Document:

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Exhibit 4(a)

 

 

SHARE RIGHTS AGREEMENT

DIGI INTERNATIONAL INC.

and

WELLS FARGO BANK, N.A.

Rights Agent

RIGHTS AGREEMENT

Dated as of April 22, 2008

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 		 
	Section 1.
	 	Certain Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Appointment of Rights Agent	 	 	4	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Issue of Right Certificates	 	 	4	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Form of Right Certificates	 	 	6	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Countersignature and Registration	 	 	7	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Transfer, Split-Up, Combination and Exchange of Right Certificates; Lost, Stolen, Destroyed or Mutilated Right Certificates	 	 	7	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	8	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Cancellation and Destruction of Right Certificates	 	 	9	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Reservation and Availability of Preferred Shares	 	 	10	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Preferred Shares Record Date	 	 	11	 
	 
	 	 	 	 	 	 
	Section 11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	 	11	 
	 
	 	 	 	 	 	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	 	19	 
	 
	 	 	 	 	 	 
	Section 13.
	 	Consolidation, Merger, Sale or Transfer of Assets or Earning Power	 	 	20	 
	 
	 	 	 	 	 	 
	Section 14.
	 	Fractional Rights and Fractional Shares	 	 	22	 

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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 15.
	 	Rights of Action	 	 	23	 
	 
	 	 	 	 	 	 
	Section 16.
	 	Agreement of Right Holders	 	 	23	 
	 
	 	 	 	 	 	 
	Section 17.
	 	Right Certificate Holder Not Deemed a Stockholder	 	 	24	 
	 
	 	 	 	 	 	 
	Section 18.
	 	Concerning the Rights Agent	 	 	24	 
	 
	 	 	 	 	 	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	25	 
	 
	 	 	 	 	 	 
	Section 20.
	 	Duties of Rights Agent	 	 	25	 
	 
	 	 	 	 	 	 
	Section 21.
	 	Change of Rights Agent	 	 	27	 
	 
	 	 	 	 	 	 
	Section 22.
	 	Issuance of New Right Certificates	 	 	28	 
	 
	 	 	 	 	 	 
	Section 23.
	 	Redemption	 	 	28	 
	 
	 	 	 	 	 	 
	Section 24.
	 	Exchange	 	 	29	 
	 
	 	 	 	 	 	 
	Section 25.
	 	Notice of Certain Events	 	 	31	 
	 
	 	 	 	 	 	 
	Section 26.
	 	Notices	 	 	31	 
	 
	 	 	 	 	 	 
	Section 27.
	 	Supplements and Amendments	 	 	32	 
	 
	 	 	 	 	 	 
	Section 28.
	 	Successors	 	 	32	 
	 
	 	 	 	 	 	 
	Section 29.
	 	Benefits of this Agreement	 	 	33	 
	 
	 	 	 	 	 	 
	Section 30.
	 	Severability	 	 	33	 
	 
	 	 	 	 	 	 
	Section 31.
	 	Governing Law	 	 	33	 

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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 32.
	 	Counterparts	 	 	33	 
	 
	 	 	 	 	 	 
	Section 33.
	 	Descriptive Headings	 	 	33	 
	 
	 	 	 	 	 	 
	Section 34.
	 	Book Entry	 	 	33	 

	 	 	 	 	 
	Exhibit A

	 	—
	 	Amended and Restated Certificate of Powers,
Designations, Preferences and Rights of Series A Junior
Participating Preferred Shares
	 
	 	 	 	 
	Exhibit B

	 	—
	 	Form of Right Certificate
	 
	 	 	 	 
	Exhibit C

	 	—
	 	Summary of Rights to Purchase Preferred Shares

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RIGHTS AGREEMENT

          Agreement, dated as of April 22, 2008, between Digi International Inc., a Delaware corporation
(the “Company”), and Wells Fargo Bank, N.A. (the “Rights Agent”).

          The Board of Directors of the Company has authorized and declared a dividend of one preferred
share purchase right (individually a “Right” and collectively the “Rights”) for each Common Share
(as defined in this Agreement) of the Company outstanding at the Close of Business (as defined in
this Agreement) on June 30, 2008 (the “Record Date”), each Right initially representing the right
to purchase one one-hundredth of a Preferred Share (as defined in this Agreement), upon the terms
and subject to the conditions set forth in this Agreement, and has further authorized the issuance
of one Right (as such number may hereafter be adjusted pursuant to the provisions of Section 11)
with respect to each Common Share that shall become outstanding (i) at any time between the Record
Date and the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date
(as such terms are defined in this Agreement) or (ii) upon the exercise or conversion, prior to the
earlier of the Redemption Date or the Final Expiration Date, of any option or other security
exercisable for or convertible into Common Shares, which option or other such security is
outstanding on the Distribution Date.

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

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

          (a) “Acquiring Person” shall mean any Person (as such term is defined in this Agreement) who
or which, together with all Affiliates and Associates (as such terms are defined in this Agreement)
of such Person, shall be the Beneficial Owner (as such term is defined in this Agreement) of 20% or
more of the Common Shares of the Company then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary (as such term is defined in this Agreement) of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, or (iv) any entity holding Common
Shares for or pursuant to the terms of any such plan described in clause (iii) of this sentence.
Notwithstanding the foregoing, 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 Common 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; provided, however,
that if a Person shall, together with all Affiliates or Associates of such Person, become the
Beneficial Owner of 20% or more of the Common Shares of the Company then outstanding by reason of
share acquisitions by the Company and if such Person or such Person’s Affiliates or Associates
shall, after such share acquisitions by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, and, immediately after becoming the Beneficial Owner of such
additional Common Shares, such Person shall, together with all Affiliates and Associates of such
Person, be the Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding, then such Person (unless such Person shall be (1) the Company, (2)

 

 

any Subsidiary of the Company, (3) any employee benefit plan of the Company or of any Subsidiary of
the Company, or (4) any entity holding Common Shares for or pursuant to the terms of any such plan
described in clause (3) of this sentence) shall be deemed an “Acquiring Person.” An entity other
than the Company or any Subsidiary of the Company holding Common Shares for or pursuant to the
terms of an employee benefit plan of the Company or of any Subsidiary of the Company and in
addition being the Beneficial Owner of Common Shares that are not held for or pursuant to the terms
of any such plan shall be deemed to constitute an Acquiring Person, notwithstanding anything herein
stated, if, but only if, it, together with its Affiliates and Associates, shall be the Beneficial
Owner of 20% or more, exclusive of those Common Shares held by it for or pursuant to the terms of
any such plan, of the Common Shares then outstanding. Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would otherwise be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently (including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares that would otherwise cause such Person to
be an “Acquiring Person” or (B) such Person was aware of the extent of its Beneficial Ownership but
had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement), and
without any intention of changing or influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person would no longer be
an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement.

          (b) “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.

          (c) A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “beneficially
own” or have “beneficial ownership” of, any securities:

               (i) which such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, including without limitation securities with respect to which such Person
or any of such Person’s Affiliates or Associates has “beneficial ownership” pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act;

               (ii) which such Person or any of such Person’s Affiliates or Associates has, directly or
indirectly, (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, whether or not in
writing (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, other rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, or to have beneficial ownership of, any

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securities pursuant to subparagraph (i), (ii) or (iii) of this paragraph (c) solely because such
securities are 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 or dispose of (including without limitation pursuant
to any agreement, arrangement or understanding (whether or not in writing)); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
or to have beneficial ownership of, any securities pursuant to subparagraph (i), (ii) or (iii) of
this paragraph (c) solely because of the right to vote such securities pursuant to an agreement,
arrangement or understanding if the agreement, arrangement or understanding to vote such securities
(1) arises solely from a revocable proxy or consent given to such Person or any of such Person’s
Affiliates or Associates in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the Exchange Act and (2) is not
also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report) as being beneficially owned by such Person; or

               (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or
Associates) has any agreement, arrangement or understanding (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 pursuant to a revocable proxy as
described in the final proviso to subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company.

Notwithstanding anything in these definitions of Beneficial Owner, beneficially own or 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 beneficially own under this Agreement.

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

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

          (f) “Common Shares,” when used with reference to the Company, shall mean shares of Common
Stock of the par value of $.01 per share (as such par value may be changed from time to time) 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.

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

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

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

          (j) “Preferred Shares” shall mean Series A Junior Participating Preferred Shares, $.01 par
value per share (as such par value may be changed from time to time) of the Company having the
rights and preferences set forth in the Amended and Restated Certificate of Powers Designations,
Preferences and Rights in the form attached to this Agreement as Exhibit A hereto.

