Document:

Exhibit
4.1

 

 

 

RIGHTS
AGREEMENT

 

 

dated as of November 26,
2002

 

 

by and between

 

 

SOFTBRANDS,
INC.

 

 

and

 

 

WELLS
FARGO BANK MINNESOTA, NATIONAL ASSOCIATION.

 

 

as Rights Agent

 

 

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issuance of Rights Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Right Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation and Destruction of Right
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Reservation and Availability of Capital
  Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Securities Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Adjustment of Exercise Price, Number of
  Shares Issuable Upon Exercise of Rights or Number of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted Exercise Price or
  Number of Shares Issuable Upon Exercise of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Consolidation,
  Merger or Sale or Transfer of Assets or Earning Power

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional Rights and Fractional Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of Action

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement of Right Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Right Holder and Right Certificate Holder
  Not Deemed a Stockholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning the Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or Consolidation or Change of Name
  of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance of New Right Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Notice of Certain Events

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements and Amendments

  	
   

  

 

 

	
  Section 28.

  	
  Certain Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Benefits of this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 35.

  	
  Determination and Actions by the Board of
  Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  TABLE OF EXHIBITS

  
	
   

  	
   

  	
   

  
	
  Exhibit A—Form of Right Certificate

  

 

ii

 

RIGHTS
AGREEMENT

 

THIS RIGHTS AGREEMENT
(the “Agreement”) is made and entered into as of the 26th day of November 2002
by and between SoftBrands, Inc., a Delaware corporation (the “Company”), and
Wells Fargo Bank Minnesota, National Association, a national banking
association, as rights agent (the “Rights Agent”).

 

WHEREAS, the Board
of Directors of the Company (the “Board of Directors”)
has authorized and declared a dividend of one preferred share purchase right (a
“Right”) for each Common Share (as
hereinafter defined) of the Company outstanding as of the Close of Business on November 26,
2002 (the “Record Date”), each Right representing
the right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions set forth herein, and
has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Expiration Date
(as such terms are hereinafter defined).

 

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

 

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

 

“Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act, as in effect
on the date hereof.

 

“Acquiring Person”
shall mean any Person that Beneficially Owns 10% or more of the Voting Shares
of the Company then outstanding; provided, however, that
the term “Acquiring Person” shall not include: (i) an Exempt Person;
(ii) any Person that would not otherwise be an Acquiring Person but for a
reduction in the number of outstanding Voting Shares resulting from a stock
repurchase program or other similar plan of the Company or from a self tender
offer of the Company, which plan or tender offer commenced on or after the date
hereof; provided, however, that the term “Acquiring
Person” shall include such Person described in this subclause (ii) from and
after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and
(B) such Person, together with all Affiliates and Associates of such
Person, shall Beneficially Own 10% or more of the Voting Shares of the Company
then outstanding; (iii) any Person that would not otherwise be an
Acquiring Person but for its Beneficial Ownership of Rights; (iv) any
Person that becomes the Beneficial Owner of 10% or more of the outstanding
Voting Shares of the Company solely as the result of the distribution to such
person of Voting Shares pursuant to the AremisSoft Plan of Reorganization; provided, however, that the term Acquiring Person shall
include any such Person (A) who, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner or 10% or more of the outstanding
Voting Shares of the Company because of the purchase, acquisition or transfer
of the right to receive such a distribution pursuant to the AremisSoft Plan of
Reorganization after the Distribution Record Date (as defined in the AremisSoft
Plan of Reorganization), or (B) who shall

 

 

have acquired, without the prior approval of the Board of Directors of
the Company, Beneficial Ownership of additional Voting Shares after November 26,
2002, other than as a result of such AremisSoft Plan of Reorganization equal to
1% of the then outstanding Voting Shares of the Company and, together with all
Affiliates and Associates of such Person, shall Beneficially Own more than 10%
or more of the Voting Shares of the Company then outstanding; (v) any
transferee, assignee or purchaser from CRP of any of those certain Common Stock
Purchase Warrants dated November 26, 2002, or any replacement or
substitute warrants or any Voting Shares issued or issueable under those
certain Common Stock Purchase Warrants dated November 26, 2002, or any
replacement or substitute warrants to the extent such Person would, absent the
operation of this clause (v), have become an
Acquiring Person solely because of the acquisition of  warrants or Voting Shares from CRP; provided, however, that the term “Acquiring Person” shall
include such Person described in this subclause (v) from and after the first
date upon which (A) such Person, since the date of acquisition from CRP,
shall have acquired Beneficial Ownership of, in the aggregate, a number of
Voting Shares of the Company equal to 1% or more of the Voting Shares of the
Company then outstanding and (B) such Person, together with all Affiliates
and Associates of such Person, shall Beneficially Own 10% or more of the Voting
Shares of the Company then outstanding; or (vi) any Person that is the
Beneficial Owner of 10% or more of the outstanding Voting Shares of the Company
solely as the result of the operation of clause (iv) of the definition of “Beneficial
Owner” if and during such period as the Board of Directors shall have
determined that the operation of such clause should be waived in the best
interests of the Company and its stockholders; provided,
however, that any determination pursuant to this clause (vi) shall have been made prior to any change in
the composition of the Board of Directors following the date that such Person
shall have become the Beneficial Owner of such Voting Shares if such change in
composition involved the election of two or more new members of the Board of
Directors. In calculating the percentage of the outstanding Voting Shares that
are Beneficially Owned by a Person for purposes of this definition, Voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights, warrants or options shall not be deemed
outstanding. Any determination made by the Board of Directors of the Company as
to whether any Person is or is not an Acquiring Person shall be conclusive and
binding upon all holders of Rights.

 

“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 containing the facts
by virtue of which a Person has become an Acquiring Person.

 

“AremisSoft” shall mean AremisSoft Corporation, a Delaware corporation.

 

“AremisSoft Liquidating Trust”
shall mean that certain Trust created by the Liquidating Trust Agreement dated
as of August 2, 2002 by and
between AremisSoft, Schiffrin & Barroway, LLP as Lead Class Counsel, and
the trustees named therein

 

“AremisSoft Plan of
Reorganization” shall mean the First Amended Plan Of Reorganization
Of AremisSoft Corporation Jointly Proposed By The Debtor And SoftBrands,

 

2

 

Inc., confirmed by the United States District Court for the District of
New Jersey on July 1, 2002 and effective August 2, 2002.

 

A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “Beneficially Own” any securities:

 

(i) that such Person or any of such
Person’s Affiliates or Associates beneficially owns, directly or indirectly,
for purposes of Section 13(d) of the Exchange Act and Rule 13d-3
promulgated under the Exchange Act, in each case as in effect on the date
hereof;

 

(ii) that such Person or any of such
Person’s Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition or otherwise) pursuant
to any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights (other than these Rights), rights, warrants
or options, or otherwise; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own,
securities tendered pursuant to a tender offer 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;

 

(iii) that such Person or any such
Person’s Affiliates or Associates has the right to vote, whether alone or in
concert with others, pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (A) arises solely from
a revocable proxy given to such Person or any of such Person’s Affiliates or
Associates in response to a public proxy solicitation made pursuant to and in
accordance with the applicable rules and regulations promulgated under the
Exchange Act, and (B) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report);

 

(iv) that are Beneficially Owned,
directly or indirectly, by any other Person with which such Person or any of
such Person’s Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than voting
pursuant to a revocable proxy as described in the proviso to clause (iii) of this definition of “Beneficial Owner”)
or disposing of any securities of the Company; and

 

(v) that, on any day on or after the
Distribution Date, evidence Rights that prior to such date were represented by
certificates for Common Shares that such Person Beneficially Owns on such day.

 

Notwithstanding anything to the contrary in this Section l(b),
a Person engaged in business as an underwriter of securities shall
not be deemed to be the Beneficial Owner of, or to Beneficially Own, any
securities acquired through such Person’s participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of
such acquisition.

 

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

 

3

 

“Certificate of Designation”
shall mean the certificate of designation of preferences designating the
rights, preferences and privileges of the Preferred Shares in accordance with
the Delaware General Corporation Law.

 

“Close of Business”
on any given date shall mean 5:00 p.m., Eastern time, on such date;
provided, however, that if such date is not a Business Day, it shall mean
5:00 p.m., Eastern time, on the next succeeding Business Day.

 

“Closing Price”
of a stock or other security on any day shall be the last sale price, regular
way, per share of such stock or unit of such other security on such day or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if such stock or other
security is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which such stock or other security is listed or admitted to trading or, if such
stock or other 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 the Nasdaq National Market (“NASDAQ”) or
such other system then in use or, if on any such date such stock or other
security is not quoted by any such organization, the average of the closing bid
and asked prices as determined in good faith by the Board of Directors of the
Company.

 

“Common Share”
shall mean one share of the Common Stock of the Company, $0.01 par value per
share, unless used with reference to a Person other than the Company, in which
case it shall mean one share of each class of stock of such Person having the
right to vote generally in the election of directors or, if such Person is a
Subsidiary of another Person, one Common Share of the Person that ultimately
controls such Person.

 

“Common Share Equivalent”
shall have the meaning ascribed to it in Section 11(a)(iii) hereof.

 

“Current Market Price”
per share of a stock or unit of any other security on any date shall mean the
average of the daily Closing Prices of such stock or other security for the 30
consecutive Trading Days through and including the Trading Day immediately
preceding the date in question; provided, however, that
if any event shall have caused the Closing Price on any Trading Day during such
30-day period not to be fully comparable with the Closing Price on the date in
question (or, if no Closing Price is available on the date in question, on the
Trading Day immediately preceding the date in question), then each such
non-comparable Closing Price so used shall be appropriately adjusted by the
Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day). “Current Market Price”
per share of any stock or unit of such other security that is not publicly held
or so listed or traded, and “Current Market Price”
of any other property, shall mean the fair value per share of such stock or
unit of such other security, or the fair value of such other property,
respectively, as determined in good faith by the Board of Directors of the Company
based upon such appraisals or valuation reports of such

 

4

 

independent experts as the Board of Directors shall in good faith
determine appropriate, which determination shall be described in a statement
filed by the Company with the Rights Agent.

 

“Distribution Date”
shall have the meaning ascribed to it in Section 3 hereof.

 

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

 

“Exempt Person”
shall mean (i) AremisSoft Corporation; (ii) any disbursing agent for the shares
of the Company pursuant to the AremisSoft Plan of Reorganization; (iii) any
Trustee, Lead Class Counsel or Class Representative pursuant to the AremisSoft
Trust Agreement; (iv) any other person who receives Voting Shares of the
Company temporarily pursuant to the AremisSoft Plan of Reorganization solely to
facilitate the redistribution of such securities to their ultimate beneficial
owner (but Exempt Person shall not include such ultimate beneficial owner), (v)
any wholly-owned Subsidiary of the Company, (vi) any employee benefit plan of
the Company or of a Subsidiary of the Company,(vii) any Person holding Voting
Shares for or pursuant to the terms of any such employee benefit plan and
(viii) Capital Resource Partners IV, L.P., a Delaware limited partnership, CRP
Investment Partners IV, LLC, a Delaware limited partnership, CRP Partners IV,
L.L.C., Capital Resource Management, Inc. and their respective Associates or
Affiliates (collectively, “CRP”).

