Rescission of the Agreement as to age discrimination claims shall
void the entire Agreement. 
 15.           No Assignment of Benefits.
Mr. King expressly represents and warrants that he has not assigned or transferred any claim or potential claim against the Released Parties to any third party. 

16.           Entire Agreement. This Agreement contains the entire
understanding and agreement of the Parties. If any portion of this Agreement is later held by an adjudicative body of competent jurisdiction to conflict with any federal, state, or local law, and as a result of such holding a portion or portions of
the Agreement are declared invalid and of no force or effect in such jurisdiction, all remaining provisions of this Agreement shall remain in full force and effect in that jurisdiction and be construed as if the invalid portion or portions had not
been included. 
 17.           Actions to Facilitate Execution of the
Agreement. Mr. King agrees to take such further action and to execute such further and additional documents, instruments, and writings as may be necessary, proper, required, desirable, or convenient for the purposes of fully
effectuating the terms and provisions of this agreement. As to these activities, each party is to bear his or its own costs. 

18.           No Benefits to Third Parties. This Agreement is between Mr.
King and AuburnBank and for the benefit of Mr. King and the Released Parties. The Parties agree that the Agreement shall not confer any rights or remedies, whether as third party beneficiaries or otherwise, upon any person or entity other than
Mr. King and the Released Parties and their respective successors and assigns. 

19.           Use of the Agreement. This Agreement shall not be
used against any of the Released Parties by Mr. King or his agents in any proceeding, action, suit, claim, or cause of action, except as evidence to enforce the terms of this Agreement. 

20.           Agreement Governed by Alabama Law. This Agreement shall be
governed by the laws of the state of Alabama without giving effect to any conflict of law rule or provision (whether in the state of Alabama or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the
state of Alabama. 

21.            Modification or Amendment. This Agreement shall not be
modified or amended except by a subsequent writing signed by all of the parties to this Agreement, making specific reference to this Agreement, and attached hereto. 

22.           Counterparts. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original but all of which together will constitute one and the same Agreement. 

23.          Authority to Sign. Each party to this Agreement represents that
he or it executes the Agreement after ample, full, and mature deliberation, with full authority to do so, and after having read the Agreement and obtained advice of counsel, and that he or it executes the Agreement voluntarily and being fully aware
of its contents, effect, and importance. 
 24.         Effective Date. This
Agreement shall be effective on the last date that it is signed by one of the parties. 
  

					
	/S/ MICHAEL J. KING	 		 	
	Michael J. King	 		 	
		 		 	 Date: November 12, 2019

		 		 	

  

	
	 STATE OF ALABAMA            )

	
                       
                             )

	 COUNTY OF
LEE                     )

 I, the undersigned authority, a Notary Public in and for said County in said State, hereby certify that
Michael J. King whose name is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that being informed of the contents of the said instrument, he executed the same voluntarily on the day the same bears date.

 GIVEN under my hand and seal this 12th day of November, 2019. 

[NOTARIAL SEAL]     
  

					
		 		 	 /S/ KRISTEN PREUS

		 		 	 NOTARY PUBLIC

		 		 	 Printed Name: Kristen Preus

		 		 	 My Commission Expires: September 19, 2023

 AuburnBank and Auburn National Bancorporation, Inc. 

By: /S/ ROBERT W. DUMAS 
 Its: PRESIDENT AND CEO

  

					
		 		 	 Date: November 12, 2019

  

	
	 STATE OF ALABAMA            )

	
                       
                             )

	 COUNTY OF
LEE                     )

 Before me, the undersigned Notary Public in and for said County and State hereby certify that
Robert W. Dumas whose name as President and CEO of AuburnBank and as President and CEO of Auburn National Bancorporation, Inc. is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that being informed of
the contents of said instrument, he in said capacity as such officer and with full authority, executed the same voluntarily for and as the act of AuburnBank. 

GIVEN under my hand and seal this 12th day of November, 2019. 

[NOTARIAL SEAL]     
  