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

          (l) “Section 11(a)(ii) Event” shall mean an event described in the first sentence of Section
11(a)(ii).

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

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

          (o) “Subsidiary” of any Person shall mean any corporation or other entity of which a majority
of the voting power of the voting equity securities or other equity interests entitled to vote in
the election of directors (or Persons with comparable responsibilities if the entity has no
directors) is beneficially owned, directly or indirectly, by such Person, or otherwise controlled
by such Person.

          Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3,
shall prior to the Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions of this Agreement, 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.

          Section 3. Issue of Right Certificates.

          (a) Until the earlier of (i) the Close of Business on the 15th day after the Shares
Acquisition Date or (ii) the Close of Business on the 15th day (or such later date as may

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 be determined by action of the Board of Directors of the Company prior to such time as any Person
becomes an Acquiring Person) after the date of the first public announcement (as defined in Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act) 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 entity holding Common Shares for or pursuant to the terms of any
such plan) relating to a tender or exchange offer the consummation of which would result in
beneficial ownership by a 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 entity holding
Common Shares for or pursuant to the terms of any such plan) of 20% or more of the then outstanding
Common Shares (including any such date that is after the date of this Agreement and prior to the
issuance of the Rights, the earlier of such dates being herein referred to as the “Distribution
Date”), (x) the Rights will 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 Right Certificates where the context so requires) and not by separate
Right Certificates, and (y) the right to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares. 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, send) by first-class, 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, one or more Right Certificates,
in substantially the form of Exhibit B hereto (the “Right Certificates”), evidencing one
Right for each Common Share so held, subject to adjustment pursuant to Section 11(i). In the event
that an adjustment in the number of Rights per Common Share has been made pursuant to Section
11(i), at the time Right Certificates are distributed, the Company may, to the extent provided in
Section 14(a), make the necessary and appropriate adjustments (as set forth in Section 14(a)) so
that Right Certificates are distributed representing only whole numbers of Rights and pay cash in
lieu of fractional Rights pursuant to Section 14(a). As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.

          (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, and the registered holders of the Common Shares
shall also be the registered holders of the associated Rights. 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. Notwithstanding any legend contained on any such surrendered
stock certificate, from and after the Close of Business on the Record Date, the surrender for
transfer of any such certificate for Common Shares shall not constitute the transfer of the rights
granted pursuant to the Rights Agreement

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between the Company and Norwest Bank Minnesota, National Association (now known as Wells Fargo
Bank, N.A.), dated as of June 10, 1998, as amended (the “Expiring Rights”), which Expiring Rights
expire at the Close of Business on June 30, 2008.

          (c) Certificates for Common Shares which become outstanding after the Record Date and (i)
prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date or
(ii) upon the exercise or conversion, prior to the earlier of the Redemption Date or the Final
Expiration Date, of any option or other security exercisable for or convertible into Common Shares,
which option or other security is outstanding on the Distribution 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 a Rights Agreement between Digi
International Inc. and Wells Fargo Bank, N.A., dated as of April 22,
2008 (the “Rights Agreement”), the terms of which (including
restrictions on the transfer of such Rights) are hereby incorporated
herein by reference and a copy of which is on file with the
Secretary at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor to its Secretary
from such holder. Under certain circumstances, as set forth in the
Rights Agreement, Rights that are or were acquired or beneficially
owned by an Acquiring Person or any Associate or Affiliate thereof
(as such terms are defined in the Rights Agreement) may become null
and void.

With respect to certificates containing the foregoing legend, until the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, the Rights associated with the
Common Shares represented by such certificates shall be evidenced by such certificates alone, the
registered holders of the Common Shares shall also be the registered holders of the associated
Rights 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 canceled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.

          Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall
be in substantially the form of Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company

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may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law, rule or regulation (including, without limitation,
any rule or regulation of any stock exchange on which the Rights may from time to time be listed)
or to conform to usage or to reflect adjustments to the Rights made pursuant to this Agreement.
Subject to the provisions of Section 11 and Section 22, the initial Right Certificates, whenever
distributed, 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 price per one-hundredth of a Preferred Share being herein called the
“Purchase Price”), but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price shall be subject to adjustment as provided in this Agreement.

          Section 5. Countersignature and Registration.

          (a) The Right Certificates shall be executed on behalf of the Company by any one of its Chief
Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and
shall be attested by the Secretary or Assistant Secretary, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or by facsimile
signature, by the Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right 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 Right Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the actual date of the
signing of such Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any such person was not
such an officer.

          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or the office or offices designated as the appropriate place for surrender of
Right Certificates upon exercise or transfer, books for registration and transfer of the Right
Certificates. Such books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.

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

          (a) Subject to the provisions of Section 14, 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 Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section 11(a)(ii) or that have
been exchanged pursuant to Section 24) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered holder to

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purchase a like number of one one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or offices of the Rights Agent designated for such purpose.
Thereupon the Rights Agent shall, subject to Section 14, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment by the registered holder 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 Right Certificates. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered Right Certificate
until the registered holder shall have duly completed and executed the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.

          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, 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 Right
Certificate if mutilated, the Company will execute (either manually or by facsimile signature) and
deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

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

          (a) Subject to Section 11(a)(ii), the registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement) in whole or in part
at any time after the Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly completed and executed, to the Rights Agent
at the office or offices 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, prior to the earliest of (i) the Close of Business on June 30, 2018 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 (the
“Redemption Date”), or (iii) the time at which such Rights are exchanged as provided in Section 24.

          (b) The Purchase Price for each one one-hundredth of a Preferred Share purchasable pursuant to
the exercise of a Right shall initially be $60, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.

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          (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase duly completed and executed, accompanied by payment of the Purchase Price for
the shares to be purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9 in cash, or by certified check
or bank cashier’s check or money order payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Preferred Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have
elected to deposit the total number of Preferred Shares issuable upon exercise of the Rights under
this Agreement with a depositary agent, requisition from the depositary agent depositary 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 depositary agent), and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional interests in shares in accordance with Section 14,
(iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after receipt, deliver such
cash for fractional interests in shares to or upon the order of the registered holder of such Right
Certificate.

          (d) In case the registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of
Section 14.

          (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section unless such registered holder
shall have (i) duly completed and executed 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) of such
Right Certificate or Affiliates or Associates thereof as the Company shall reasonably request.

          Section 8. Cancellation and Destruction of Right Certificates. All Right 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 canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for

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cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. Subject
to applicable law and regulation, the Rights Agent shall maintain in a retrievable database
electronic records of all canceled or destroyed stock certificates which have been canceled or
destroyed by the Rights Agent. The Rights Agent shall maintain such electronic records or physical
records for the time period required by applicable law and regulation. Upon written request of the
Company (and at the expense of the Company), the Rights Agent shall provide to the Company or its
designee copies of such electronic records or physical records relating to rights certificates
canceled or destroyed by the Rights Agent.

          Section 9. Reservation and Availability of Preferred Shares.

          (a) 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 treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights.

          (b) The Company will prepare and file, as soon as practicable following expiration of the
Company’s right of redemption pursuant to Section 23, a registration statement under the Securities
Act of 1933, as amended (the “Act”), with respect to the Rights and the Company’s securities
purchasable upon exercise of the Rights on an appropriate form, and use its best efforts to cause
such registration statement to (i) become effective as soon as practicable after such filing, and
(ii) remain effective (with a prospectus at all times meeting the requirements of the Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for such securities or
(B) the Final Expiration Date. The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend, for a period of time
not to exceed 90 days after the date the registration statement is filed, the exercisability of the
Rights in order to permit the registration statement to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof is not permitted under
applicable law.

          (c) 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 and any
applicable transfer taxes), be duly and validly authorized and issued and fully paid and
nonassessable shares.

          (d) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares upon the exercise

-10-

 

of Rights. The Company shall not, however, be required to pay any transfer tax that may be payable
in respect of any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred Shares in a name
other than that of, the registered holder of the Right Certificate evidencing Rights surrendered
for exercise, or to issue or to deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights, until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or until it has been
established to the Company’s satisfaction that no such tax is due.

          Section 10. 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 Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes) 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 Right Certificate as such
shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

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

               (a)(i) In the event 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, surviving or acquiring 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 pursuant to the exercise of the Rights, shall
be proportionately adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect (and any applicable transfer
taxes), the aggregate number and kind of shares of capital stock which, if such Right 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

-11-

 

the consideration to be paid upon 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. If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).