 

“Exercise Price”
shall have the meaning ascribed to it in Section 7(c) hereof.

 

“Expiration Date”
shall mean November 26, 2012.

 

“Person” shall
mean any individual, firm, partnership, corporation, association, trust, joint
venture, limited liability company, unincorporated organization, group (as such
term is used in Rule 13d-5 promulgated under the Exchange Act as in effect
on the date hereof) or other entity, and shall include any successor (by merger
or otherwise) of such entity.

 

“Preferred Share”
shall mean one share of the Series A Preferred Stock, $0.01 par value per
share, of the Company, which shall have the rights, preferences and privileges
set forth in the Certificate of Designation for the Preferred Shares.

 

“Preferred Share
Equivalents” shall have the meaning ascribed to it in Section 11(b) hereof.

 

“Record Date”
shall have the meaning ascribed to it in the recitals hereto.

 

“Redemption Date”
shall mean the date of the action of the Board of Directors of the Company
authorizing and directing the redemption of the Rights pursuant to Section 23(a) hereof or the exchange of the Rights
pursuant to Section 24(a) hereof.

 

“Redemption Price”
shall have the meaning ascribed to it in Section 23(a) hereof.

 

“Right Certificate”,
as that term is used with respect to any period prior to the Distribution Date,
shall have the meaning ascribed to it in Section 3(b) hereof,
and, as that term is used with respect to any period on or after the
Distribution Date, shall have the meaning ascribed to it in Section 3(c) hereof.

 

5

 

“Rights Expiration Date”
shall mean the Expiration Date, except if there has been a Distribution Date,
then it shall mean the tenth anniversary of the Distribution Date.

 

“Section 11(a)(ii) Event”
shall have the meaning ascribed to it in Section 11(a)(ii) hereof.

 

“Section 13(a) Event”
shall have the meaning ascribed to it in Section 13(a) hereof.

 

“Securities Act”
shall mean the Securities Act of 1933, as amended.

 

“Subsidiary” of
any Person shall mean any corporation or other Person of which equity
securities or equity interests representing a majority of the voting power are
owned, directly or indirectly, or which is effectively controlled, by such
Person.

 

“Surviving Person”
shall have the meaning ascribed to it in Section 13(a) hereof.

 

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

 

“Voting Share”
shall mean (i) a Common Share of the Company and (ii) any other share
of capital stock of the Company entitled to vote generally in the election of
directors or entitled to vote together with the Common Shares in respect of any
merger, consolidation, sale of all or substantially all of the Company’s
assets, liquidation, dissolution or winding up. References in this Agreement to
a percentage or portion of the outstanding Voting Shares shall be deemed a
reference to the percentage or portion of the total votes entitled to be cast
by the holders of the outstanding Voting Shares.

 

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

 

Section 3.                                          Issuance
of Rights Certificates.

 

(a) ”Distribution Date”
shall mean the date, after the date hereof, that is the earliest of
(i) the tenth Business Day (or such later day as shall be designated by
the Board of Directors of the Company) following the date of the commencement of,
or the first public announcement of the intent of any Person (other than an
Exempt Person) to commence, a tender offer or exchange offer, the consummation
of which would cause any Person to become an Acquiring Person, (ii) the
date of the first Section 11(a)(ii) Event or (iii) the date of
the first Section 13(a) Event.

 

6

 

(b) Until the Distribution Date,
(i) the Rights shall be represented by certificates for Common Shares (all
of which certificates for Common Shares shall be deemed to be Right
Certificates) and not by separate Right Certificates, (ii) the record
holder of the Common Shares represented by each of such certificates shall be
the record holder of the Rights represented thereby and (iii) the Rights
shall be transferable only in connection with the transfer of the Common Shares
representing the corresponding Rights. Until the earliest of the Distribution
Date, the Redemption Date or the Expiration Date, the surrender for transfer of
such certificates for Common Shares shall also constitute the surrender for
transfer of the corresponding Rights represented thereby.

 

(c) As soon as practicable on or after
the Distribution Date, the Company shall promptly notify the Rights Agent in
writing of the occurrence of the Distribution Date and provide the Rights Agent
with the names and addresses of all record holders of Common Shares (together
with all other necessary information), and after such notification by the
Company, the Rights Agent shall send to each record holder of Common Shares as
of the Close of Business on the Distribution Date a Right Certificate
substantially in the form of Exhibit A hereto
representing one Right for each Common Share held. Such Right Certificates
shall be sent at the Company’s expense by first-class mail, postage prepaid to
the address of each such record holder shown on the records of the Company.
From and after the Distribution Date, the Rights shall be represented solely by
such Right Certificates and may only be transferred by the transfer of such
Right Certificates and the holders of such Right Certificates (as listed in the
records of the Company or any transfer agent or registrar for such Rights)
shall be the record holders of such Rights.

 

(d) Certificates for Common Shares
issued at any time after the Record Date and prior to the earliest of
(i) the Distribution Date, (ii) the Redemption Date or (iii) the
Expiration Date, shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:

 

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of November 26,
2002 by and between SoftBrands, Inc. and Wells Fargo Bank Minnesota, National
Association., as Rights Agent (the “Rights Agreement”),
as amended to date, the terms and conditions of which are incorporated herein
by reference and a copy of which is on file at the principal executive offices
of SoftBrands, Inc.. Under certain circumstances specified in the Rights Agreement,
such Rights will be represented by separate certificates and will no longer be
represented by this certificate. Under certain circumstances specified in the
Rights Agreement, Rights beneficially owned by certain Persons may become null
and void. SoftBrands, Inc. will mail to the record holder of this certificate a
copy of the Rights Agreement without charge promptly following receipt of a
written request therefor. As described in the Rights Agreement, Rights
Beneficially Owned by any Person who becomes an Acquiring Person or any
Affiliate or Associate of an Acquiring Person (as such capitalized terms are
defined in the Rights Agreement) shall become null and void.

 

(e) Certificates for Common Shares
issued at any time on or after the Distribution Date and prior to the earlier
of the Redemption Date or the Rights Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:

 

7

 

This certificate does not represent any Right issued pursuant to the
terms of a Rights Agreement dated as of November 26, 2002 by and between
SoftBrands, Inc. and Wells Fargo Bank Minnesota, National Association, as
Rights Agent.

 

(f) In the event that at any time on or
after the earlier of (i) the date of the first Section 11(a)(ii) Event
or (ii) the date of the first Section 13(a) Event and prior to the
earlier (x) of the Redemption Date or (y) the Rights Expiration Date,
the Company shall issue any Common Shares pursuant to the exercise of
conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of
(A) the date of the first Section 11(a)(ii) Event or
(B) the date of the first Section 13(a) Event, then, unless the Board
of Directors of the Company shall have provided otherwise at the time of the
issuance or grant of such conversion rights, exchange rights, rights (other
than Rights), warrants or options, the Rights Agent shall, as soon as practicable
after the date of such event and after written notice from the Company of such
event, send a Right Certificate substantially in the form of Exhibit A hereto representing one Right for each Common
Share so issued by first-class, postage-prepaid mail to the record holder of
such Common Shares at the address of such holder as shown on the records of the
Company.

 

(h) Notwithstanding the foregoing
provisions of this Section 3, the Rights Agent shall not send any Right
Certificate to any Acquiring Person or any of its Affiliates or Associates or
to any Person if the Rights held by such Person are Beneficially Owned by an
Acquiring Person or any of its Affiliates or Associates. Any determination made
by the Board of Directors of the Company as to whether any Common Shares are or
were Beneficially Owned at any time by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person shall be conclusive and binding upon all
holders of Rights.

 

Section 4.                                          Form
of Right Certificates.  The
Right Certificates and the form of assignment, including certificate, and the
form of election to purchase, including certificate, printed on the reverse
thereof, when, as and if issued, shall be substantially the same as Exhibit A hereto. Such instruments and documents may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (provided that
such marks, legends, summaries and endorsements do not affect the rights,
duties or responsibilities of the Rights Agent) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange upon which the Rights or the
securities of the Company issuable upon exercise of the Rights may from time to
time be listed, or to conform to usage. Subject to Section 22
hereof, Right Certificates, whenever issued, that are issued in
respect of Common Shares that were issued and outstanding as of the Close of
Business on the Distribution Date, shall be dated as of the Distribution Date.

 

Section 5.                                          Countersignature
and Registration.

 

(a) The Right Certificates shall be
executed on behalf of the Company by any of its Chairman of the Board, its
Chief Executive Officer, its President or any Vice President, either manually
or by facsimile signature, and may have affixed thereto the Company’s seal or a
facsimile thereof attested to by its Secretary or any Assistant Secretary,
either manually or by

 

8

 

facsimile signature. The Right Certificates shall be manually
countersigned 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 an officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless 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 an
officer of the Company. Any Right Certificate may be signed on behalf of the
Company by any person who is a proper officer of the Company to sign such Right
Certificate as of the actual date of such execution, even though such person
was not a proper officer at the date of the execution of this Agreement.

 

(b) Following the Distribution Date and
receipt by the Rights Agent of all relevant information not in the Rights Agent’s
control or possession, the Rights Agent shall keep or cause to be kept at its
offices designated for such purpose pursuant to Section 26
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
Right Certificates, the number of Rights represented on its face by each Right
Certificate and the date of each Right Certificate.

 

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

 

(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split-up, combined or exchanged for one or
more Right Certificates representing the same aggregate number of Rights as the
Right Certificates surrendered. Any registered holder desiring to transfer,
split up, combine or exchange one or more Right Certificates shall deliver such
request in writing to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose with the form of assignment,
including certificate, on the reverse side thereof completed and duly executed,
with signature guaranteed. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have
properly completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate. Thereupon, the
Rights Agent shall countersign and deliver to the Person entitled thereto one
or more Right Certificates, as so requested. The Company may require payment 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. The Rights Agent shall have no duty or obligation under this Section 6 or any other similar provision of this
Agreement unless and until it is reasonably satisfied that all such taxes
and/or governmental charges have been paid in full.

 

(b) Upon receipt by the Company and the
Rights Agent of evidence 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 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 such Right Certificate if mutilated, the Company shall issue
and deliver to the Rights Agent for delivery to the record

 

9

 

holder of such Right Certificate a new Right Certificate of like tenor
in lieu of such lost, stolen, destroyed or mutilated Right Certificate.

 

(c) Notwithstanding anything to the
contrary in this Section 6, the Rights Agent
shall not countersign and deliver a Right Certificate to any Person if such
Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d) hereof.

 

Section 7.                                          Exercise
of Rights.

 

(a) Until the Distribution Date, no
Right may be exercised.

 

(b) Subject to Section 7(d)
and (g) hereof and the other
provisions of this Agreement, at any time after the Close of Business on the
Distribution Date and prior to the Close of Business on the earlier of the
Redemption Date or the Rights Expiration Date, the registered holder of any
Right Certificate may exercise the Rights represented thereby in whole or in
part upon surrender of such Right Certificate, with the form of election to
purchase, including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed, to the Rights Agent at the office of the
Rights Agent set forth in Section 2.6, together with payment of the
Exercise Price for each Right exercised. Upon the exercise of an exercisable
Right and payment of the Exercise Price in accordance with the provisions of
this Agreement, the holder of such Right shall be entitled to receive, subject
to adjustment as provided herein, one one-hundredth of a Preferred Share (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, Common Shares and/or other securities).