					
		 		 	 /S/ MARCIA OTWELL

		 		 	 NOTARY PUBLIC

		 		 	 Printed Name: Marcia Otwell

		 		 	 My Commission Expires: December 26, 2020Exhibit

Exhibit 4.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
The authorized capital stock of Qumu Corporation (“Qumu,” “we,” “our,” or “us”) consists of 30,000,000 shares of capital stock, $0.01 par value. Unless otherwise established by our board of directors, all shares of capital stock are common stock. Qumu has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: its common stock, $0.01 par value.
The following summary of the general terms and provisions of our capital stock does not purport to be complete and is based upon and qualified by reference to our articles of incorporation and bylaws, which are filed as exhibits to our Annual Report on Form 10-K and are incorporated by reference herein. We encourage you to read our articles of incorporation, our bylaws and the applicable provisions of the Minnesota Business Corporation Act, or MBCA, for additional information.
Common Stock
Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders, and do not have cumulative voting rights. Holders of common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. 
Subject to preferences that may be applicable to any then outstanding preferred stock, holders of common stock are entitled to receive dividends, if any, as and when declared by our board of directors. 
All outstanding shares of common stock are fully paid and nonassessable. 
The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.
Transfer Agent
The transfer agent and registrar for our common stock is Equiniti Trust Company.
Listing
Our common stock is currently listed on the Nasdaq Capital Market under the symbol “QUMU”.
Preferred Stock
From the 30,000,000 shares of Qumu’s authorized capital stock, 250,000 shares have been designated as Series A Junior Participating Preferred Shares. We currently have no outstanding Series A Junior Participating Preferred Shares or any other shares of preferred stock. The Series A Junior Participating Preferred Shares are summarized below under “Anti-Takeover Effects of Provisions of our Articles of Incorporation, our Bylaws and Minnesota Law.”
Under our articles of incorporation, our board of directors is authorized to establish more than one class or series of shares from our capital stock and to fix the relative rights and preferences of any such different classes or series, without shareholder approval. 
Our board of directors could authorize the issuance of additional shares of preferred stock with terms and conditions that could have the effect of discouraging a takeover or other transaction that might involve a premium price for holders of the shares of common stock or otherwise discourage a transaction that holders of common stock might believe to be in their best interests.
Anti-Takeover Effects of Provisions of our Articles of Incorporation, our Bylaws and Minnesota Law
Some provisions of Minnesota law, our articles of incorporation and our bylaws contain provisions that could make the following transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy 

contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that shareholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares. These provisions are summarized below:
Series A Junior Participating Preferred Shares
On September 17, 2003, our board of directors adopted resolutions designating a series of 250,000 preferred shares, $0.01 par value, designated as the Series A Junior Participating Preferred Shares. The Series A Junior Participating Preferred Shares were created in connection with our shareholder rights plan which expired on March 21, 2014. 
Under the shareholder rights plan when it was in effect, if any person or group (the “Acquiring Person”) became the beneficial owner of 20% or more of our outstanding common stock, all other holders of our common stock would be entitled to purchase from us 1/100 of a Series A Junior Participating Preferred Share at a price of $35 per 1/100 of a Preferred Share, subject to adjustment. In the event that any person or group became an Acquiring Person, each holder of this Preferred Share purchase right, other than rights that are or were beneficially owned by the Acquiring Person (which would thereafter be void), would thereafter have the right to receive, upon exercise thereof at the then current exercise price of the right, that number of shares of our common stock having a market value of two times the exercise price of the right. The effect of the shareholder rights plan was to dilute the Acquiring Person thereby making the cost of abusive unsolicited takeover practices prohibitive and create an incentive for a potential acquiror to negotiate in good faith with our board of directors.
Although the shareholder rights plan expired on March 21, 2014, our board of directors has the right to reinstate the shareholder rights plan or adopt a new shareholder rights plan without shareholder approval.
The resolutions creating the Series A Junior Participating Preferred Shares provide that the holders of Series A Junior Participating Preferred Shares are entitled, in preference to holders of common stock, to such dividends as our board of directors may declare out of funds legally available for the purpose. Each Series A Junior Participating Preferred Share is entitled to a minimum preferential quarterly dividend payment of $1 per share but is entitled to an aggregate dividend of 100 times the dividend declared per share of common stock whenever such dividend is declared. In the event of liquidation, the holders of Series A Junior Participating Preferred Shares will be entitled to a minimum preferential liquidation payment of $100 per share but will be entitled to an aggregate payment of 100 times the payment made per share of common stock. Each Series A Junior Participating Preferred Share will have 100 votes, voting together with common stock. In the event of any merger, consolidation or other transaction in which shares of common stock are exchanged, each Series A Junior Participating Preferred Share will be entitled to receive 100 times the amount received per share of common stock. These rights will be protected by customary anti-dilution provisions. Series A Junior Participating Preferred Shares are not redeemable. 
Because of the nature of the Series A Junior Participating Preferred Shares’ dividend, liquidation and voting rights, the value of a one one-hundredth interest in a Series A Junior Participating Preferred Share should approximate the value of one share of common stock.
Designation of Capital Stock
The ability of our board of directors to designate classes or series of stock from our authorized capital stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
Shareholder Meetings
Under our bylaws, regular meetings of our shareholders may be called only by our board of directors.
Under our bylaws, special meetings of our shareholders may be held at any time and for any purpose and may be called by our president, treasurer, two or more directors or by a shareholder or shareholders holding 10% or more of the voting power of all shares entitled to vote on the matters to be presented to the meeting, except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or affect a business combination, including any action to change or otherwise affect the composition of the board of directors for that purpose, must be called by 25% or more of the voting power of all shares entitled to vote.