               (ii) Subject to Section 24 of this Agreement, in the event any Person shall become an
Acquiring Person (other than pursuant to any Section 13 Event occurring after the Distribution Date
or within 15 days prior thereto), proper provision shall be made so that each holder of a Right,
subject to Section 11(a)(iii), shall thereafter have a right to receive, upon exercise thereof by
payment of the amount equal to the product of the number of one one-hundredths of a Preferred Share
which would otherwise be issuable upon exercise of a Right and the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of Preferred Shares, such number of Common
Shares of the Company 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
exercisable immediately prior to the occurrence of the Section 11(a)(ii) Event and (y) dividing
that product by 50% of the then current per share market price of the Company’s Common Shares
(determined pursuant to Section 11(d)) on the date of such occurrence.

               From and after the first occurrence of a Section 11(a)(ii) Event or a Section 13 Event, any
Rights that are beneficially owned by any Acquiring Person (or any Associate or Affiliate thereof)
or were beneficially owned by any Acquiring Person (or any Associate or Affiliate thereof) after
the Acquiring Person became an Acquiring Person shall become null and void without any further
action and no holder of such Rights shall thereafter have any rights to exercise such Rights or any
other rights whatsoever with respect to such Rights, whether under any provision of this Agreement
or otherwise. No Right Certificate shall be issued pursuant to Section 3 that represents Rights
that would be void pursuant to the preceding sentence; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate of such an Acquiring Person or to any nominee
of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person or any Associate or Affiliate of such Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be canceled. The Company shall
use all reasonable efforts to insure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of a Right Certificate or other Person as a result
of its failure in good faith to make any determinations with respect to an Acquiring Person or its
Affiliates or Associates.

               (iii) If, on the date of the occurrence of a Section 11(a)(ii) Event (the “Adjustment Date”),
the Company does not have sufficient issued but not outstanding or reserved, or authorized,
unissued and unreserved, Common Shares available to permit the exercise in full of all Rights that
are exercisable on the Adjustment Date for the number of Common Shares per Right provided for in
Section 11(a)(ii), then the Exercise Price (as defined

-12-

 

below) and the number of Common Shares to be delivered by the Company upon exercise of a Right
shall be further adjusted as provided in this subparagraph (iii).

          (1) Definitions:

               (A) The “Aggregate Market Value” is the product of (i) the number of Available Shares and (ii)
the current per share market price of the Common Shares on the Adjustment Date, determined as
provided in Section 11(d).

               (B) The “Available Shares” are all unreserved Common Shares which are authorized and unissued
or issued but not outstanding immediately prior to the Adjustment Date.

               (C) The “Exercise Price” is the amount of the payment that must be made by the holder of a
Right in connection with the exercise of one Right immediately prior to the Adjustment Date.

               (D) The “Deficiency” is the amount by which (i) two times the Exercise Price exceeds (ii) the
quotient obtained by dividing the Aggregate Market Value by the number of Rights remaining
outstanding immediately prior to the Adjustment Date (the “Remaining Rights”) (which number shall
not include the Rights that are beneficially owned by any Acquiring Person (or any Associate or
Affiliate thereof) or were beneficially owned by any Acquiring Person (or any Associate or
Affiliate thereof) after the Acquiring Person became an Acquiring Person that shall have become
void pursuant to Section 11(a)(ii)).

          (2) If the Deficiency is less than or equal to the Exercise Price, then

               (A) the number of Common Shares to be delivered by the Company upon exercise of a Right shall
be adjusted to be equal to the number of Available Shares divided by the number of Remaining
Rights; and

               (B) the amount of cash required to be delivered by the holder of a Right upon the exercise
thereof shall be adjusted (the “New Exercise Price”) to equal the Exercise Price minus the
Deficiency; provided, however, that in no event will the New Exercise Price be less
than the aggregate par value of the Common Shares required to be delivered upon the exercise of one
Right pursuant to subparagraph (2)(A) above.

          (3) If the Deficiency is greater than the Exercise Price, then

               (A) the number of Common Shares to be delivered by the Company upon exercise of a Right shall
be adjusted to equal the quotient obtained by dividing the Exercise Price by the current per share
market price of the Common Shares on the Adjustment Date;

-13-

 

               (B) the New Exercise Price shall equal the aggregate par value of the Common Shares required
to be delivered upon the exercise of one Right pursuant to subparagraph (3)(A) above; and

               (C) in lieu of issuing Common Shares (in whole or in part upon the exercise of Rights) the
Company may issue, upon the exercise of Rights at the New Exercise Price, other equity securities
of the Company (including, without limitation, shares, or units or fractions of shares, of
preferred stock, which may include Preferred Shares) that the Board of Directors of the Company has
determined to have substantially the same value, voting rights and other rights as Common Shares
(such equity securities are herein called “common share equivalents”). To the extent that such
common share equivalents (or fractions thereof) are substituted for Common Shares upon exercise of
the Rights following the occurrence of a Section 11(a)(ii) Event, they shall be substituted on a
pro-rata basis with respect to all Rights (other than Rights that are beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after the Acquiring Person became an
Acquiring Person that shall have become void pursuant to Section 11(a)(ii)). Such common share
equivalents shall not be included in Available Shares, and all of the Available Shares shall be
reserved, as of the Adjustment Date, for issuance, on a pro-rata basis, upon exercise of the Rights
and may not be substituted for with common share equivalents upon the exercise of any Right except
to the extent that the number of Common Shares required to be delivered under subparagraph (3)(A)
upon the exercise of such Right exceeds the quotient of the number of Available Shares divided by
the number of Remaining Rights.

          (4) If, at the time any adjustment is required pursuant to this Section 11(a)(iii), the Common
Shares shall have no par value, then for the purposes of this Section 11(a)(iii), the par value of
the Common Shares shall be deemed to be $.01 per share.

          (5) In the event that there shall not be sufficient issued but not outstanding or reserved or
authorized but unissued and unreserved Common Shares (or common share equivalents the issuance of
which is permitted under Section 11(a)(iii)(3)(C)) to permit the exercise in full of the Rights in
accordance with this subparagraph (iii), the Company shall use its best efforts to cause the
authorization of sufficient additional Common Shares or common share equivalents to permit such
exercise and, if the Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional Common Shares or common share equivalents could be authorized to
permit such exercise, the Company may suspend the exercisability of the Rights for a period not to
exceed 90 days in order to seek any authorization of additional Common Shares or other common share
equivalents. In the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.

          (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

-14-

 

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 convertible into Preferred Shares or equivalent preferred shares) less than
the current per share market price of the Preferred Shares (as determined pursuant to Section
11(d)) 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
per share 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); 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. 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 and shall be binding on the Rights Agent and the holders of the Rights.
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
a record date is fixed; and in the event that such rights, options or warrants are not so issued,
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.

          (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 cash or non-cash assets (other than a regular quarterly cash dividend
or a dividend payable in Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b)), 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 (as determined pursuant to Section 11(d)) 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 and shall be binding on the Rights Agent and
the holders of the Rights) of the portion of the evidences of indebtedness or cash or non-cash
assets so to be distributed on, or of such subscription rights or warrants applicable to, one
Preferred Share, and the denominator of which shall be such then current per share market price of
the Preferred Shares; 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 to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed;

-15-

 

and in the event that such distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price that would then be in effect if such record date had not been fixed.

               (d)(i) For the purpose of any computation hereunder, 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 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer of such Security of
(A) a dividend or distribution on such Security payable in such Security or securities convertible
into such Security (other than the Rights) or (B) any subdivision, combination or reclassification
of such Security, and prior to the expiration of 30 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, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on The Nasdaq Stock Market LLC or, if the Security is not
listed or admitted to trading on The Nasdaq Stock Market LLC, 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 quoted
price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported on such quoting or reporting system then in use, or, if on any
such day the Security is not so quoted or reported, 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. Except as provided in Section 11(d)(ii) with respect to Preferred
Shares, if on any such day the Security is not publicly held or no professional market maker is
making a market in the Security, the fair value of such Security on such day as determined in good
faith by the Board of Directors of the Company (whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights) shall be used in lieu of the closing price for such day. 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) If the Preferred Shares are not publicly held or traded in a manner described in Section
11(d)(i), then, notwithstanding anything to the contrary provided in Section 11(d)(i), 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
of this Agreement) multiplied by one hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so traded, the “current per share market price” of the Preferred Shares
shall mean the fair value per share

-16-

 

as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights.

          (e) Except as provided in the third sentence of this Section 11(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 one-millionth of a Preferred Share or one ten-thousandth 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, but for the first sentence of this Section
11(e), shall be made no later than the earlier of (i) three years from the date of the transaction
that requires such adjustment or (ii) the Final Expiration Date.

          (f) If as a result of an adjustment made pursuant to Section 11(a) or Section 13(a), the
holder of any Right thereafter exercised shall become entitled to receive any shares of capital
stock other than Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right 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, 13 and 14 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 under this Agreement shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Share (or other securities) purchasable from
time to time under this Agreement upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.