 

(c) The “Exercise
Price” for the exercise of each Right shall initially be $15.00 and
shall be payable in lawful money of the United States of America in accordance
with Section 7(f) hereof. The Exercise
Price and the number of Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event
or a Section 13(a) Event, Common Shares and/or other securities) to be
acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 7(e), 11 and
13 hereof and the other provisions of
this Agreement.

 

(d) Notwithstanding anything in this
Agreement to the contrary, from and after the earlier of (i) the date of
the first Section 11(a)(ii) Event and (ii) the date of the first
Section 13(a) Event, any Rights that are or were Beneficially Owned by an
Acquiring Person or any Affiliate or Associate of an Acquiring Person at any
time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is an
Acquiring Person or an Affiliate or Associate of an Acquiring Person) shall
thereafter have no right to exercise such Rights.

 

(e) Prior to the Distribution Date, if
the Board of Directors of the Company shall have determined that such action
adequately protects the interests of the holders of Rights, the Company may, in
its discretion, substitute for all or any portion of the Preferred Shares that
would otherwise be issuable after the Close of Business on the Distribution
Date and upon the exercise of each Right and payment of the Exercise Price:
(i) cash, (ii) other equity securities of the Company,
(iii) debt securities of the Company, (iv) other property or
(v) any combination of

 

10

 

the foregoing, in each case having an aggregate Current Market Price
equal to the aggregate Current Market Price of the Preferred Shares for which
substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section 7(e), such action shall apply uniformly to all
outstanding Rights.

 

(f) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase,
including certificate, properly completed and duly executed, with signature
guaranteed, accompanied by payment of the Exercise Price for each Right to be
exercised and an amount equal to any applicable tax or governmental charge
required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof by certified check or cashier’s check
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) requisition from the transfer agent of the Preferred Shares (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, Common Shares and/or securities) certificates for the number of
Preferred Shares or such other securities) to be purchased, and the Company
hereby irrevocably authorizes such transfer agent to comply with all such
requests, and/or, as provided in Section 14 hereof,
requisition from the depositary agent described therein depositary receipts
representing such number of one-hundredths of a Preferred Share or such other
securities as are to be purchased (in which case certificates for the Preferred
Shares or such other securities represented by such receipts shall be deposited
by the transfer agent with such depositary agent), and the Company hereby
directs such depositary agent to comply with such request, (ii) when
necessary to comply with this Agreement, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional Preferred Shares or
such other securities in accordance with Section 14 hereof,
(iii) after receipt of such certificates, depositary receipts or cash,
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 necessary to comply with this
Agreement, after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate.

 

(g) Notwithstanding the foregoing
provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify the Preferred
Shares and/or Common Shares or other securities to be issued pursuant to the
exercise of the Rights under the Securities Act and any applicable securities
law of any jurisdiction; provided, however, that
nothing contained in this Section 7 shall relieve the Company of its
obligations under Section 9(c) hereof.

 

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

 

(i) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action whatsoever with respect to a registered
holder of Rights upon the occurrence of any purported exercise as set forth in
this Section 7, unless the certificate
contained in the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such exercise shall have been duly
completed and signed by the registered holder thereof and the Company shall
have been

 

11

 

provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall request.

 

(j) Neither the Company nor the Rights
Agent shall have any liability to any holder of Rights or any other Person as a
result of the Company’s failure to make any determination under this Section 7 or any other section with respect to an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.

 

Section 8.                                          Cancellation
and Destruction of Right Certificates.  All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall (i) if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or (ii) if surrendered to the Rights Agent, shall be canceled by the
Rights Agent, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent promptly
shall cancel and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise of such Right Certificate. The
Rights Agent shall deliver all canceled Right Certificates to the Company or
shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

 

Section 9.                                          Reservation
and Availability of Capital Stock.

 

(a) Subject to Sections
7(e) and 9(f) hereof,
the Company shall cause to be reserved and kept available out of its authorized
and unissued equity securities the number of such equity securities that will
from time to time be sufficient to permit the exercise in full of all
outstanding Rights.

 

(b) In the event that any securities
issuable upon exercise of the Rights are listed on any national securities
exchange, the Company shall use its best efforts, from and after such time as
the Rights become exercisable, to cause all such securities issued or reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.

 

(c) If necessary to permit the issuance
of securities upon exercise of the Rights, the Company shall use its best
efforts, from and after the Distribution Date, to register and qualify such
securities under the Securities Act, the Exchange Act and any other applicable
securities laws and to keep such registration effective until the earlier of
the Redemption Date or the Rights Expiration Date.

 

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

 

(e) The Company shall pay when due and
payable any and all taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any tax
or charge that may be payable in respect of any transfer or delivery of a Right
Certificate to a

 

12

 

Person other than, or the issuance or delivery of a certificate for
securities in respect of a name other than that of, the registered holder of
the Right Certificate representing Rights surrendered for exercise, or to issue
or deliver any certificate for securities upon the exercise of any Right until
any such tax or charge shall have been paid (such tax or charge 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 or charge
is due.

 

(f) With respect to the Common Shares
and/or other securities issuable pursuant to Section 11(a)(ii)
and (iii) hereof, the foregoing
covenants shall be applicable only upon and following the occurrence of a Section 11(a)(ii) Event.

 

Section 10.                                   Securities
Record Date.  Each
Person in whose name any certificate for securities of the Company is issued
upon the exercise of Rights shall be deemed to have become the holder of record
of the securities represented thereby for all purposes on, and such certificate
shall be dated, the date upon which the Right Certificate representing such
Rights was duly surrendered and payment of the Exercise Price (and any
applicable taxes and governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date
upon which the securities transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such securities on, and
such certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.

 

Section 11.                                   Adjustment
of Exercise Price, Number of Shares Issuable Upon Exercise of Rights or Number
of Rights.  The Exercise Price, the number and kind of
securities that may be purchased upon exercise of a Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

 

(a)(i)In the event that the Company shall at
any time after the Close of Business on the Record Date and prior to the Close
of Business on the earlier of the Redemption Date or the Rights Expiration Date
(A) declare or pay any dividend on the Preferred Shares payable in
Preferred Shares or Voting Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller number
of Preferred Shares or (D) issue Preferred Shares or other securities of
the Company (other than those issuances for which an adjustment is required
under Section 11(b) hereof) in a
reclassification of the Preferred Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) or in a reorganization of the Company, then,
and upon each such event, the number and kind of Preferred Shares or other
securities issuable upon the exercise of a Right on the date of such event
shall be proportionately adjusted so that the holder of any Right exercised on
or after such date shall be entitled to receive, upon the exercise thereof and
payment of the Exercise Price, the aggregate number and kind of Preferred
Shares or other securities or other property, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time when such
Right was exercisable and the transfer books of the Company were open, such
holder would have owned upon such exercise and would have been entitled to
receive by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i)

 

13

 

shall be in addition to, and shall be made prior to, any adjustment
required under Section 11(a)(ii) hereof.

 

(ii) In the event that an Acquisition
Date shall have occurred and neither the Redemption Date nor the Expiration
Date shall have occurred prior to the tenth Business Day following such
Acquisition Date (a “Section 11(a)(ii)
Event”), then, and upon each such Section 11(a)(ii) Event,
proper provision shall be made so that, except as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement and payment of the then current Exercise
Price, the number of Common Shares of the Company as equals the result obtained
by (A) multiplying the then current Exercise Price by the then number of
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such Section 11(a)(ii) Event (or, if the
Distribution Date shall not have occurred prior to the date of such Section 11(a)(ii) Event,
the number of one-hundredths of a Preferred Share for which a Right would have
been exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event), and
(B) dividing that product by 50% of the Current Market Price of a Common
Share on the date of occurrence of the relevant Section 11(a)(ii) Event
(such number of shares being hereinafter referred to as the “Adjustment Shares”). Successive adjustments shall be made
pursuant to this paragraph each time a Section 11(a)(ii) Event
occurs.

 

(iii) In the event that on the date of a
Section 11(a)(ii) Event the aggregate number of Common Shares that
are authorized by the Company’s Certificate of Incorporation, as amended from
time to time, but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is less than the aggregate number of
Adjustment Shares thereafter issuable upon the exercise in full of the Rights
in accordance with Section 11(a)(ii) hereof
(the excess of such number of Adjustment Shares over and above such number of
Common Shares being hereinafter referred to as the “Unavailable
Adjustment Shares”), then, and upon each such event, the Company
shall substitute for the pro rata portion of the Unavailable Adjustment Shares
that would otherwise be issuable thereafter upon the exercise of each Right and
payment of the Exercise Price (A) cash, (B) other equity securities
of the Company (including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as one
Common Share (a “Common Share Equivalent”)),
(C) debt securities of the Company, (D) other property or
(E) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
Unavailable Adjustment Shares for which substitution is made. Subject to Section 7(d) hereof, in the event that the Company
takes any action pursuant to this Section 11(a)(iii), such
action shall apply uniformly to all outstanding Rights.

 

(b) In the event that the Company shall,
at any time after the Close of Business on the Record Date and prior to the
Close of Business on the earlier of the Redemption Date or the Rights
Expiration Date, fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling such holders initially to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares (“Preferred Share
Equivalents”)) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share

 

14

 

Equivalents) less than the Current Market Price per Preferred Share on
such record date, then, and upon each such event, the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be equal to the sum of the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares that the
aggregate offering price of the total number of Preferred Shares and/or
Preferred Share Equivalents to be so offered (and/or the aggregate initial
conversion price of the convertible securities to be so offered) would purchase
at such Current Market Price, and the denominator of which shall be equal to
the number of Preferred Shares outstanding on such record date plus the number
of additional Preferred Shares and/or Preferred Share Equivalents to be offered
for subscription or purchase (or into which the convertible securities to be so
offered are initially convertible); provided, however, that
if such rights, options or warrants are not exercisable immediately upon
issuance but become exercisable only upon the occurrence of a specified event
or the passage of a specified period of time, then the adjustment to the
Exercise Price shall be made and become effective only upon the occurrence of
such event or such passage of time, and such adjustment shall be made as if the
record date for the issuance of such rights, options or warrants had been the
Business Day immediately preceding the date upon which such rights, options or
warrants became exercisable. 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 to the Exercise Price shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise
Price that would then be in effect if such record date had not been fixed.

 

(c) In the event that the Company shall,
at any time after the Close of Business on the Record Date and prior to the
Close of Business on the earlier of the Redemption Date or the Rights
Expiration Date, fix a record date for the making of a distribution of assets
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 surviving
corporation, other than a distribution for which an adjustment is required
under Section 11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the
Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be equal to the excess of the
Current Market Price per Preferred Share on such record date over and above the
fair market value of the portion of the securities or assets to be so
distributed with respect to one Preferred Share, and the denominator of which
shall be equal to such Current Market Price per Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such a distribution is not so made, the Exercise Price
shall be adjusted to be the Exercise Price that would then be in effect if such
record date had not been fixed.

 

(d) For the purpose of any computation
under this Section 11, if the Preferred Shares
are not publicly held or traded, the “Current Market Price”
per Preferred Share conclusively shall be deemed to be the Current Market Price
per Common Share multiplied by 100.

