CALLIDUS SOFTWARE INC
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<TYPE>EX-10.27
<SEQUENCE>2
<FILENAME>sep0204_ex1027.htm
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<p align="right"><strong><font size="2" face="Times New Roman, Times, serif">Exhibit
      10.27</font></strong></p>
<P align="center">
<B><FONT size=2 face="serif">RIGHTS AGREEMENT</FONT></B><FONT size=2 face="serif"> </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">dated as of </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">September 2, 2004 </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">between </FONT>
</P>
<P align="center">
<B><FONT size=2 face="serif">CALLIDUS SOFTWARE INC.</FONT></B><FONT size=2 face="serif"> </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">and </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">AMERICAN STOCK TRANSFER &amp; TRUST COMPANY</FONT>
</P>
<P align="center">
<FONT size=2 face="serif">as Rights Agent </FONT>
</P>

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<P align="center">
<B><FONT size=2 face="serif">TABLE OF CONTENTS</FONT></B>
</P>
<TABLE width="95%" border=0 cellspacing=0 cellpadding=0>
<TR>
   <TD width="10%">&nbsp;</TD>
   <TD align="center" width="80%">&nbsp;</TD>
   <TD align="right" width="5%"><u><FONT size=2 face="serif">P</FONT><FONT size=2 face="serif">AGE</FONT></u></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%">&nbsp;</TD>
   <TD width="80%" align="center">&nbsp;</TD>
   <TD width="5%" align="right">&nbsp;</TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 1.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Definitions</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">1</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 2.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Issuance of Rights and Right Certificates</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">6</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 3.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Form of Right Certificates</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">7</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 4.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Registration; Transfer and Exchange of Right Certificates;</FONT></I></TD>
   <TD width="5%" align="right">&nbsp;</TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%">&nbsp;</TD>
   <TD width="80%"><i><font size=2 face="serif">Mutilated, Destroyed, Lost or
    Stolen Right Certificates</font></i></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">8</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 5.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Exercise of Rights</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">9</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 6.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Cancellation and Destruction of Right Certificates</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">11</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 7.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Reservation and Availability of Capital Stock</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">11</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 8.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Adjustment of Purchase Price, Number and Kind of Shares or</FONT></I></TD>
   <TD width="5%" align="right">&nbsp;</TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%">&nbsp;</TD>
   <TD width="80%"><i><font size=2 face="serif">Number of Rights</font></i></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">12</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 9.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Certificate of Adjusted Purchase Price or Number of Shares</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">20</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 10.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Consolidation, Merger or Sale or Transfer of Assets or Earning</FONT></I></TD>
   <TD width="5%" align="right">&nbsp;</TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><I></I></TD>
   <TD width="80%"><i><font size=2 face="serif">Power</font></i></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">21</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 11.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Fractional Rights and Fractional Shares</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">23</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 12.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Rights of Action</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">24</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 13.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Agreement of Right Holders</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">24</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 14.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Right Certificate Holder Not Deemed a Stockholder</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">25</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 15.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Appointment of Rights Agent</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">25</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 16.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Merger or Consolidation or Change of Name of Rights Agent</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">26</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 17.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Duties of the Rights Agent</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">27</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 18.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Change of Rights Agent</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">29</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 19.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Redemption</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">30</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 20.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Exchange</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">30</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 21.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Notice of Proposed Actions</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">31</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 22.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Notices</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">32</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 23.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Supplements and Amendments</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">33</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 24.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Successors</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">33</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 25.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Determinations and Actions by the Board, etc</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">33</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 26.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Benefits of This Agreement</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">34</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 27.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Severability</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">34</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 28.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Governing Law</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">34</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 29.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Counterparts</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">34</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
   <TD width="10%"><FONT size=2 face="serif">Section 30.</FONT></TD>
   <TD width="80%"><I><FONT size=2 face="serif">Descriptive Headings</FONT></I></TD>
   <TD align="right" width="5%"><FONT size=2 face="serif">35</FONT></TD>
   <TD width="5%">&nbsp;</TD>
</TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD><font size=2 face="serif">Exhibit A</font></TD>
  <TD>&#150; <FONT size=2 face="serif">Form of Certificate of Designation of