          (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths
of a Preferred Share (calculated to the nearest one one-millionth 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

-17-

 

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 ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by
the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement 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 Right Certificates have been issued on or after the Distribution Date, shall be at least 10
days later than the date of the public announcement. If Right Certificates have been issued on or
after the Distribution Date, 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 Right Certificates on such record date Right Certificates evidencing, subject to Section 14, 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 Right Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided for in this
Agreement, shall bear the adjusted Purchase Price, and shall be registered in the names of the
holders of record of Right 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 Right
Certificates theretofore issued may continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed at the time of the issuance of such Right
Certificates under this Agreement.

          (k) Before taking any actions 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
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares upon the occurrence of the event requiring such adjustment.

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

          (n) Anything in this Agreement or the Rights to the contrary notwithstanding, 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)
into a greater or lesser number of Common Shares, then in any such case (x) 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 (y) 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(n) shall be made successively whenever such a dividend
is declared or paid or such a subdivision, combination or consolidation is effected. If an event
occurs which would require an adjustment under Section 11(a)(ii) and this Section 11(n), the
adjustments provided for in this Section 11(n) shall be in addition and prior to any adjustment
required pursuant to Section 11(a)(ii).

          (o) If any adjustment in the Purchase Price pursuant to paragraph (b) or (c) of this Section
11 would not be permitted by law, under the Company’s Certificate of Incorporation or under the
Amended and Restated Certificate of Powers, Designations, Preferences and Rights establishing the
Preferred Shares, no such issuance of securities or distribution of evidences of indebtedness or
other assets or subscription rights or warrants, as the case may be, that would require such an
adjustment but for the limitations established by law, the Company’s Certificate of Incorporation
or such Amended and Restated Certificate of Powers, Designations, Preferences and Rights shall be
made by the Company.

          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) if such

-19-

 

adjustment is made after the Distribution Date, mail a brief summary thereof to each holder of
record of a Right Certificate in accordance with Section 25. The Rights Agent shall be fully
protected in relying on such certificate and on any adjustment therein contained.

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

          (a) In the event, after the Distribution Date or within 15 days prior thereto, directly or
indirectly,

               (x) 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,

               (y) 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 consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding Common Shares of the
Company held by existing stockholders of the Company shall be changed into or exchanged for stock
or other securities of any other Person (or the Company) or money or any other property (except as
a result of the exercise of statutory dissenters’ rights), or

               (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or a series of related 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 or one or more of its wholly
owned Subsidiaries),

then, and in each such case, proper provision shall be made so that (i) each holder of a Right
(except as otherwise provided herein) shall thereafter have the right to receive, upon the exercise
thereof by payment of the amount equal to the product of the number of one one-hundredths of a
Preferred Share which would otherwise be issuable upon exercise of a Right and the then current
Purchase Price in accordance with the terms of this Agreement and in lieu of Preferred Shares, such
number of validly authorized and issued, fully paid, nonassessable and freely tradeable Common
Shares of the Principal Party (as hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or adverse claims, as shall be equal to 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, immediately prior to the occurrence of the Section 13 Event,
exercisable and (y) dividing that product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such merger, consolidation, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be
deemed to refer to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its Common Shares to
permit the exercise of all outstanding Rights) in connection with the

-20-

 

consummation of any such transaction as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.

          (b) “Principal Party” shall mean:

               (i) in the case of any transaction described in clauses (x) or (y) of the first sentence of
Section 13(a), the Person (including, without limitation, the Company as successor thereto or as
the surviving corporation) that is the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, or if no securities are so issued, the
Person that is the other party to such merger or consolidation; and

               (ii) in the case of any transaction described in clause (z) of the first sentence of Section
13(a), the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;

provided, however, that in any such case, (1) if the Common Shares of such Person
are not at such time or have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered, “Principal Party” shall refer to
such other Person, and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Shares of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the Common Shares
having the greatest aggregate market value.

          (c) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized, unreserved Common Shares which have not been issued or are
held in treasury to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after the date of any
Section 13 Event, the Principal Party will:

               (i) prepare and file a registration statement under the Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights, on an appropriate form, and use its best
efforts to cause such registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (1) the date as of which the Rights are no longer exercisable for
such securities or (2) the Final Expiration Date;

               (ii) take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights; and

-21-

 

               (iii) deliver to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.

          (d) The Company shall not enter into any transaction of the kind referred to in this Section
13 if at the time of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to be afforded by the
Rights.

          The provisions of this Section 13 shall similarly apply to successive mergers, consolidations
or other transfers.

          Section 14. Fractional Rights and Fractional Shares.

          (a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there may be
paid to the registered holders of the Right 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 Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on The Nasdaq Stock Market LLC or, if the Rights are not listed or admitted to trading
on The Nasdaq Stock Market LLC, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported on such quoting or
reporting system then in use or, if on any such date the Rights are not so quoted or reported, the
average of the closing bid and asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be used in lieu of the
closing price for such day.

          (b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-hundredth of a Preferred Share, or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction) upon exercise of the Rights or to distribute certificates
which evidence fractions of Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share or, if a Right shall then be exercisable for a fraction
other than one one-hundredth of a Preferred Share, integral multiples of that fraction). Fractions

-22-

 

of Preferred Shares in integral multiples of one one-hundredth of a Preferred Share or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction may, at the election of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a depositary selected by it,
provided, that such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, or, if
a Right shall then be exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction, the Company may pay to the registered holders of Right
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 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)(ii)) for the Trading Day immediately prior to the
date of such exercise.

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

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

          Section 16. Agreement of Right 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;

-23-

 

          (b) after the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated
for such purposes, duly endorsed or accompanied by a proper instrument of transfer;

          (c) the Company and the Rights Agent may deem and treat the person in whose name the Right
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 Right Certificate 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;

          (d) the Company may issue Rights after the Record Date as provided in this Agreement; and

          (e) notwithstanding anything in this Agreement or the Rights to the contrary, the Company, the
Rights Agent and the Board of Directors of the Company shall not have any liability to any holder
of a Right or other Person as a result of the inability of the Company or the Rights Agent to
perform any of its obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute, rule, regulation
or executive order promulgated or enacted by any governmental authority prohibiting or otherwise
restraining performance of such obligation.

          Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of
any Right 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 in this
Agreement or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions of this Agreement.

          Section 18. Concerning the Rights Agent.

          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it under this Agreement and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties under this Agreement.
The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense (including the costs and expenses of defending against any claim of
liability), incurred without negligence, bad faith or willful

-24-

 

misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement.

          (b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Agreement in
reliance upon any Right 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 its counsel as
set forth in Section 20.

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

          (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties to this Agreement;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. If at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right 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 Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right 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 Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

          (b) In case at any time the name of the Rights Agent shall be changed and at such time any of
the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in the Right Certificates and
in this Agreement.

          Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates (or, prior to the Distribution Date, the Common
Shares certificates), by their acceptance of the Rights, shall be bound:

-25-

 

          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion.

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of the “current per share market price”) be proved or
established by the Company prior to taking or suffering any action under this Agreement, 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 Chief
Executive Officer, the President, the Chief Financial Officer, any Vice President or the Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.

          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own negligence, bad faith or willful misconduct.

          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right 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 be under any responsibility in respect of the validity of this
Agreement or the execution and delivery of this Agreement (except the due execution by the Rights
Agent) or in respect of the validity or execution of any Right 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 Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii)) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act under this Agreement be deemed to make any
representation or warranty as to the authorization or reservation of any Preferred Shares or Common
Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.

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

-26-

 

          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties under this Agreement from any one of the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President or the Secretary of the Company, and to
apply to such officers for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for delay in acting while waiting for those instructions.

          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company or its Subsidiaries may be interested, or
contract with or lend money to the Company or its Subsidiaries or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or its Subsidiaries or for any
other legal entity.

          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty under this Agreement either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.

          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties under this
Agreement or in the exercise of its rights or powers if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or liability
is not reasonably assured to it.

          (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the form of assignment or form of election to purchase, as the case may be, has either
not been duly completed and executed or indicates an affirmative response to enumerated clause 1
and/or 2 on the reverse side of the applicable Right Certificate, the Rights Agent shall not take
any further action with respect to such requested exercise or transfer without first consulting
with the Company.