 

(e) No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the then current Exercise Price; provided,
however, that any adjustments that are not required to be made by
reason of this Section 11(e)

 

15

 

shall be cumulated 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-thousandth of a Common Share
or other share or one-millionth of a Preferred Share, as the case may be.

 

(f) If, as a result of an adjustment
made pursuant to Section 11(a) hereof, the
holder of any Right shall be entitled to receive any securities of the Company
other than Preferred Shares upon exercise of such Right, and if an event occurs
in respect of such securities that, if it were to occur in respect of Preferred
Shares, would require an adjustment under this Section 11
in respect of Preferred Shares, then the number of such other
securities so receivable upon exercise of each 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 Preferred Shares contained in
this Section 11, and the other
provisions of this Agreement with respect to Preferred Shares shall apply on
like terms to any such other securities.

 

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

 

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

 

(i) The Company may elect, on or after
the date of any adjustment of the Exercise Price, to adjust the number of
Rights instead of making any adjustment in the number of Preferred Shares
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one one-thousandth of a Right) obtained by dividing
the Exercise Price in effect immediately prior to the adjustment of the
Exercise Price by the Exercise Price in effect immediately after such
adjustment of the Exercise Price. The Company shall promptly notify the Rights
Agent in writing of any such election and shall make a public announcement of
its election to adjust the number of Rights pursuant to this Section 11(i), indicating the record date for the
adjustment and, if known at the time, the amount of the adjustment to be made.
Such record date may be the date on which the Exercise Price is adjusted or any
day thereafter, but, if separate Right Certificates have been issued, it shall
be at least ten days after the date of such public announcement. If separate
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause Right Certificates
representing the additional Rights to which such holders are entitled as a
result of such adjustment to be distributed, subject to Section 14

 

16

 

hereof, to holders of record of Right Certificates on such record date
or, at the option of the Company, cause new Right Certificates representing all
the Rights to which such holders are entitled after such adjustment 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 such adjustment,
and upon surrender thereof if required by the Company. Right Certificates to be
so distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise 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 Exercise Price or the number of one-hundredths of a Preferred
Share issuable upon the exercise of one Right, the Right Certificates
theretofore and thereafter issued may continue to express the Exercise Price
per one one-hundredth of a Preferred Share and the number of Preferred Shares
issuable upon the exercise of one Right that were expressed in the initial
Right Certificates issued hereunder.

 

(k) Before taking any action that would
cause an adjustment reducing the Exercise 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 that may, in the advice or
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one one-hundredths of a Preferred
Share at such adjusted Exercise Price.

 

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

 

(m) Notwithstanding anything to the
contrary in this Section 11, the Company shall be entitled to make such
further adjustments in the number of one-hundredths of a Preferred Share that
may be purchased upon exercise of one Right, and such further adjustments in
the Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Company in its sole discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of any
Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that 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) hereof, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such stockholders.

 

17

 

(n) In the event that the Company shall,
at any time after the Close of Business on the Record Date and prior to the
Close of Business on the earliest of (i) the date of the first Section 11(a)(ii) Event,
(ii) the date of the first Section 13(a) Event, (iii) the
Redemption Date or (iv) the Rights Expiration Date, either (A) pay
any dividend on the Common Shares payable in Common Shares, (B) subdivide
the outstanding Common Shares, (C) combine the outstanding Common Shares
into a smaller number of Common Shares or (D) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be the number of Common Shares outstanding immediately after such event.
Successive adjustments shall be made pursuant to this Section 11(n)
each time such a dividend is paid or such a subdivision, combination
or reclassification is effected. If an event occurs that would require an
adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii) hereof.

 

Section 12.                                   Certificate
of Adjusted Exercise Price or Number of Shares Issuable Upon Exercise of Rights.  Whenever an adjustment is made as
provided in Section 11 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and
a brief, reasonably detailed, statement of the facts, methodology and
computations giving rise to such adjustment, (b) file with the Rights
Agent and with each transfer agent for the securities issuable upon exercise of
the Rights a copy of such certificate and (c) mail a brief summary thereof
to each holder of Rights in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or to give such notice shall not affect the validity or the force
and effect of such adjustment. Any adjustment to be made pursuant to Sections 11 or 13 hereof shall
be effective as of the date of the event giving rise to such adjustment. The
Rights Agent shall be fully authorized and protected in relying on any such
certificate and on any adjustment therein contained, and shall not be obligated
or responsible for calculating any adjustment nor shall it be deemed to have
any duty with respect to or any knowledge of such an adjustment unless and
until it shall have received such certificate.

 

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

 

(a) In the event (a “Section 13(a) Event”) that, at any time on or after the
Acquisition Date and prior to the earlier of the Redemption Date or the Rights
Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company shall
not be the continuing or surviving corporation in such consolidation or merger,
(2) any Person shall, directly or indirectly, consolidate with or merge
with and into the Company and the Company shall be the continuing or surviving
corporation in such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any Person or cash or any other property, or (3) the Company
and/or any one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer, in one or more transactions (other than transactions in
the

 

18

 

ordinary course of business), assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons other than the Company or one or
more of its wholly-owned Subsidiaries (such Persons, together with the Persons
described in clauses (1) and (2) above shall be collectively referred to in this Section as
the “Surviving Person”), then, and in each
such case, proper provision shall be made so that:

 

(i) except as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement and payment of the then current Exercise
Price, in lieu of the securities or other property otherwise purchasable upon
such exercise, such number of validly authorized and issued, fully paid and
nonassessable Common Shares of the Surviving Person (and if such Surviving
Person has more than one class or series of Common Shares, such number of
validly authorized and issued, fully paid and nonassessable Common Shares of
each series or class) as shall be equal to a fraction, the numerator of which
is:

 

(A) if a Section 11(a)(ii) Event
has not occurred prior to such Section 13(a) Event, the product of the
then current Exercise Price multiplied by the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
the first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable if the
Distribution Date had occurred on the Business Day immediately preceding the
date of such Section 13(a) Event), or

 

(B) if a Section 11(a)(ii) Event
has occurred prior to such Section 13(a) Event, the product of the
Exercise Price in effect immediately prior to such Section 11(a)(ii) Event
multiplied by the number of one-hundredths of a Preferred Share purchasable
upon the exercise of one Right immediately prior to such Section 11(a)(ii) Event
(or, if the Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a Preferred
Share that would have been so purchasable if the Distribution Date had occurred
on the Business Day immediately preceding the date of such Section 11(a)(ii) Event),

 

and the denominator of which is 50% of the Current Market Price per
Common Share of the Surviving Person on the date of consummation of such Section 13(a)
Event;

 

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

 

(iii) the term “Company” shall
thereafter be deemed to refer to the Surviving Person; and

 

(iv) the Surviving Person shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9
hereof) in connection with such consummation as may be necessary to
ensure that the provisions hereof shall thereafter be applicable to its Common
Shares thereafter deliverable upon the exercise of Rights.

 

19

 

(b) Notwithstanding the foregoing, if
the Section 13(a) Event is the sale or transfer in one or more
transactions of assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole), but
less than 100% thereof, then each Person acquiring all or a portion thereof
shall assume the obligations of the Company as to a fraction of each of the
Rights equal to the fraction of the assets of the Company and its Subsidiaries
(taken as a whole) acquired by such Person, and the obligations of the Company
as to the remaining fraction of each of the Rights shall continue to be the
obligations of the Company.

 

(c) The Company shall not consummate a Section 13(a)
Event unless prior thereto the Company and the Surviving Person shall have
executed and delivered to the Rights Agent a supplemental agreement confirming
that such Surviving Person shall, upon consummation of such Section 13(a)
Event, assume this Agreement in accordance with Section 13
hereof, that all rights of first refusal or preemptive rights in
respect of the issuance of Common Shares of such Surviving Person upon exercise
of outstanding Rights have been waived and that such Section 13(a) Event
shall not result in a default by such Surviving Person under this Agreement,
and further providing that, as soon as practicable after the date of
consummation of such Section 13(a) Event, such Surviving Person shall:

 

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

 

(ii) use its best efforts to list (or
continue the listing of) the Rights and the Common Shares of the Surviving
Person purchasable upon exercise of the Rights on a national securities exchange,
or use its best efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on NASDAQ; and

 

(iii) deliver to holders of the Rights
historical financial statements for such Surviving Person that comply in all respects
with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.

 

(d) In the event that at any time after
the occurrence of a Section 11(a)(ii) Event some or all of the Rights
shall not have been exercised pursuant to Section 11 hereof
prior to the date of a Section 13(a) Event, such Rights shall thereafter
be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs
on or after the date of a Section 13(a) Event, Rights shall not be
exercisable pursuant to Section 11 hereof
but shall instead be exercisable pursuant to, and only pursuant to, this Section 13.

 

(e) The provisions of this Section 13
shall apply to each successive merger, consolidation, sale or other transfer
constituting a Section 13(a) Event.

 

20

 

Section 14.                                   Fractional
Rights and Fractional Shares.

 

(a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates that represent
fractional Rights. If the Company shall determine not to issue such fractional
Rights, the Company shall pay to the registered holders of the Right
Certificates with respect to which such fractional Rights would otherwise be
issuable, at the time such fractional Rights would otherwise have been issued
as provided herein, an amount in cash equal to the same fraction of the Current
Market Price of a whole Right on the Business Day immediately prior to the date
upon which such fractional Rights would otherwise have been issuable.

 

(b) The Company shall not be required to
issue fractions of Common Shares or Preferred Shares upon exercise of Rights
(other than fractions that are integral multiples of one one-hundredth of a
Preferred Share), or to distribute certificates that represent fractional
Common Shares or Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be represented by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary selected by it; provided, however, that any 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
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred
Shares), the Company shall promptly notify the Rights Agent in writing thereof
and shall pay to the registered holders of Right Certificates to whom such
fractional Common Shares or Preferred Shares would otherwise be issuable, at
the time such Rights are exercised as provided herein, an amount in cash equal
to the same fraction of the Current Market Price of a whole Common Share or
Preferred Share, as the case may be. For purposes of this Section 14(b),
the Current Market Price of a whole Common Share or Preferred Share
shall be the Closing Price per share for the Trading Day immediately prior to
the date of such exercise.

 

(c) The holder of a Right, by the
acceptance of such Right, expressly waives such holder’s right to receive any
fractional Rights or any fractional Common Shares or Preferred Shares upon
exercise of such Right, except as permitted by this Section 14.

 

(d) The Rights Agent shall have no duty
or obligation with respect to this Section 14 unless
and until it has received specific instructions (and sufficient cash, if
required) from the Company with respect to its duties and obligations under
such Section.