Requirements for Advance Notification of Shareholder Nominations and Proposals
Nominations for election to our board of directors may be made by or at the direction of the board of directors or by a shareholder who follows the advance notice procedures described in Section 3.14 of our bylaws. In general, a shareholder must submit a written notice of the nomination to our corporate secretary at least 120 days before the date that is one year after the date of our proxy statement for the prior year’s regular meeting, together with required information regarding the shareholder and each person the shareholder proposes to nominate.
Shareholders can propose business, other than nominations to our board of directors, to be considered at a regular meeting of shareholders only if a shareholder follows the advance notice procedures described in Section 2.10 of our bylaws. In general, a shareholder must submit a written notice of the proposal together with required information regarding the shareholder and the shareholder’s interest in the proposal to our corporate secretary at least 120 days before the date that is one year after the date of our proxy statement for the prior year’s regular meeting.
Unanimous Shareholder Action by Written Consent
Our bylaws permit shareholders to take any action that might be taken at a meeting of the shareholders by written action, but only if it is signed by all of the shareholders entitled to vote on that action.
Provisions of Minnesota Law
We are governed by the provisions of Section 671 (Control Share Act), Section 673 (Business Combination Act) and Section 675 (Takeover Provisions) of the MBCA. These provisions may have an effect of delaying, deferring or preventing an unsolicited takeover of Qumu and deprive our shareholders of an opportunity to sell their shares at a premium over the market price. The following description of certain provisions of the MBCA is only a summary and does not purport to be complete and is qualified in its entirety by reference to the MBCA.
In general, Section 671 of the MBCA provides that shares of an “issuing public corporation,” such as Qumu, acquired by an “acquiring person” in a “control share acquisition” that exceed the threshold of voting power of any of the three ranges identified below will not have voting rights, unless the issuing public company’s shareholders vote to accord such shares the voting rights normally associated with such shares. A “control share acquisition” is an acquisition, directly or indirectly, by an “acquiring person” (as defined in the MBCA) of beneficial ownership of shares of an issuing public corporation that, but for Section 671, would, when added to all other shares of the issuing public corporation beneficially owned by the acquiring person, entitle the acquiring person, immediately after the acquisition, to exercise or direct the exercise of a new range of voting power of the issuing public corporation with any of the following three ranges: (i) at least 20 percent but less than 33.33 percent; (ii) at least 33.33 percent but less than or equal to 50 percent; and (iii) over 50 percent. Shares acquired in a control share acquisition in excess of any of the three thresholds will have not voting rights, unless voting rights are accorded such shares by an affirmative vote by the issuing public company’s shareholders. Acquisition of beneficial ownership of shares includes the acquisition of the power to vote or direct the voting of shares, whether that power is shared within a group or is held by one shareholder. Certain acquisitions of voting power are exempt from Section 671, including acquisitions directly from the issuing public company. The issuing public company also has an option to call for redemption all, but not less than all, shares acquired in the control share acquisition that exceed 20% of the outstanding voting power (or such higher threshold of voting power for which shareholder approval has not been obtained) at a price equal to the fair market value of the shares at the time the call is given if (i) the acquiring person fails to deliver the information statement to the issuing public company by the tenth day after the control share acquisition; or (ii) shareholders have voted not to accord voting rights to the shares acquired in the control share acquisition.
In general, Section 673 of the MBCA prohibits a public Minnesota corporation from engaging in a business combination with an interested shareholder for a period of four years after the date of the transaction in which the person became an interested shareholder, unless either the business combination or the acquisition by which such person becomes an interested shareholder is approved in a prescribed manner before the person became an interested shareholder. The term “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested shareholder. An “interested shareholder” is a person who is the beneficial owner, directly or indirectly, of 10% or more of a corporation’s voting stock, or who is an affiliate or associate of the corporation, and who, at any time within four years before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the corporation’s outstanding voting stock. Section 673 does not apply if a committee of our board of directors consisting of one or more of our disinterested directors (excluding our current and former officers and employees) approves the proposed transaction or the interested shareholder’s acquisition of shares before 

the share acquisition date or on the share acquisition date but before the interested shareholder becomes an interested shareholder.
If a takeover offer is made for our stock, Section 675 of the MBCA precludes the offeror from acquiring additional shares of stock (including in acquisitions pursuant to mergers, consolidations or statutory share exchanges) within two years following the completion of the takeover offer, unless shareholders selling their shares in the later acquisition are given the opportunity to sell their shares on terms that are substantially the same as those contained in the earlier takeover offer. A “takeover offer” is a tender offer which results in an offeror who owned ten percent or less of a class of our shares acquiring more than ten percent of that class, or which results in the offeror increasing its beneficial ownership of a class of our shares by more than ten percent of the class, if the offeror owned ten percent or more of the class before the takeover offer. Section 675 does not apply if a committee of our board of directors approves the proposed acquisition before any shares are acquired pursuant to the earlier tender offer. The committee must consist solely of directors who were directors or nominees for our board of directors at the time of the first public announcement of the takeover offer, and who are not our current or former officers and employees, offerors, affiliates or associates of the offeror or nominees for our board of directors by the offeror or an affiliate or associate of the offeror.

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