          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and, if such notice is mailed after the Distribution Date, to the
holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days’ 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 and Preferred
Shares by registered or certified mail, and, if such

-27-

 

notice is mailed after the Distribution Date, to the holders of the Right 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 Right Certificate (who shall, with such notice,
submit such holder’s Right Certificate for inspection by the Company), then the registered holder
of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the United States or of
the State of Minnesota or New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State of Minnesota or New
York), in good standing, having an office in the State of Minnesota or New York which is authorized
under such laws to exercise corporate trust or stock transfer powers 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 a corporation
described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it under this Agreement,
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 and
Preferred Shares, and, if such notice is filed after the Distribution Date, mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section, 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 Right Certificates. Notwithstanding any of the provisions
of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
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 Right Certificates made in accordance with the
provisions of this Agreement.

          Section 23. Redemption.

          (a) Subject to the provisions of Section 27, the Board of Directors of the Company may, at its
option, at any time prior to the earlier of (x) such time as a Person becomes an Acquiring Person
or (y) the Close of Business on the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.001 per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date of this Agreement
(such redemption price being hereinafter referred to as the

-28-

 

“Redemption Price”). The Redemption Price shall be payable in cash by the Company. The redemption
of the Rights by the Board of Directors of the Company may be made effective at such time and on
such basis and with such conditions as the Board of Directors of the Company in its sole discretion
may establish. Except for the obligation to pay the Redemption Price, the Board of Directors and
the Company shall not have any liability to any Person as a result of the redemption of Rights
pursuant to the terms of this Section 23.

          (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 for each Right so
held. Promptly after the action of the Board of Directors of the Company ordering the redemption
of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at 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; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the validity of such
redemption. Any notice which is mailed in the manner provided in this paragraph 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. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in
any manner except as specifically set forth in this Section or in Section 24 or in connection with
the purchase of Common Shares prior to the Distribution Date.

          Section 24. Exchange.

          (a) The Board of Directors of the Company may, at its option, at any time after the date the
Rights first become exercisable for Common Shares pursuant to Section 11(a)(ii), exchange all or
part of the then outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)) for Common Shares, with each Right to
be exchanged for such number of Common Shares as shall equal the result obtained by dividing (x)
the Exercise Price (as defined in Section 11(a)(iii)) by (y) the current per share market price of
the Common Shares (determined pursuant to Section 11(d)) on the date the Rights first become
exercisable for Common Shares pursuant to Section 11(a)(ii) (such number of shares being
hereinafter referred to as the “Exchange Ratio”). The Exchange Ratio shall be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction affecting the Common
Shares that occurs after the date the Rights first become exercisable for Common Shares pursuant to
Section 11(a)(ii). Notwithstanding the foregoing, the Board of Directors of the Company shall not
be empowered to effect such exchange at any time after any Person (other than (1) the Company, (2)
any Subsidiary of the Company, (3) any employee benefit plan of the Company or of any Subsidiary of
the Company or (4) any entity holding Common Shares for or pursuant to the terms of any plan
described in clause (3) of this sentence), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then outstanding.

-29-

 

          (b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (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; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of Rights which will
be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 11(a)(ii)) held by each
holder of Rights.

          (c) In the event that there shall not be sufficient unreserved Common Shares issued but not
outstanding or authorized, unissued and unreserved to permit the exchange of Rights as contemplated
in accordance with 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), or common share equivalents,
as such term is defined in Section 11(a)(iii)(3)(C)), for Common Shares exchangeable for Rights, at
the initial rate of one one-hundredth of a Preferred Share (or equivalent preferred share) or one
common share equivalent for each Common Share, as appropriately adjusted to reflect stock splits,
stock dividends or similar transactions affecting the Common Shares that occur after the date of
this Agreement.

          (d) In the event that there shall not be sufficient unreserved Common Shares, Preferred
Shares, equivalent preferred shares or common share equivalents, authorized and unissued or issued
but not outstanding to permit the exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to authorize additional
Common Shares or Preferred Shares, equivalent preferred shares or common share equivalents 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 may pay to the registered holders of the Right 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 the second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of exchange pursuant to this Section. The Board of Directors and the Company
shall not have any liability to any Person as a result of the exchange of Rights pursuant to the
terms of this Section.

-30-

 

          Section 25. Notice of Certain Events.

          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend),
or (ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred Shares), or (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or a
series of related 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 or Persons (other than the Company and/or
any of its wholly owned Subsidiaries), or (v) to effect the liquidation, dissolution or winding up
of the Company, or (vi) to declare or pay any dividend on the Common Shares payable in Common
Shares or to effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise), then, in each such case, the Company shall give to each holder of a
Right Certificate, to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which shall specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 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 Section 11(a)(ii) Event shall occur, then, in any such case, the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii).

          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 Right 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:

Digi International Inc.

11001 Bren Road East

Minnetonka, MN 55343

Attention: Chief Financial Officer

-31-

 

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Right 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:

Wells Fargo Bank, N.A.

161 North Concord Exchange

South St. Paul, MN 55075

Attention: Manager — Shareowner Services

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

          Section 27. Supplements and Amendments. The Company may and the Rights Agent shall,
if so directed by the Company, from time to time supplement or amend this Agreement without the
approval of any holders of Common Shares or Right Certificates in order (i) to extend the Final
Expiration Date or, provided that at the time of such amendment no Person has become an Acquiring
Person, the period during which the Rights may be redeemed, (ii) to cure any ambiguity, or to
correct or supplement any provision contained in this Agreement which may be defective or
inconsistent with any other provisions in this Agreement, (iii) prior to such time as any Person
becomes an Acquiring Person, to otherwise change or supplement any provision in this Agreement in
any manner which the Company may deem necessary or desirable, or (iv) following such time as any
Person becomes an Acquiring Person, to otherwise change or supplement any provision in this
Agreement in any manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates (other than Right Certificates
evidencing Rights that shall have become null and void pursuant to Section 11(a)(ii)). Without
limiting the foregoing, the Company may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set forth in Sections 1(a) and 3(a)
hereof from 20% to not less than the greater of (i) the sum of .001% and the largest percentage of
the outstanding Common Shares then known by the Company to be beneficially owned by any Person
(other than (1) the Company, (2) any Subsidiary of the Company, (3) any employee benefit plan of
the Company or any Subsidiary of the Company, or (4) any entity holding Common Shares for or
pursuant to the terms of any plan described in clause (3) of this sentence) or (ii) 10%.

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

-32-

 

          Section 29. Benefits of this Agreement.

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

          (b) The Board of Directors of the Company shall have the exclusive power and total and
complete authority to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or the Company or necessary or advisable in the administration of
this Agreement, including without limitation the right and power to interpret this Agreement and to
make conclusively all determinations deemed necessary or advisable for the administration of this
Agreement. All such acts, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors in good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent and the holders of the Rights and all other parties and (y) not subject the Board of
Directors to any liability to the holders of the Rights or any other party.

          Section 30. 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 31. Governing Law. This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of the State of Delaware applicable
to contracts to be made and performed entirely within such state, except for Sections 18, 19, 20
and 21, which shall be governed and construed in accordance with the laws of the State of
Minnesota.

          Section 32. 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 33. 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 of this Agreement.

          Section 34. Book Entry. Reference in this Agreement to certificates for Common Shares
includes, in the case of uncertificated shares, the balances indicated in the book-entry account
system of the transfer agent for the Common Shares, and any uncertificated

-33-

 

Common Share will also represent the associated Right. Any legend required to be placed on any
certificate for Common Shares may instead be included on any book-entry confirmation or
notification to the holder of such Common Shares.

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

	 	 	 	 	 
	 	DIGI INTERNATIONAL INC.

 	 
	 	By:  	/s/ Joseph T. Dunsmore
 	 
	 	 	Its:  President and Chief Executive Officer 	 
	 	 	 	 
	 
	 	WELLS FARGO BANK, N.A.

 	 
	 	By:  	/s/ Cindy Gesme
 	 
	 	 	Its:  Assistant Vice President 	 
	 	 	 	 

-34-

 

EXHIBIT A

AMENDED AND RESTATED CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES A JUNIOR PARTICIPATING PREFERRED SHARES

OF

DIGI INTERNATIONAL INC.

(Pursuant to Section 151 of the Delaware General Corporation Law)

          The undersigned officer of Digi International Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the “Company”), in accordance with the
provisions of Section 103 and Section 151 of the Delaware General Corporation Law, does hereby
certify:

          A. That, by resolution of the Board of Directors of the Company adopted on June 10, 1998, and
by a Certificate of Powers, Designations, Preferences and Rights of Series A Junior Participating
Preferred Shares filed in the office of the Secretary of State of the State of Delaware on June 22,
1998, the Company authorized the issuance of a series of Six Hundred Thousand (600,000) Series A
Junior Participating Preferred Shares of the Company (the “Series A Preferred Shares”) and
established the powers, designations, preferences and rights and the qualifications, limitations or
restrictions thereof.