 

Section 15.                                   Rights
of Action.  All
rights of action in respect of this Agreement, except the rights of action
given to the Rights Agent under Section 18 and
Section 20 hereof, are vested in
the respective registered holders of the Right Certificates and certificates
for Common Shares representing Rights, and any registered holder of any Right
Certificate or of such certificate for Common Shares, without the consent of
the Rights Agent or of the holder of any other Right Certificate or any other
certificate for Common Shares 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 represented by such Right
Certificate or by such certificate for Common Shares in the manner provided in
such 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

 

21

 

of Rights would not have an adequate remedy at law for any breach of
this Agreement and shall be entitled to specific performance, and injunctive
relief against actual or threatened violations, of the obligations of any
Person under 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 every other holder of a Right that:

 

(a) prior to the Distribution Date, the
Rights shall be represented by certificates for Common Shares registered in the
name of the holders of such Common Shares (which certificates for Common Shares
shall also constitute Right Certificates), and each such Right shall be
transferable only in connection with the transfer of such Common Shares;

 

(b) after the Distribution Date, the
Right Certificates shall only be transferable on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of transfer
(with all required certifications completed) and such further documentation as
the Rights Agent may require; and

 

(c) the Company and the Rights Agent may
deem and treat the Person in whose name the Right Certificate is registered as
the absolute owner thereof and of the Rights represented thereby for all
purposes whatsoever (notwithstanding any notations of ownership or writing on
the Right Certificate by anyone other than the Company or the Rights Agent),
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.

 

(d) Notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree, judgment or
ruling (whether interlocutory or final) 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; provided, however, that
the Company must use commercially reasonable efforts to have any such order,
decree, judgment or ruling lifted, rescinded or otherwise overturned as soon as
possible.

 

Section 17.                                   Right
Holder and Right Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right or
Right Certificate shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the securities of the Company that may at any time be
issuable upon the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right or 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,
to give or withhold consent to any corporate action, to receive notice of
meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, in each case until such Right or the Rights

 

22

 

represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.

 

Section 18.                                   Concerning
the Rights Agent.

 

(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses,
its fees and disbursements of counsel and other disbursements incurred in the
preparation, delivery, acceptance, administration, execution and amendment of
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold the Right
Agent harmless against, any loss, liability, damage, judgment, ruling
(interlocutory or final), fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (as finally determined by a court of competent
jurisdiction or arbitrational tribunal if any such matter is submitted to
binding arbitration), for any action taken, suffered or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement or
the exercise or performance of its duties hereunder, including, without
limitation, the costs and expenses of defending against any claim of liability.
The costs and expenses of enforcing this right of indemnification shall also be
paid by the Company. The indemnification provided for hereunder shall survive
the expiration of the Rights and the termination of this Agreement.

 

(b) The Rights Agent shall be authorized
to conclusively rely upon and shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with the acceptance and administration of this Agreement in reliance upon any
Right Certificate or certificate for 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 or opinion of its
counsel as set forth in Section 20 hereof.
The Rights Agent shall not be deemed to have any duty or notice unless and
until the Company has provided the Rights Agent with actual written notice to
the extent required hereunder.

 

(c) Notwithstanding anything to the
contrary in this Agreement, in no event shall the Rights Agent be liable for
special, punitive, indirect incidental or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Rights Agent has been advised of the possibility of such loss or damage and
regardless of the form of the action. Any liability of the Rights Agent under
this Agreement shall be limited to the amount of fees paid by the Company to
the Rights Agents.

 

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

 

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

 

23

 

Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, however, that
such Person would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. If any of
the Right Certificates shall have been countersigned but not delivered at the
time such successor Rights Agent succeeds to the agency created by this
Agreement, such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and if 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
and effect provided in such Right Certificate and in this Agreement.

 

(b) If 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 if 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 and effect provided in such Right
Certificate and in this Agreement.

 

Section 20.                                   Duties
of Rights Agent.  The
Rights Agent undertakes the duties and obligations expressly imposed by this
Agreement upon the following terms and conditions (and no implied duties or
obligations shall be read into this Agreement), by all of which terms and
conditions the Company and the holders of Right Certificates, by their
acceptance of the Rights, shall be bound:

 

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

 

(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking, suffering or omitting to take any action hereunder, such fact or
matter may be deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman of the Board, the Chief Executive Officer,
the President or any Vice President, the Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent (unless
other evidence in respect thereof is specifically prescribed herein); and such
certificate shall be full authorization and protection to the Rights Agent, and
the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate (unless other evidence in respect
thereof is specifically prescribed herein).

 

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

 

24

 

by a court of competent jurisdiction or arbitrational tribunal if any
such matter is submitted to binding arbitration).

 

(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 have any
liability for, nor be under any responsibility regarding the validity of this
Agreement or the execution and delivery hereof (except the due authorization,
execution and delivery of this Agreement by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall the Rights Agent be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall the Rights Agent have any liability for, nor be
responsible for any change in the exercisability of the Rights (including any
Rights becoming null and void pursuant to Section 7(d) hereof)
or any adjustment in the terms of the Rights provided for in Sections 7, 11, 13 and 23 hereof
(including the manner, method or amount thereof), or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights represented by Right Certificates after
actual notice that such change or adjustment is required); nor shall the Rights
Agent by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares or Common Shares or
other securities to be issued pursuant to this Agreement or any Right
Certificate, or as to whether any Preferred Shares or Common Shares or other
securities will be validly authorized and issued, fully paid and nonassessable
when issued.

 

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

 

(g) The Rights Agent is hereby
authorized and directed to accept the advice or instructions regarding the
performance of its duties hereunder from any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Secretary or the Treasurer of the Company, and to seek
advice or instructions from such officers in connection with its duties under
this Agreement, and such advice or instructions shall be full authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted to be taken by it in
good faith in accordance with such advice or instructions or for any delay in
acting while waiting for such advice or instructions. Any application by the
Rights Agent for written advice or instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken, suffered or omitted by the Rights Agent under this Agreement and the
date on or after which such action shall be taken or suffered or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
or suffered by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless such
officer shall have

 

25

 

consented in writing to an earlier date) unless, prior to taking or
suffering any such action (or the effective date in the case of an omission),
the Rights Agent receives written advice or instructions from the Company in
response to such application to the contrary. The Rights Agent may conclusively
rely on the most recent advice or instructions given by any such officer.

 

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

 

(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself 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, absent
gross negligence, bad faith or willful misconduct (as finally determined by a
court of competent jurisdiction or arbitrational tribunal to which any such
action may be submitted for binding arbitration) in the selection and continued
employment thereof.

 

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

 

(k) The Rights Agent shall not be
required to take notice or be deemed to have notice of any fact, event or
determination under this Agreement (including, without limitation, any dates or
events defined in this Agreement or the designation of any Person as an
Acquiring Person, Affiliate or Associate) unless and until the Rights Agent is
specifically notified by the Company of such fact, event or determination in
writing.

 

(l) If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has not been properly completed, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company; provided, however, that
the Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted in connection with any such
Rights Certificate surrendered to the Rights Agent for exercise or transfer,
absent gross negligence, bad faith or willful misconduct (as determined by a
court of competent jurisdiction or arbitrational tribunal to which any such
action may be submitted for binding arbitration). The Company agrees to give
the Rights Agent prompt written notice of any event or ownership of which the
Company is aware that would prohibit the exercise or transfer of the Rights
Certificates.

 

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’ written

 

26

 

notice mailed to the Company and to each transfer agent of the Common
Shares and Preferred Shares by registered or certified mail, and, at the
expense of the Company 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’ written notice, 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 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 as such, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within 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 Company shall become the
Rights Agent and 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 (i) a Person organized, in good standing, and doing
business under the laws of the United States that is authorized under such laws
to conduct stockholder services business or exercise stock transfer powers and
is subject to supervision or examination by federal or state authority and that
has a combined capital and surplus of at least $50,000,000 at the time of its
appointment as Rights Agent or (ii) an Affiliate of such Person described
in clause (i) of this sentence that,
in the determination of the Board of Directors and its advisors, is capable of
performing and fulfilling all of the rights, obligations, responsibilities and
duties of a Rights Agent hereunder. 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;
provided, however, that the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by the predecessor Rights Agent hereunder, and shall
execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose of this Agreement and so that the successor Rights Agent may
appropriately act as Rights Agent hereunder. 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 shall mail a notice thereof in writing to the registered
holders of the Right Certificates; provided, however, that
neither the failure to give any notice provided for in this Section 21 nor any defect therein shall affect the
legality or validity of the resignation or removal of the predecessor 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 Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in such
form as may be approved by the Board of Directors in order to reflect any
adjustment or change in the Exercise Price and the number or kind or class of
shares or other securities or property issuable or purchasable upon exercise of
the Rights in accordance with the provisions of this Agreement.

 

Section 23.                                   Redemption
of Rights.

 

(a) Until the earliest of (i) the
date of the first Section 11(a)(ii) Event, (ii) the date of the
first Section 13(a) Event or (iii) the Rights Expiration Date, the
Board of Directors of the

 

27

 

Company may, at its option, authorize and direct the redemption of all,
but not less than all, of the then outstanding Rights at a redemption price of
$.005 per Right, as such redemption price shall be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (the “Redemption Price”),
and the Company shall so redeem the Rights.

 

(b) Immediately upon the action of the
Board of Directors of the Company authorizing and directing the redemption of
the Rights pursuant to clause (a) of
this Section 23, or at such time and
date thereafter as the Board of Directors may specify, and without any further
action and without any notice, the right to exercise Rights shall terminate and
the only right of the holders of Rights thereafter shall be to receive the
Redemption Price. Within ten Business Days after the date of such action, the
Company shall promptly notify the Rights Agent in writing of such redemption
and shall give notice of such redemption to the holders of Rights by mailing
written notice to all holders of Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, if prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice that is mailed in the manner provided herein shall be deemed given,
whether or not the holder receives such notice; provided,
however, that neither the failure to give any such notice nor any
defect therein shall affect the legality or validity of such redemption. Each
such notice of redemption shall 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, directly or indirectly, redeem, acquire or purchase for value
any Rights in any manner other than that specifically set forth in Section 24 hereof or in this Section 23,
or in connection with the purchase of Common Shares prior to the
earlier of the date of the first Section 11(a)(ii) Event or the date
of the first Section 13(a) Event.

 

(c) The Company may, at its option, pay
the Redemption Price in cash, Common Shares, Preferred Shares, other equity
securities of the Company, debt securities of the Company, other property or
any combination of the foregoing, in each case having an aggregate Current
Market Price on the Redemption Date equal to the Redemption Price.

 

Section 24.                                   Exchange
of Rights.

 

(a) At any time during the period of
180 days after a Section 11(a)(ii) Event, the Board of Directors
of the Company may, at its option, authorize and direct the exchange of all,
but not less than all, of the then outstanding Rights for Common Shares, one
one-hundredths of Preferred Shares, debt securities of the Company, other
property, or any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the result obtained by (i) multiplying the
Current Market Price per Common Share on the record date for such exchange by
the number of Common Shares for which a Right is exercisable on such record
date and (ii) subtracting from such product the Exercise Price on such
Record Date (the “Exchange Ratio”), and the Company
shall so exchange the Rights.

 

(b) Immediately upon the action of the
Board of Directors of the Company authorizing and directing the exchange of the
Rights pursuant to subsection (a) of this Section 24,
or at such time and date thereafter as it may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to receive
the securities described in Section 24(a) in
accordance with the

 

28

 

Exchange Ratio. Within ten Business Days after the date of such action,
the Company shall promptly notify the Rights Agent in writing of such exchange
and give notice of such exchange to the holders of Rights by mailing such
notice to all holders of Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, if prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice that is
mailed in the manner provided herein shall be deemed given, whether or not the
holder receives such notice; provided, however, that
neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of such exchange. Each such notice of exchange shall
state the method by which the Rights will be exchanged.

 

(c) Notwithstanding the foregoing, in
the event that the aggregate number of Common Shares that are authorized by the
Company’s Certificate of Incorporation, as amended from time to time, but not
outstanding or reserved for issuance for purposes other than upon exercise or
exchange of the Rights is less than the aggregate number of Common Shares
issuable upon the exchange of the Rights in accordance with this Section 24 (the excess of such number of authorized
Common Shares over and above such number of issuable Common Shares being
hereinafter referred to as the “Unavailable Exchange
Shares”), then the Company shall substitute for the pro rata portion
of the Unavailable Exchange Shares that would otherwise be issuable upon the
exchange of the Rights in accordance with this Section 24
(i) cash, (ii) other equity securities of the Company
(including, without limitation, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination
of the foregoing, in each case having an aggregate Current Market Price equal
to the aggregate Current Market Price of the Unavailable Exchange Shares for
which substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section 24, such action shall apply uniformly to all
outstanding Rights.

 

Section 25.                                   Notice
of Certain Events.

 

(a) In the event that the Company shall
propose (i) to declare or pay any dividend on or make any distribution
with respect to its Common Shares or Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Common
Shares or Preferred Shares options, rights or warrants to subscribe for or to
purchase any additional shares thereof or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification
of its Common Shares or Preferred Shares (other than a reclassification
involving only the subdivision of outstanding shares), (iv) to effect any
consolidation or merger with or into 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) of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) in one or more transactions to
any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then and in each such case, the Company shall
give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice
of such proposed action that shall specify the record date for the purpose of
such dividend or distribution, or the date upon 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 record
of the Common Shares 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 20 days prior to the record date for determining holders of the
Common Shares or Preferred Shares for purposes of

 

29

 

such action, and in the case of any such other action, at least
20 days prior to the earlier of the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Shares
or Preferred Shares; provided, however, that
neither the failure to give the notice required by this Section 25
nor any defect therein shall affect the legality or validity of the
action taken by the Company or the vote upon any such action.

 

(b) Upon the occurrence of each Section 11(a)(ii) Event
and each Section 13(a) Event, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice
of the occurrence of such event, specifying the event and the consequences of
the event to holders of Rights under Sections 11 and
13 hereof.

 

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:

 

	
  SoftBrands, Inc.

  
	
  Two Meridian Crossings, Suite 800

  
	
  Minneapolis, MN 55423

  
	
  Attention: Chief Financial Officer

  

 

Subject to the provisions of Section 21 hereof,
any notice or demand authorized by this Agreement to be given or made to or on
the Rights Agent (i) by the Company shall be sufficiently given or made if
sent, postage prepaid, by registered or certified mail, addressed to the office
of the Rights Agent designated for such purpose as set forth below (until
another address is filed in writing with the Company) or (ii) by the
holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to the designated office of the
Rights Agent as set forth below (until another address is filed in writing with
the Company), and shall be deemed given upon actual receipt. The Company hereby
agrees that it shall encourage the holders of the Right Certificates, in any
and all writings to such holders regarding the Rights or this Agreement, to
give or make any notice or demand authorized by this Agreement by registered or
certified mail, addressed to the designated office of the Rights Agent as
follows (until another address is filed in writing with the Company):

 

	
  Wells Fargo Bank Minnesota, National Association

  
	
  Shareowner Services

  
	
  161 North Concord Exchange

  
	
  P.O. Box 738

  
	
  South St. Paul, MN 55075-1139

  

 

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.

 

30

 

Section 27.                                   Supplements
and Amendments.

 

(a) The Board of Directors of the
Company may from time to time supplement or amend any provision of this
Agreement in any manner without the approval of any holders of Rights, whether
or not such supplement or amendment is adverse to any holder of Rights, and
further may direct the Rights Agent to so supplement or amend such provision,
and the Rights Agent shall so supplement or amend such provision; provided, however, that from and after the earliest of
(i) the date of the first Section 11(a)(ii) Event, (ii) the
date of the first Section 13(a) Event, (iii) the Redemption Date or
(iv) the Expiration Date, this Agreement shall not be supplemented or
amended in any manner that would materially and adversely affect the Rights
Agent or any holder of outstanding Rights other than an Acquiring Person or a
Surviving Person.

 

(b) b) From and after the earlier
of the date of the first Section 11(a)(ii) Event or the date of the
first Section 13(a) Event and prior to the Rights Expiration Date, the
Company shall not effect any amendment to the Certificate of Designation for
the Preferred Shares that would materially and adversely affect the rights,
privileges or preferences of the Preferred Shares without the prior approval of
the holders of two-thirds or more of the then outstanding Rights. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment that changes the rights,
obligations, liabilities and duties of the Rights Agent under this Agreement in
any manner adverse to the Rights Agent will be effective against the Rights
Agent without the consent and execution of such supplement or amendment by the
Rights Agent.

 

Section 28.                                   Certain
Covenants.  Subject
to Section 27 hereof and the other
provisions of this Agreement, from and after the earlier of the date of the
first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Rights Expiration
Date, the Company shall not (a) issue or sell, or permit any Subsidiary to
issue or sell, to an Acquiring Person or a Surviving Person, or any Affiliate
or Associate of an Acquiring Person or a Surviving Person, or any Person
holding Voting Shares of the Company that are Beneficially Owned by an
Acquiring Person or a Surviving Person, (i) any rights, options, warrants
or convertible securities on terms similar to, or that materially adversely
affect the value of, the Rights or (ii) Preferred Shares, Common Shares or
shares of any other class of capital stock, if such sale is intended to or
would materially adversely affect the value of the Rights, or (b) take any
other action that is intended to or would materially adversely affect the value
of the Rights.

 

Section 29.                                   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 permitted assigns
hereunder.

 

Section 30.                                   Benefits
of this Agreement.  Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(other than those representing Rights that have become null and void) and the
certificates for Common Shares representing Rights (other than those Rights that
have become null and void) any legal or equitable right, remedy or claim under
this Agreement, and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent

 

31

 

and such registered holders of Right Certificates and certificates for
Common Shares representing Rights.

 

Section 31.                                   Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

 

Section 32.                                   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 such state applicable to
contracts made and performed entirely within such state; provided,
however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to contracts made
and to be performed entirely within such state.

 

Section 33.                                   Counterparts.  This Agreement may be executed by facsimile and
in two or more counterparts, each of which shall be deemed to be an original
and all of which when taken together shall constitute one and the same
instrument.

 

Section 34.                                   Descriptive
Headings.  Descriptive
headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

Section 35.                                   Determination
and Actions by the Board of Directors.  The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise the rights and powers specifically granted to
the Board of Directors or to the Company (subject to any express limitations of
or conditions to such power, authority and rights set forth in this Agreement).
All such actions, calculations, interpretations and determinations that are
done or made by the Board of Directors in good faith and pursuant to or
permitted by the terms and provisions of this Agreement shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other applicable Persons. The Rights Agent shall always
be entitled to assume that the Board of Directors acted in good faith and shall
be fully protected and incur no liability in reliance thereon.

 

[signature page follows]

 

32

 

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

 

	
   

  	
   

  	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Elizabeth A. Hammett

  	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name: Elizabeth A. Hammett

  	
   

  	
   

  	
  Name: David G. Latzke

  	
   

  
	
   

  	
  Title:   Admin. Assistant

  	
   

  	
   

  	
  Title:   EVP & CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION, as Rights Agent

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Corbin Connell

  	
   

  	
  By:

  	
  /s/ Darren Larson

  	
   

  
	
   

  	
  Name: Corbin Connell

  	
   

  	
   

  	
  Name: Darren Larson

  	
   

  
	
   

  	
  Title:   Assistant Vice
  President

  	
   

  	
   

  	
  Title:   Assistant Vice
  President

  	
   

  

 

33Exhibit 4.2

 

SOFTBRANDS, INC.

2001 STOCK INCENTIVE PLAN

 

Section 1.  Purpose

 

The purpose of the
Plan is to promote the interests of the Company and its shareholders by aiding
the Company in attracting and retaining employees, officers, consultants,
independent contractors and Non-Employee Directors capable of assuring the
future success of the Company, to offer such persons incentives to put forth
maximum efforts for the success of the Company’s business and to afford such
persons an opportunity to acquire a proprietary interest in the Company.

 

Section 2.  Definitions

 

As used in the
Plan, the following terms shall have the meanings set forth below:

 

(a)                                  “Affiliate”
shall mean (i) any entity that, directly or indirectly through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the
Company has a significant equity interest, in each case as determined by the
Committee.

 

(b)                                 “Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent, Other Stock Grant or Other
Stock-Based Award granted under the Plan.

 

(c)                                  “Award
Agreement” shall mean any written agreement, contract or other instrument or
document evidencing any Award granted under the Plan.  Each Award Agreement shall be subject to the
applicable terms and conditions of the Plan and any other terms and conditions
(not inconsistent with the Plan) determined by the Committee.

 

(d)                                 “Board”
shall mean the Board of Directors of the Company.

 

(e)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
any regulations promulgated thereunder.

 

(f)                                    “Committee”
shall mean a committee of Directors designated by the Board to administer the
Plan.  The Committee shall be comprised
of not less than such number of Directors as shall be required to permit Awards
granted under the Plan to qualify under Rule 16b-3, and each member of the
Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3
and an “outside director” within the meaning of Section 162(m) of the
Code.  The Company expects to have the
Plan administered in accordance with the requirements for the award of “qualified
performance-based compensation” within the meaning of Section 162(m) of
the Code.

 

(g)                                 “Company”
shall mean SoftBrands, Inc., a Delaware corporation,
and any successor corporation.

 

 

(h)                                 “Director”
shall mean a member of the Board, including Non-Employee Directors.

 

(i)                                     “Dividend
Equivalent” shall mean any right granted under Section 6(e) of the Plan.

 

(j)                                     “Eligible
Person” shall mean any employee, officer, consultant, independent contractor or
Director (including any Non-Employee Director) providing services to the
Company or any Affiliate whom the Committee determines to be an Eligible Person,
and transferees of Eligible Persons to the extent that the transfer is
permitted by the Plan and the applicable Award Agreement.

 

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

 

(l)                                     “Fair
Market Value” shall mean, with respect to any property (including, without
limitation, any Shares or other securities), the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee. 
Notwithstanding the foregoing, unless otherwise determined by the
Committee, the Fair Market Value of a Share as of a given date shall be,(i) if
the Shares are then traded on the New York Stock Exchange, or on any other
national exchange, the closing price of one share as reported in the NYSE on
such date, or (ii) if the Shares are not traded on a national exchange but
are then traded on the Nasdaq National Market System, the last sales price of
one Share as reported on the Nasdaq National Market System on such date, or
(iii) if not traded on a national exchange or the Nasdaq National Market
System, the average of the bid and asked quotes reported by the automated
quotation system for such date on the automated quotation system on which the
shares are then quoted, or if not quoted, the average of the bid and asked
quotes of a reputable dealer in the Shares on such date, or (iv) if the Shares
are not quoted, the price as is reasonably determined, based, among other
things, on any reported trades in the Shares, by the Committee on such date.  With respect to any date on which the NYSE or
the Nasdaq National Market System, or any similar exchange or market on which
the Shares are then traded, is not open for trading, the foregoing Fair Market
Value shall be determined based on the most recent preceding date when such
market or exchange is open for trading.