          B. That no Series A Junior Participating Preferred Shares of the Company have been issued.

          C. That pursuant to the authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation of the Company, as amended, and Section 151(g) of the Delaware General
Corporation Law, the Board of Directors of the Company on April 22, 2008, adopted the following
resolution amending and restating, effective 6:00 p.m., Delaware time, on June 30, 2008, the
provisions of the Series A Junior Participating Preferred Shares.

          RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Company in accordance with the provisions of its Restated Certificate of Incorporation, as
amended, the Certificate of Powers, Designations, Preferences and Rights of Series A Junior
Participating Preferred Shares of the Company is hereby amended and restated, effective 6:00 p.m.,
Delaware time, on June 30, 2008, to read in its entirety as follows:

          1. Designation and Amount. The shares of such series shall be designated as “Series A
Junior Participating Preferred Shares,” and the number of shares constituting such series shall be
Six Hundred Thousand (600,000). The number of shares constituting such series may, unless
prohibited by the Restated Certificate of Incorporation, as amended, or by applicable law of the
State of Delaware, be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of Series A Preferred Shares to a number
less than the number of shares then outstanding or held in treasury plus the number of shares
issuable upon the exercise of outstanding options, rights or warrants or upon the

A-1

 

conversion of any outstanding securities issued by the Company convertible into Series A Preferred
Shares.

          2. Dividends and Distributions.

               (i) The holders of Series A Preferred Shares, in preference to the holders of Common Shares
and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on
the last business day of March, June, September and December in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a Series A Preferred Share, or fraction thereof,
in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, one hundred (100) times the
aggregate per share amount of all cash dividends, and one hundred (100) times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any Series A Preferred Share, or fraction thereof. In the event the
Company shall at any time after June 30, 2008 declare or pay any dividend on Common Shares payable
in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of Common Shares, then in
each such case the amount to which holders of Series A Preferred Shares were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.

               (ii) The Company shall declare a dividend or distribution on the Series A Preferred Shares as
provided in subparagraph (i) of this paragraph 2 simultaneously with its declaration of a dividend
or distribution on the Common Shares (other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00
per share on the Series A Preferred Shares shall nevertheless be payable, out of funds legally
available for such purpose, on such subsequent Quarterly Dividend Payment Date.

               (iii) Dividends shall begin to accrue and be cumulative on outstanding Series A Preferred
Shares from the Quarterly Dividend Payment Date immediately preceding the date of issue of such
Series A Preferred Shares, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the

A-2

 

determination of holders of Series A Preferred Shares entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the Series A Preferred Shares in an amount
less than the total amount of such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares outstanding at that time.
The Board of Directors may fix a record date for the determination of
holders of Series A Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record
date shall be not more than sixty (60) days prior to the date fixed for the payment thereof.

          3. Voting Rights. The holders of Series A Preferred Shares shall have the following
voting rights:

               (i) Subject to the provision for adjustment hereinafter set forth, each Series A Preferred
Share shall entitle the holder thereof to one hundred (100) votes on all matters submitted to a
vote of the stockholders of the Company. In the event the Company shall at any time after June 30,
2008 declare or pay any dividend on Common Shares payable in Common Shares, or effect a subdivision
or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise)
into a greater or lesser number of Common Shares, then in each such case the number of votes per
share to which holders of Series A Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of which is the number
of Common Shares that were outstanding immediately prior to such event.

               (ii) Except as otherwise provided herein, in any other Certificate of Powers, Designations,
Preferences and Rights creating a series of Preferred Stock or by law, the holders of Series A
Preferred Shares and the holders of Common Shares and any other capital shares of the Company
having general voting rights shall vote together as one class on all matters submitted to a vote of
the stockholders of the Company.

               (iii) Except as otherwise provided herein or by law, the holders of Series A Preferred Shares
shall have no special voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Shares and any other capital stock of the Company
having general voting rights as set forth herein) for taking any corporate action.

          4. Certain Restrictions.

               (i) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Preferred Shares as provided in paragraph 2 hereof are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on Series A Preferred Shares
outstanding shall have been paid in full, the Company shall not:

A-3

 

                    (a) declare or pay dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares;

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

                    (c) redeem or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares, provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the Company ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the Series A Preferred Shares;
or

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

               (ii) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company could, under
subparagraph (i) of this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.

          5. Reacquired Shares. Any Series A Preferred Shares purchased or otherwise acquired
by the Company in any manner whatsoever shall be retired promptly after the acquisition thereof.
All such shares shall upon their retirement become authorized but unissued Preferred Shares and may
be reissued as part of a new series of Preferred Stock by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth herein, in the Restated
Certificate of Incorporation, as amended, or in any other Certificate of Powers, Designations,
Preferences and Rights creating a series of Preferred Stock or as otherwise required by law.

          6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares shall
have received the greater of (i) $100 per share, plus an amount equal to accrued and

A-4

 

unpaid dividends and distributions thereon, whether or not declared, to the date of such payment,
or (ii) an aggregate amount per share, subject to the provision for adjustment hereinafter set
forth, equal to one hundred (100) times the aggregate amount to be distributed per share to holders
of Common Shares, or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares,
except distributions made ratably on the Series A Preferred Shares and all other such parity stock
in proportion to the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Company shall at any time after June 30,
2008 declare or pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by reclassification
or otherwise) into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (a)(ii) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.

          7. Consolidation, Merger, Exchange, etc. In case the Company shall enter into any
consolidation, merger, combination, or other transaction in which the Common Shares are exchanged
for or changed into other stock or securities, cash and/or any other property, then in any such
case the Series A Preferred Shares shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth) equal to one
hundred (100) times the aggregate amount of stock, securities, money and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share is changed or
exchanged. In the event the Company shall at any time after June 30, 2008 declare or pay any
dividend on Common Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Series A Preferred Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the number of Common
Shares that were outstanding immediately prior to such event.

          8. No Redemption. The Series A Preferred Shares shall not be redeemable.

          9. Rank. The Series A Preferred Shares shall rank junior in terms of dividend and
liquidation, dissolution and winding up rights to all other series of the Company’s Preferred Stock
hereafter issued that specifically provide that they shall rank senior to the Series A Preferred
Shares.

          10. Fractional Shares. Series A Preferred Shares may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional shares, to

A-5

 

receive dividends, participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Shares.

          IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of
Powers, Designations, Preferences and Rights on behalf of the Company this _________ day of _________,
2008.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	  	
 	 
	 	 	 	 

	 	 	 	 	 
	Attest:

 	 
	By:  	 	 
	 	James E. Nicholson, Secretary 	 
	 	 	 
	 

A-6

 

EXHIBIT B

[FORM OF RIGHT CERTIFICATE]

	 	 	 
	Certificate No. R- ______

	 	____________ Rights

     NOT EXERCISABLE AFTER JUNE 30, 2018 OR SUCH EARLIER DATE AS THE BOARD OF DIRECTORS ORDERS
REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT (SUBJECT TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.

Right Certificate

DIGI INTERNATIONAL INC.

          This certifies that ________________, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of April 22, 2008 (the “Rights
Agreement”) between Digi International Inc., a Delaware corporation (the “Company”), and Wells
Fargo Bank, N.A. (the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Minneapolis, Minnesota time) on June 30, 2018 at the office or offices of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable Series A Junior Participating Preferred Share, $.01 par value per share of the
Company (the “Preferred Shares”), at a purchase price of $60 per one one-hundredth of a Preferred
Share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly completed and executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise thereof) set forth above, and the Purchase Price set forth above, are, except for
adjustments required pursuant to the Rights Agreement, the number and Purchase Price as of June 30,
2008, based on the Preferred Shares as constituted at such date.

          As provided in the Rights Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of certain events.

          This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein

B-1

 

by reference and made a part hereof and which contains a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates (which limitations of rights include the voiding
of the Rights under certain circumstances specified in the Rights Agreement). Copies of the Rights
Agreement are on file with the Secretary of the Company at its principal executive office and will
be mailed without charge by the Company or the Rights Agent to the holder of this certificate
promptly following receipt by the Company or the Rights Agent of a written request therefor.

          Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), any Rights evidenced by this Right Certificate that are beneficially owned by an
Acquiring Person or an Associate or Affiliate of such Acquiring Person (as such terms are defined
in the Rights Agreement) or were beneficially owned by an Acquiring Person or an Associate or
Affiliate of such Acquiring Person after the Acquiring Person becomes an Acquiring Person shall be
null and void from and after the occurrence of such Section 11(a)(ii) Event.