 

(m)                               “Incentive
Stock Option” shall mean an option granted under Section 6(a) of the Plan
that is intended to meet the requirements of Section 422 of the Code or
any successor provision.

 

(n)                                 “Non-Employee
Director” shall mean any Director who is not also an employee of the Company.

 

(o)                                 “Non-Qualified
Stock Option” shall mean an option granted under Section 6(a) of the Plan
that is not intended to be an Incentive Stock Option.

 

2

 

(p)                                 “Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

 

(q)                                 “Other
Stock Grant” shall mean any right granted under Section 6(f) of the Plan.

 

(r)                                    “Other
Stock-Based Award” shall mean any right granted under Section 6(g) of the
Plan.

 

(s)                                  “Participant”
shall mean an Eligible Person designated to be granted an Award under the Plan.

 

(t)                                    “Performance
Award” shall mean any right granted under Section 6(d) of the Plan.

 

(u)                                 “Person”
shall mean any individual, corporation, partnership, association or trust.

 

(v)                                 “Plan”
shall mean the SoftBrands, Inc. 2001 Stock Incentive Plan, as amended from time
to time, the provisions of which are set forth herein.

 

(w)                               “Plan
Year” shall mean a consecutive 12-month period ending on December 31 of
each year.

 

(x)                                   “Reload
Option” shall mean any Option granted under Section 6(a)(v)
of the Plan.

 

(y)                                 “Restricted
Stock” shall mean any Shares granted under Section 6(c) of the Plan.

 

(z)                                   “Restricted
Stock Unit” shall mean any unit granted under Section 6(c) of the Plan
evidencing the right to receive a Share (or a cash payment equal to the Fair
Market Value of a Share) at some future date.

 

(aa)                            “Rule
16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or any
successor rule or regulation.

 

(bb)                          “Securities
Act” shall mean the Securities Act of 1933, as amended.

 

(cc)                            “Share”
or “Shares” shall mean shares of common stock, $0.01 par value per share, of
the Company or such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(c) of the Plan.

 

(dd)                          “Stock
Appreciation Right” shall mean any right granted under Section 6(b) of the
Plan.

 

3

 

Section 3.  Administration

 

(a)                                  Power
and Authority of the Committee.  The
Plan shall be administered by the Committee. 
Subject to the express provisions of the Plan and to applicable law, the
Committee shall have full power and authority to:  (i) designate Participants;
(ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments, or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any
Award or Award Agreement; (v) amend the terms and conditions of any Award
or Award Agreement and accelerate the exercisability of any Award or the lapse
of restrictions relating to any Award; (vi) determine whether, to what
extent and under what circumstances Awards may be exercised in cash, Shares,
promissory notes, other securities, other Awards or other property, or
canceled, forfeited or suspended; (vii) determine whether, to what extent and
under what circumstances cash, Shares, promissory notes, other securities,
other Awards, other property and other amounts payable with respect to an Award
under the Plan shall be deferred either automatically or at the election of the
holder thereof or the Committee; (viii) interpret and administer the Plan
and any instrument or agreement, including an Award Agreement, relating to the
Plan; (ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (x) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.  Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Participant, any holder or beneficiary
of any Award and any employee of the Company or any Affiliate.

 

(b)                                 Delegation.  The Committee may delegate its powers and
duties under the Plan to one or more Directors or officers of the Company, or
to a committee of Directors or officers, subject to such terms, conditions and
limitations as the Committee may establish in its sole discretion, provided,
however, that the Committee shall not delegate its powers and duties under the
Plan (i) with regard to officers or directors of the Company or any Affiliate
who are subject to Section 16 of the Exchange Act or (ii) in such a manner
as would cause the Plan not to comply with the requirements of Section 162(m)
of the Code.

 

(c)                                  Power
and Authority of the Board. 
Notwithstanding anything to the contrary contained herein, the Board
may, at any time and from time to time, without any further action of the
Committee, exercise the powers and duties of the Committee under the Plan.

 

4

 

Section 4.  Shares Available for Awards

 

(a)                                  Shares
Available.  Subject to adjustment as
provided in Section 4(c) of the Plan, the aggregate number of Shares that
may be issued under all Awards under the Plan shall be 11,400,000; provided that, any Shares with respect to which Awards may
be issued, but are not issued, under the Plan in any Plan Year shall be carried
forward and shall be available to be covered by Awards issued in any subsequent
Plan Year in which Awards may be issued under the Plan.  Shares to be issued under the Plan may be
either authorized but unissued Shares or Shares acquired in the open market or
otherwise.  Any Shares that are used by a Participant as full or partial payment to
the Company of the purchase price relating to an Award, or in connection with
the satisfaction of tax obligations relating to an Award, shall again be
available for granting Awards (other than Incentive Stock Options) under the
Plan. 
In addition, if any Shares covered by an Award or to which an Award
relates are not purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such Award,
to the extent of any such forfeiture or termination, shall again be available
for granting Awards under the Plan. 
Notwithstanding the foregoing, the number of Shares available for
granting Incentive Stock Options under the Plan shall not exceed 8,000,000,
subject to adjustment as provided in the Plan and subject to the provisions of Section 422
or 424 of the Code or any successor provision.

 

(b)                                 Accounting
for Awards.  For purposes of this Section 4,
if an Award entitles the holder thereof to receive or purchase Shares, the
number of Shares covered by such Award or to which such Award relates shall be
counted on the date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan.

 

(c)                                  Adjustments.  In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) that
thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards and
(iii) the purchase or exercise price with respect to any Award; provided,
however, that the number of Shares covered by any Award or to which such
Award relates shall always be a whole number.

 

(d)                                 Award
Limitations Under the Plan.  No Eligible Person may be granted any Award
or Awards under the Plan, the value of which Award or Awards is based solely on
an increase in the value of the Shares after the date of grant of such Award or
Awards, for more than 2,000,000
Shares (subject to adjustment as provided for in Section 4(c) of the
Plan), in the

 

5

 

aggregate
in any calendar year.  The foregoing
annual limitation specifically includes the grant of any Award or Awards
representing “qualified performance-based compensation” within the meaning of Section 162(m)
of the Code.

 

Section 5.  Eligibility

 

Any Eligible
Person shall be eligible to be designated a Participant.  In determining which Eligible Persons shall
receive an Award and the terms of any Award, the Committee may take into
account the nature of the services rendered by the respective Eligible Persons,
their present and potential contributions to the success of the Company or such
other factors as the Committee, in its discretion, shall deem relevant.  Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full or part-time employees (which term as
used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee
of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

 

Section 6.  Awards

 

(a)                                  Options.  The Committee is hereby authorized to grant
Options to Eligible Persons with the following terms and conditions and with
such additional terms and conditions not inconsistent with the provisions of
the Plan as the Committee shall determine:

 

(i)                                     Exercise
Price.  The purchase price per Share
purchasable under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant of such Option.

 

(ii)                                  Option
Term.  The term of each Option shall
be fixed by the Committee, but, with respect to any Incentive Stock Option,
shall in no event exceed 10 years from the date on which such Incentive Stock
Option is granted.

 

(iii)                               Time
and Method of Exercise.  The
Committee shall determine the time or times at which an Option may be exercised
in whole or in part and the method or methods by which, and the form or forms
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property, or any combination thereof, having
a Fair Market Value on the exercise date equal to the applicable exercise
price) in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.

 

(iv)                              Incentive
Stock Options.  Notwithstanding
anything in the Plan to the contrary, the following additional provisions shall
apply to the grant of stock options which are intended to qualify as Incentive
Stock Options:

 

(A)                              The
aggregate Fair Market Value (determined as of the time the option is granted)
of the Shares with respect to which Incentive Stock Options are exercisable for
the first time by any Participant during

 

6

 

any
calendar year (under this Plan and all other plans of the Company and its
Affiliates) shall not exceed $100,000.

 

(B)                                All
Incentive Stock Options must be granted within ten years from the earlier of
the date on which this Plan was adopted by the Board or the date this Plan was
approved by the shareholders of the Company.

 

(C)                                Unless
sooner exercised, all Incentive Stock Options shall expire and no longer be
exercisable no later than 10 years after the date of grant; provided, however,
that in the case of a grant of an Incentive Stock Option to a Participant who,
at the time such Option is granted, owns (within the meaning of Section 422
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of its Affiliate, such Incentive
Stock Option shall expire and no longer be exercisable no later than 5 years
from the date of grant.

 

(D)                               The
purchase price per Share for an Incentive Stock Option shall be not less than
100% of the Fair Market Value of a Share on the date of grant of the Incentive
Stock Option; provided, however, that, in the case of the grant of an Incentive
Stock Option to a Participant who, at the time such Option is granted, owns
(within the meaning of Section 422 of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
or of its Affiliate, the purchase price per Share purchasable under an
Incentive Stock Option shall be not less than 110% of the Fair Market Value of
a Share on the date of grant of the Inventive Stock Option.

 

(E)                                 Any
Incentive Stock Option authorized under the Plan shall contain such other
provisions as the Committee shall deem advisable, but shall in all events be
consistent with and contain all provisions required in order to qualify the
Option as an Incentive Stock Option.

 

(v)                                 Reload
Options.  The Committee may grant
Reload Options, separately or together with another Option, pursuant to which,
subject to the terms and conditions established by the Committee, the
Participant would be granted a new Option when the payment of the exercise price
of a previously granted option is made by the delivery of Shares owned by the
Participant pursuant to Section 6(a)(iii) hereof or the relevant
provisions of another plan of the Company, and/or when Shares are tendered or
withheld as payment of the amount to be withheld under applicable income tax
laws in connection with the exercise of an Option, which new Option would be an
Option to purchase the number of Shares not exceeding the sum of (A) the number
of Shares so provided as consideration upon the exercise of the previously
granted option to which such Reload Option relates and (B) the number of
Shares, if any, tendered

 

7

 

or
withheld as payment of the amount to be withheld under applicable tax laws in
connection with the exercise of the option to which such Reload Option relates
pursuant to the relevant provisions of the plan or agreement relating to such
option.  Reload Options may be granted
with respect to Options previously granted under the Plan or any other stock
option plan of the Company or may be granted in connection with any Option
granted under the Plan or any other stock option plan of the Company at the
time of such grant.  Such Reload Options
shall have a per share exercise price equal to Fair Market Value of one Share
as of the date of grant of the new Option. 
Any Reload Option shall be subject to availability of sufficient Shares
for grant under the Plan.  Shares
surrendered as part or all of the exercise price of the Option to which it
relates that have been owned by the optionee less than six months will not be
counted for purposes of determining the number of Shares that may be purchased
pursuant to a Reload Option.

 

(b)                                 Stock
Appreciation Rights.  The Committee
is hereby authorized to grant Stock Appreciation Rights to Eligible Persons
subject to the terms of the Plan and any applicable Award Agreement.  A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise
thereof the excess of (i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. 
Subject to the terms of the Plan and any applicable Award Agreement, the
grant price, term, methods of exercise, dates of exercise, methods of
settlement and any other terms and conditions of any Stock Appreciation Right
shall be as determined by the Committee. 
The Committee may impose such conditions or restrictions on the exercise
of any Stock Appreciation Right as it may deem appropriate.

 

(c)                                  Restricted
Stock and Restricted Stock Units. 
The Committee is hereby authorized to grant Restricted Stock and
Restricted Stock Units to Eligible Persons with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:

 

(i)                                     Restrictions.  Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, a waiver by the Participant of the right to
vote or to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Committee may deem
appropriate.

 

(ii)                                  Stock
Certificates.  Any Restricted Stock
granted under the Plan shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock.

 

8

 

(iii)                               Forfeiture.  Except as otherwise determined by the
Committee, upon a Participant’s termination of employment (as determined under
criteria established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and Restricted Stock Units held by the
Participant at such time shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in
the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units.

 

(d)                                 Performance
Awards.  The Committee is hereby
authorized to grant Performance Awards to Eligible Persons subject to the terms
of the Plan and any applicable Award Agreement. 
A Performance Award granted under the Plan (i) may be denominated
or payable in cash, Shares (including, without limitation, Restricted Stock and
Restricted Stock Units), other securities, other Awards or other property and
(ii) shall confer on the holder thereof the right to receive payments, in whole
or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish.  Subject to the terms of the Plan and any
applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee.

 

(e)                                  Dividend
Equivalents.  The Committee is hereby
authorized to grant Dividend Equivalents to Eligible Persons under which the
Participant shall be entitled to receive payments (in cash, Shares, other
securities, other Awards or other property as determined in the discretion of
the Committee) equivalent to the amount of cash dividends paid by the Company
to holders of Shares with respect to a number of Shares determined by the
Committee.  Subject to the terms of the
Plan and any applicable Award Agreement, such Dividend Equivalents may have such
terms and conditions as the Committee shall determine.

 

(f)                                    Other
Stock Grants.  The Committee is
hereby authorized, subject to the terms of the Plan and any applicable Award
Agreements, to grant to Eligible Persons Shares without restrictions thereon as
are deemed by the Committee to be consistent with the purpose of the Plan.

 

(g)                                 Other
Stock-Based Awards.  The Committee is
hereby authorized to grant to Eligible Persons, subject to the terms of the
Plan and any applicable Award Agreements, such other Awards that are
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Committee to be
consistent with the purpose of the Plan. Shares or other securities delivered
pursuant to a purchase right granted under this Section 6(g) shall be
purchased for such consideration, which may be paid by such method or methods
and in such form or forms (including, without limitation, cash, Shares,
promissory notes, other securities, other Awards or other property or any
combination thereof), as the Committee shall determine, the value of which
consideration, as established by the Committee, shall not be less than 100% of
the Fair Market Value of such Shares or other securities as of the date such
purchase right is granted.

 

9

 

(h)                                 General

 

(i)                                     No
Cash Consideration for Awards. 
Awards shall be granted for no cash consideration or for any cash or
other consideration as may be determined by the Committee or required by
applicable law.

 

(ii)                                  Awards
May Be Granted Separately or Together. 
Awards may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with or in substitution for any other Award or any
award granted under any plan of the Company or any Affiliate other than the
Plan.  Awards granted in addition to or
in tandem with other Awards or in addition to or in tandem with awards granted
under any such other plan of the Company or any Affiliate may be granted either
at the same time as or at a different time from the grant of such other Awards
or awards.

 

(iii)                               Forms
of Payment under Awards.  Subject to
the terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and may
be made in a single payment or transfer, in installments or on a deferred
basis, in each case in accordance with rules and procedures established by the
Committee.  Such rules and procedures may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents with respect to installment or deferred
payments.

 

(iv)                              Limits
on Transfer of Awards.  No Award
(other than Other Stock Grants) and no right under any such Award shall be
transferable by a Participant otherwise than by will or by the laws of descent
and distribution and the Company shall not be required to recognize any
attempted assignment of such rights by any Participant; provided, however,
that, if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant and receive any property distributable
with respect to any Award upon the death of the Participant; and provided,
further, that, except in the case of an Incentive Stock Option, Awards may be
transferable as specifically provided in any applicable Award Agreement or amendment
thereto pursuant to terms determined by the Committee.  The transferee shall remain subject to all
the terms and conditions applicable to the Award prior to such transfer.  The foregoing right to transfer the Award
shall apply to the right to consent to amendments to the Award Agreement and,
in the discretion of the Committee, shall also apply to the right to transfer
ancillary rights associated with the Award. 
Except as otherwise provided in any applicable Award Agreement or
amendment thereto (other than an Award Agreement relating to an Incentive Stock
Option), pursuant to terms determined by the Committee, each Award or right
under any Award shall be exercisable during the Participant’s lifetime only by
the Participant or, if permissible under applicable law, by the Participant’s
guardian or legal representative.  In the
event of a transfer of the Award, the Award shall be exercisable by the
transferee only to the extent, and only for term, as fixed by the Committee for
the original Participant.  Except as
otherwise provided in any

 

10

 

applicable Award
Agreement or amendment thereto (other than an Award Agreement relating to an
Incentive Stock Option), no Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.

 

(v)                                 Term
of Awards.  The term of each Award
shall be for such period as may be determined by the Committee; provided,
however,  that
in the case of an Incentive Stock Option such Option shall not be exercisable
after the expiration of 10 years from the date such Option is granted.

 

(vi)                              Restrictions;
Securities Exchange Listing.  All
Shares or other securities delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such restrictions as the Committee may
deem advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to be
made or legends to be placed on the certificates for such Shares or other
securities to reflect such restrictions. 
If the Shares or other securities of the Company are traded on a securities
exchange, the Company shall not be required to deliver any Shares or other
securities covered by an Award unless and until such Shares or other securities
have been admitted for trading on such securities exchange.

 

Section 7.  Amendment and Termination; Adjustments

 

(a)                                  Amendments
to the Plan.  The Board may amend,
alter, suspend, discontinue or terminate the Plan at any time; provided,
however, that, notwithstanding any other provision of the Plan or any Award
Agreement, without the approval of the shareholders of the Company, no such
amendment, alteration, suspension, discontinuation or termination shall be made
that, absent such approval:

 

(i)                                     would violate the rules or regulations of the NASDAQ
National Market System (if applicable to the Company) or any other securities
exchange that are applicable to the Company; or

 

(ii)                                  would cause the Company to be unable, under the Code, to
grant Incentive Stock Options under the Plan.

 

(b)                                 Amendments
to Awards.  The Committee may waive
any conditions of or rights of the Company under any outstanding Award,
prospectively or retroactively.  Except as otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.

 

(c)                                  Correction
of Defects, Omissions and Inconsistencies. 
The Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.

 

11

 

Section 8.  Income Tax Withholding

 

In order to comply
with all applicable national, federal, state or local income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that all applicable national, federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of a
Participant, are withheld or collected from such Participant.  In order to assist a Participant in paying
all or a portion of the national, federal, state and local taxes to be withheld
or collected upon exercise or receipt of (or the lapse of restrictions relating
to) an Award, the Committee, in its discretion and subject to such additional
terms and conditions as it may adopt, may permit the Participant to satisfy
such tax obligation by (i) electing to have the Company withhold a portion
of the Shares otherwise to be delivered upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market Value equal to
the amount of such taxes or (ii) delivering to the Company Shares other
than Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such
taxes.  The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.

 

Section 9.  General Provisions

 

(a)                                  No
Rights to Awards.  No Eligible
Person, Participant or other Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Eligible Persons, Participants or holders or beneficiaries of Awards under the
Plan.  The terms and conditions of Awards
need not be the same with respect to any Participant or with respect to different
Participants.

 

(b)                                 Award
Agreements.  No Participant will have
rights under an Award granted to such Participant unless and until an Award
Agreement shall have been duly executed on behalf of the Company and, if
requested by the Company, signed by the Participant.

 

(c)                                  Plan
Provisions Control.  In the event
that any provision of an Award Agreement conflicts with or is inconsistent in
any respect with the terms of the Plan as set forth herein or subsequently
amended, the terms of the Plan shall control.

 

(d)                                 No
Rights of Shareholders.  Except with
respect to Shares of Restricted Stock as to which the Participant has been
granted the right to vote, neither a Participant nor the Participant’s legal
representative shall be, or have any of the rights and privileges of, a
stockholder of the Company with respect to any Shares issuable to such
Participant upon the exercise or payment of any Award, in whole or in part,
unless and until such Shares have been issued in the name of such Participant
or such Participant’s legal representative without restrictions thereto.

 

(e)                                  No
Limit on Other Compensation Arrangements. 
Nothing contained in the Plan shall prevent the Company or any Affiliate
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

12

 

(f)                                    No
Right to Employment.  The grant of an
Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company or any Affiliate, nor will it affect in any way
the right of the Company or an Affiliate to terminate such employment at any
time, with or without cause.  In
addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan or any
Award, unless otherwise expressly provided in the Plan or in any Award
Agreement.  Nothing in this Plan shall confer on
any person any legal or equitable right against the Company or any Affiliate,
directly or indirectly, or give rise to any cause of action at law or in equity
against the Company or an Affiliate.  The
Awards granted hereunder shall not form any part of the wages or salary of any
Eligible Person for purposes of severance pay or termination indemnities,
irrespective of the reason for termination of employment.  Under no circumstances shall any person
ceasing to be an employee of the Company or any Affiliate be entitled to any
compensation for any loss of any right or benefit under the Plan which such
employee might otherwise have enjoyed but for termination of employment,
whether such compensation is claimed by way of damages for wrongful or unfair
dismissal, breach of contract or otherwise. 
By participating in the Plan, each Participant shall be deemed to have
accepted all the conditions of the Plan and the terms and conditions of any
rules and regulations adopted by the Committee and shall be fully bound thereby.

 

(g)                                 Governing
Law.  The validity, construction and
effect of the Plan or any Award, and any rules and regulations relating to the
Plan or any Award, shall be determined in accordance with the internal laws,
and not the law of conflicts, of the State of Minnesota.

 

(h)                                 Severability.  If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the purpose or intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction or Award, and the remainder of the Plan or
any such Award shall remain in full force and effect.

 

(i)                                     No
Trust or Fund Created.  Neither the
Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person.  To the extent that any Person acquires a
right to receive payments from the Company or any Affiliate pursuant to an
Award, such right shall be no greater than the right of any unsecured general
creditor of the Company or any Affiliate.

 

(j)                                     Other
Benefits.  No compensation or benefit
awarded to or realized by any Participant under the Plan shall be included for
the purpose of computing such Participant’s compensation under any
compensation-based retirement, disability, or similar plan of the Company
unless required by law or otherwise provided by such other plan.

 

(k)                                  No
Fractional Shares.  No fractional
Shares shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash shall be

 

13

 

paid
in lieu of any fractional Shares or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise eliminated.

 

(l)                                     Headings.  Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.

 

Section 10.  Effective Date of the Plan

 

The Plan shall be
effective as of December 13, 2001.

 

Section 11.  Term of the Plan

 

No Award shall be
granted under the Plan after December 13,
2011 or any earlier date of discontinuation or termination established
pursuant to Section 7(a) of the Plan. 
However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may extend beyond
such date, and the authority of the Committee provided for hereunder with respect
to the Plan and any Awards, and the authority of the Board to amend the Plan,
shall extend beyond the termination of the Plan.

 

14

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