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

          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may, but are not required to, be redeemed by the Company at a redemption price of $.001 per
Right, subject to adjustment as provided in the Rights Agreement, payable in cash and (ii) may, but
are not required to, be exchanged by the Company in whole or in part for Common Shares or other
shares of capital stock of the Company. The Board of Directors of the Company and the Company
shall not have any liability to any person as a result of the redemption or exchange of the Rights
pursuant to the provisions of the Rights Agreement.

          No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractional shares which are integral multiples of one one-hundredth of
a Preferred Share or, if a Right shall then be exercisable for a fraction other than one
one-hundredth of a Preferred Share, integral multiples of that fraction, which may, at the election
of the Company, be evidenced by depositary receipts), if in lieu thereof a cash payment is made, as
provided in the Rights Agreement.

          No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder

B-2

 

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

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

          WITNESS the manual or facsimile signature of the proper officer of the Company.

Dated: _________________

	 	 	 	 	 
	 	DIGI INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	Its: 	 
	 	 	 	 

	 	 	 	 	 	 	 
	ATTEST:

 	 	 
	By:  	 	 	 
	 	Its: 	 	 
	 
	 
	Countersigned:

WELLS FARGO BANK, N.A.

 	 	 
	By:  	 	 	 
	 	Authorized Manual or 	 	 
	 	Facsimile Signature 	 	 	 

B-3

 

	 	 	 	 	 

[Form of Reverse Side of Right Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.)

FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto

(Please print name and address of transferee)

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

Dated: ______________________

	 	 	 	 	 
	 	_____________________________________

Signature

 	 

Signature Medallion Guaranteed:

          Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the Financial Industry Regulatory Authority, or a commercial bank or trust company having
an office or correspondent in the United States or by an eligible guarantor institution (bank,
stockbroker, savings and loan association or credit union with membership in an approved signature
guarantee medallion program), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange
Act of 1934, as amended.

B-4

 

CERTIFICATE

          The undersigned hereby certifies (after due inquiry and to the best of its knowledge) by
checking the appropriate boxes that:

          (1) the Rights evidenced by this Right Certificate

	 	 	 
	o
	 	are
	 
	 	or
	o
	 	are not

beneficially owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement); and

          (2) the undersigned

	 	 	 
	o
	 	did
	 
	 	or
	o
	 	did not

acquire the Rights evidenced by this Right Certificate from any Person who, at any time that such
Person beneficially owned such Rights, is or was an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.

	 	 	 	 	 
	 	_____________________________________

Signature
 	 

NOTICE

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

B-5

 

FORM OF ELECTION TO EXERCISE

(To be executed if holder desires to exercise

Rights represented by the Right Certificate.)

TO:     DIGI INTERNATIONAL INC.

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

Please insert social security

or other identifying number

 

 

(Please print name and address)

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

Please insert social security

or other identifying number

 

 

(Please print name and address)

Dated: _____________________

	 	 	 	 	 
	 	_____________________________________

Signature	 

B-6

 

	 	 	 	 	 

Signature Guaranteed:

          Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the Financial Industry Regulatory Authority, or a commercial bank or trust company having
an office or correspondent in the United States or by an eligible guarantor institution (bank,
stockbroker, savings and loan association or credit union with membership in an approved signature
guarantee medallion program), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange
Act of 1934, as amended.

B-7

 

CERTIFICATE

          The undersigned hereby certifies (after due inquiry and to the best of its knowledge) by
checking the appropriate boxes that:

          (1) the Rights evidenced by this Right Certificate

	 	 	 
	o
	 	are
	 
	 	or
	o
	 	are not

beneficially owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement); and

          (2) the undersigned

	 	 	 
	o
	 	did
	 
	 	or
	o
	 	did not

acquire the Rights evidenced by this Right Certificate from any Person who, at any time that such
Person beneficially owned such Rights, is or was an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.

	 	 	 	 	 
	 	_____________________________________

Signature
 	 

NOTICE

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

B-8

 

EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES

OF

DIGI INTERNATIONAL INC.

          On April 22, 2008, the Board of Directors of Digi International Inc. (the “Company”), declared
a dividend of one preferred share purchase right (a “Right”) for each outstanding Common Share of
the par value of $.01 per share (the “Common Shares”) of the Company. The dividend was payable on
June 30, 2008 (the “Record Date”) to stockholders of record on that date.

          Each Right entitles the registered holder to purchase from the Company one one-hundredth of a
Series A Junior Participating Preferred Share, $.01 par value per share (the “Preferred Shares”) of
the Company at a price of $60 per one one-hundredth of a Preferred Share (the “Purchase Price”),
subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement
(the “Rights Agreement”), dated as of April 22, 2008, between the Company and Wells Fargo Bank,
N.A., as Rights Agent (the “Rights Agent”).

          Initially, the Rights will attach to all certificates representing Common Shares then
outstanding and no separate Right Certificates will be distributed. The Rights will separate from
the Common Shares and a Distribution Date for the Rights will occur, subject to certain exceptions,
upon the earlier of:

          (i) the close of business on the fifteenth day following a public announcement that a person
or group of affiliated or associated persons has become an “Acquiring Person” (i.e., has become,
subject to certain exceptions, the beneficial owner of 20% or more of the outstanding Common
Shares), or

          (ii) the close of business on the fifteenth day following the first public announcement
relating to a tender offer or exchange offer the consummation of which would result in a person or
group of affiliated or associated persons becoming, subject to certain exceptions, the beneficial
owner of 20% or more of the outstanding Common Shares (or such later date as may be determined by
the Board of Directors of the Company prior to a person or group of affiliated or associated
persons becoming an Acquiring Person).

Until the Distribution Date,

               (i) the Rights will be evidenced by the Common Share certificates and will be transferred with
and only with the Common Shares,

               (ii) new Common Share certificates issued after the Record Date upon transfer or new issuance
of the Common Shares will contain a notation incorporating the Rights Agreement by reference, and

C-1

 

               (iii) the surrender for transfer of any Common Share certificate, even without such notation
or a copy of this Summary of Rights attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate.

As promptly as practicable following the Distribution Date, separate certificates evidencing the
Rights (“Right Certificates”) will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate Right Certificates alone will evidence
the Rights.

          The Rights are not exercisable until the Distribution Date. The Rights will expire on June
30, 2018, unless extended or earlier redeemed or exchanged by the Company as described below.

          The Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution:

               (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of,
the Preferred Shares,

               (ii) upon the grant to holders of the Preferred Shares of certain rights, options or warrants
to subscribe for or purchase Preferred Shares or convertible securities at less than the then
current market price of the Preferred Shares, or

               (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those described in clause (ii) hereof).

The number of Preferred Shares issuable upon the exercise of a Right is also subject to adjustment
in the event of a dividend on Common Shares payable in Common Shares, or a subdivision, combination
or consolidation of the Common Shares.

          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in the Purchase Price. No fractional Preferred
Shares will be issued (other than fractional shares which are integral multiples of one
one-hundredth (subject to adjustment) of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts) if in lieu thereof a payment in cash is made based on
the closing price (pro-rated for the fraction) of the Preferred Shares on the last trading date
prior to the date of exercise.

          In the event that any person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other than Rights that are
or were beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise thereof at the then current exercise

C-2

 

price of the Right that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.

          In the event that, after the Distribution Date or within 15 days prior thereto, the Company is
acquired in certain mergers or other business combination transactions or 50% or more of the assets
or earning power of the Company and its subsidiaries (taken as a whole) are sold after the
Distribution Date or within 15 days prior thereto in one or a series of related transactions, each
holder of a Right (other than Rights which have become void under the terms of the Rights
Agreement) will thereafter have the right to receive, upon exercise thereof at the then current
exercise price of the Right, that number of common shares of the acquiring company (or, in certain
cases, one of its affiliates) having a market value of two times the exercise price of the Right.

          In certain events specified in the Rights Agreement, the Company is permitted to temporarily
suspend the exercisability of the Rights.

          At any time after a person or group of affiliated or associated persons becomes an Acquiring
Person (subject to certain exceptions) and prior to the acquisition by a person or group of
affiliated or associated persons of 50% or more of the outstanding Common Shares, the Board of
Directors of the Company may exchange all or part of the Rights (other than Rights which have
become void under the terms of the Rights Agreement) for Common Shares or equivalent securities at
an exchange ratio per Right equal to the result obtained by dividing the exercise price of a Right
by the current per share market price of the Common Shares, subject to adjustment.

          At any time prior to such time as a person or group of affiliated or associated persons
becomes an Acquiring Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right, subject to adjustment (the “Redemption Price”),
payable in cash. The period of time during which the Rights may be redeemed may be extended by the
Board of Directors of the Company if no person has become an Acquiring Person. The redemption of
the Rights 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 Board of Directors and the Company shall
not have any liability to any person as a result of the redemption or exchange of the Rights
pursuant to the provisions of the Rights Agreement.

          The terms of the Rights may be amended by the Board of Directors of the Company, subject to
certain limitations after the such time as a person or group of affiliated or associated persons
becomes an Acquiring Person, without the consent of the holders of the Rights, including an
amendment prior to the date a person or group of affiliated or associated persons becomes an
Acquiring Person to lower the 20% threshold for exercisability of the Rights to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding Common Shares then
known by the Company to be beneficially owned by any person or group of affiliated or associated
persons (subject to certain exceptions) or (ii) 10%.

C-3

 

          Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends.

          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A dated [_________], 2008. A copy of the Rights
Agreement is available free of charge from the Company by contacting the Chief Financial Officer at
Digi International Inc., 11001 Bren Road East, Minnetonka, Minnesota 55343. This summary
description of the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, as amended, which is hereby incorporated herein by reference.

C-4exv4wxby

 

Exhibit 4(b)

AMENDED AND RESTATED CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES A JUNIOR PARTICIPATING PREFERRED SHARES

OF

DIGI INTERNATIONAL INC.

(Pursuant to Section 151 of the Delaware General Corporation Law)

          The undersigned officer of Digi International Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the “Company”), in accordance with the
provisions of Section 103 and Section 151 of the Delaware General Corporation Law, does hereby
certify:

          A. That, by resolution of the Board of Directors of the Company adopted on June 10, 1998, and
by a Certificate of Powers, Designations, Preferences and Rights of Series A Junior Participating
Preferred Shares filed in the office of the Secretary of State of the State of Delaware on June 22,
1998, the Company authorized the issuance of a series of Six Hundred Thousand (600,000) Series A
Junior Participating Preferred Shares of the Company (the “Series A Preferred Shares”) and
established the powers, designations, preferences and rights and the qualifications, limitations or
restrictions thereof.

          B. That no Series A Junior Participating Preferred Shares of the Company have been issued.

          C. That pursuant to the authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation of the Company, as amended, and Section 151(g) of the Delaware General
Corporation Law, the Board of Directors of the Company on April 22, 2008, adopted the following
resolution amending and restating, effective 6:00 p.m., Delaware time, on June 30, 2008, the
provisions of the Series A Junior Participating Preferred Shares.

          RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Company in accordance with the provisions of its Restated Certificate of Incorporation, as
amended, the Certificate of Powers, Designations, Preferences and Rights of Series A Junior
Participating Preferred Shares of the Company is hereby amended and restated, effective 6:00 p.m.,
Delaware time, on June 30, 2008, to read in its entirety as follows:

          1. Designation and Amount. The shares of such series shall be designated as “Series A
Junior Participating Preferred Shares,” and the number of shares constituting such series shall be
Six Hundred Thousand (600,000). The number of shares constituting such series may, unless
prohibited by the Restated Certificate of Incorporation, as amended, or by applicable law of the
State of Delaware, be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of Series A Preferred Shares to a number
less than the number of shares then outstanding or held in treasury plus the number of

 

shares issuable upon the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Company convertible into Series A Preferred Shares.

          2. Dividends and Distributions.

               (i) The holders of Series A Preferred Shares, in preference to the holders of Common Shares
and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on
the last business day of March, June, September and December in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a Series A Preferred Share, or fraction thereof,
in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, one hundred (100) times the
aggregate per share amount of all cash dividends, and one hundred (100) times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any Series A Preferred Share, or fraction thereof. In the event the
Company shall at any time after June 30, 2008 declare or pay any dividend on Common Shares payable
in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of Common Shares, then in
each such case the amount to which holders of Series A Preferred Shares were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.

               (ii) The Company shall declare a dividend or distribution on the Series A Preferred Shares as
provided in subparagraph (i) of this paragraph 2 simultaneously with its declaration of a dividend
or distribution on the Common Shares (other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00
per share on the Series A Preferred Shares shall nevertheless be payable, out of funds legally
available for such purpose, on such subsequent Quarterly Dividend Payment Date.

               (iii) Dividends shall begin to accrue and be cumulative on outstanding Series A Preferred
Shares from the Quarterly Dividend Payment Date immediately preceding the date of issue of such
Series A Preferred Shares, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of

2

 

issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination
of holders of Series A Preferred Shares entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the Series A Preferred Shares in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares outstanding at that time. The Board of Directors
may fix a record date for the determination of holders of Series A Preferred Shares entitled to
receive payment of a dividend or distribution declared thereon, which record date shall be not more
than sixty (60) days prior to the date fixed for the payment thereof.

          3. Voting Rights. The holders of Series A Preferred Shares shall have the following
voting rights:

               (i) Subject to the provision for adjustment hereinafter set forth, each Series A Preferred
Share shall entitle the holder thereof to one hundred (100) votes on all matters submitted to a
vote of the stockholders of the Company. In the event the Company shall at any time after June 30,
2008 declare or pay any dividend on Common Shares payable in Common Shares, or effect a subdivision
or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise)
into a greater or lesser number of Common Shares, then in each such case the number of votes per
share to which holders of Series A Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of which is the number
of Common Shares that were outstanding immediately prior to such event.

               (ii) Except as otherwise provided herein, in any other Certificate of Powers, Designations,
Preferences and Rights creating a series of Preferred Stock or by law, the holders of Series A
Preferred Shares and the holders of Common Shares and any other capital shares of the Company
having general voting rights shall vote together as one class on all matters submitted to a vote of
the stockholders of the Company.

               (iii) Except as otherwise provided herein or by law, the holders of Series A Preferred Shares
shall have no special voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Shares and any other capital stock of the Company
having general voting rights as set forth herein) for taking any corporate action.

          4. Certain Restrictions.

               (i) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Preferred Shares as provided in paragraph 2 hereof are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on Series A Preferred Shares
outstanding shall have been paid in full, the Company shall not:

3

 

                    (a) declare or pay dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares;

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

                    (c) redeem or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares, provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the Company ranking junior (both
as to dividends and upon liquidation, dissolution or winding up) to the Series A Preferred Shares;
or

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

               (ii) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company could, under
subparagraph (i) of this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.

          5. Reacquired Shares. Any Series A Preferred Shares purchased or otherwise acquired
by the Company in any manner whatsoever shall be retired promptly after the acquisition thereof.
All such shares shall upon their retirement become authorized but unissued Preferred Shares and may
be reissued as part of a new series of Preferred Stock by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth herein, in the Restated
Certificate of Incorporation, as amended, or in any other Certificate of Powers, Designations,
Preferences and Rights creating a series of Preferred Stock or as otherwise required by law.

          6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Shares unless, prior thereto, the holders of Series A Preferred

4

 

Shares shall have received the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date of such payment,
or (ii) an aggregate amount per share, subject to the provision for adjustment hereinafter set
forth, equal to one hundred (100) times the aggregate amount to be distributed per share to holders
of Common Shares, or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares,
except distributions made ratably on the Series A Preferred Shares and all other such parity stock
in proportion to the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Company shall at any time after June 30,
2008 declare or pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by reclassification
or otherwise) into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (a)(ii) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.

          7. Consolidation, Merger, Exchange, etc. In case the Company shall enter into any
consolidation, merger, combination, or other transaction in which the Common Shares are exchanged
for or changed into other stock or securities, cash and/or any other property, then in any such
case the Series A Preferred Shares shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth) equal to one
hundred (100) times the aggregate amount of stock, securities, money and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share is changed or
exchanged. In the event the Company shall at any time after June 30, 2008 declare or pay any
dividend on Common Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Series A Preferred Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the number of Common
Shares that were outstanding immediately prior to such event.

          8. No Redemption. The Series A Preferred Shares shall not be redeemable.

          9. Rank. The Series A Preferred Shares shall rank junior in terms of dividend and
liquidation, dissolution and winding up rights to all other series of the Company’s Preferred Stock
hereafter issued that specifically provide that they shall rank senior to the Series A Preferred
Shares.

          10. Fractional Shares. Series A Preferred Shares may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional shares, to

5

 

receive dividends, participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Shares.

     IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of
Powers, Designations, Preferences and Rights on behalf of the Company this ___ day of ______,
2008.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	  	 	 

	 	 	 	 	 
	Attest:

 	 	 
	By:  	 	 	 
	 	James E. Nicholson, Secretary 	 	 
	 	 	 	 
	 

6

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