    Preferred Stock </FONT></TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD><FONT size=2 face="serif">Exhibit B</FONT></TD>
  <TD>&#150; <FONT size=2 face="serif">Summary Description of the Stockholder
    Rights Plan</FONT></TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD><FONT size=2 face="serif">Exhibit C </FONT><FONT face="sans-serif">&nbsp;</FONT></TD>
  <TD>&#150; <FONT size=2 face="serif">Form of Right Certificate </FONT> </TD>
  <TD align="right">&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
</TABLE>
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">i</FONT>
</P>

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<P align="center">
<B><FONT size=2 face="serif">RIGHTS AGREEMENT </FONT></B>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">AGREEMENT dated as of September 2, 2004, between Callidus Software Inc., a Delaware corporation (the &#147;</FONT><B><FONT size=2 face="serif">Company</FONT></B><FONT size=2 face="serif">&#148;), and American Stock
Transfer &amp; Trust Company, as Rights Agent (the &#147;</FONT><B><FONT size=2 face="serif">Rights Agent</FONT></B><FONT size=2 face="serif">&#148;). </FONT>
</P>
<P align="center">
<B><FONT size=2 face="serif">W I T N E S S E T H </FONT></B>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">WHEREAS, on August 31, 2004, the Board of Directors of the Company authorized and declared a dividend, effective September 2, 2004, of one preferred stock purchase right (a &#147;</FONT><B><FONT
size=2 face="serif">Right</FONT></B><FONT size=2 face="serif">&#148;) for each share of Common Stock (as defined below) outstanding at the close of business (as defined below) on Friday, September 10, 2004 (the &#147;</FONT><B><FONT size=2 face="serif">Record
Date</FONT></B><FONT size=2 face="serif">&#148;) and authorized the issuance, upon the terms and subject to the conditions herein, of one Right (subject to adjustment) in respect of each share of Common Stock issued after the Record Date, each Right
representing the right to purchase, upon the terms and subject to the conditions herein, one one-thousandth (subject to adjustment) of a share of Preferred Stock (as defined below); </FONT>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"></FONT>&nbsp;NOW, THEREFORE, the parties hereto agree as follows: </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 1</FONT><I><FONT size=2 face="serif">. Definitions. </FONT></I><FONT size=2 face="serif">(a) The following terms, as used herein, have the following meanings: </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Acquiring Person</FONT></B><FONT size=2 face="serif">&#148; means any Person who, together with all Affiliates and Associates of such Person, is the Beneficial Owner of the
Specified Percentage of shares of outstanding Common Stock; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that &#147;Acquiring Person&#148; shall not include: </FONT>
</P>
<blockquote>
  <p>
    <FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"></FONT>&nbsp;&nbsp;(i) an Exempt Person; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii) any Person that the Board determines in good faith became the Beneficial Owner of the Specified Percentage of shares of outstanding Common Stock inadvertently (including, without limitation,
  because such Person was unaware that it Beneficially Owned the Specified Percentage of shares of outstanding Common Stock, or such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the
  consequences of such Beneficial Ownership under this Agreement) and without any intention of changing or influencing control of the Company, unless such Person fails to divest itself, as soon as practicable (as determined in good faith by the
  Board), of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person would own less than the Specified Percentage of shares of outstanding Common Stock; </FONT>
  </p>
</blockquote>
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<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii) any Person that, as the result of an acquisition of shares of Common Stock by the Company that, by reducing the number of shares of Common Stock outstanding, increases the proportionate number
    of shares of Common Stock Beneficially Owned by such Person to the Specified Percentage of shares of Common Stock then outstanding;</FONT><I><FONT size=2 face="serif"> provided</FONT></I><FONT size=2 face="serif">, </FONT><I><FONT
size=2 face="serif">however</FONT></I><FONT size=2 face="serif">, that if such Person shall thereafter become the Beneficial Owner of any additional shares of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company or pursuant
    to a split or subdivision of the outstanding Common Stock), then such Person shall be deemed to be an &#147;Acquiring Person&#148; unless upon becoming the Beneficial Owner of such additional shares of Common Stock such Person does not Beneficially
    Own the Specified Percentage of the shares of Common Stock then outstanding; and </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iv) Crosspoint Venture Partners 1997, L.P., Crosspoint Venture Partners LS 1999, Crosspoint Venture Partners LS 2000, Crosspoint Venture Partners 2000 Q, L.P. and Crosspoint Venture Partners 2000,
  L.P. (collectively, &#147;</FONT><B><FONT size=2 face="serif">Crosspoint</FONT></B><FONT size=2 face="serif">&#148;) together with its Affiliates and Associates, shall not be an &#147;Acquiring Person&#148;, so long as Crosspoint and its Affiliates and Associates
  do not Beneficially Own or become the Beneficial Owner of shares of Common Stock in excess of the shares of Common Stock reported as Beneficially Owned by Crosspoint in the Company&#146;s Proxy Statement dated April 26, 2004 pursuant to Section
  14(a) of the Securities Exchange Act of 1934 with the Securities and Exchange Commission, other than shares of Common Stock that Crosspoint or its Affiliates or Associates becomes the Beneficial Owner of pursuant to a dividend or distribution paid
  or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Affiliate</FONT></B><FONT size=2 face="serif">&#148; has the meaning ascribed to such term in Rule 12b-2 under the Exchange Act as in effect on the date hereof. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Associate</FONT></B><FONT size=2 face="serif">&#148; has the meaning ascribed to such term in Rule 12b-2 of the Exchange Act as in effect on the date hereof. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">A Person shall be deemed the &#147;</FONT><B><FONT size=2 face="serif">Beneficial Owner</FONT></B><FONT size=2 face="serif">&#148; of, and shall be deemed to have &#147;</FONT><B><FONT size=2 face="serif">Beneficial
Ownership</FONT></B><FONT size=2 face="serif">&#148; of and to &#147;</FONT><B><FONT size=2 face="serif">Beneficially Own</FONT></B><FONT size=2 face="serif">&#148;, any securities: </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i) which such Person or any of its Affiliates or Associates, directly or indirectly, beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the date hereof);
    </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii) which such Person
  or any of its Affiliates or Associates, directly or indirectly, has</FONT></p>
</blockquote>
<P align="center"><FONT size=2 face="serif">2 </FONT>
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<blockquote>
  <blockquote>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(A) the right to acquire (whether such right is exercisable immediately or only upon the occurrence of certain events or the passage of time or both) pursuant to any agreement, arrangement or
      understanding (other than customary agreements with and between underwriters, initial purchasers and/or selling group members with respect to a bona fide public offering or distribution pursuant to Rule 144A under the Securities Act of such
      securities); </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that a Person shall not be deemed the &#147;Beneficial Owner&#148; of or to &#147;Beneficially Own&#148;, (1) securities tendered pursuant to a tender or exchange offer
      made by or on behalf of such Person or any of such Person&#146;s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (2) securities that such Person has a right to acquire upon the exercise of Rights at any
      time prior to the time that any Person becomes an Acquiring Person or (3) securities issuable upon the exercise of Rights from and after the time that any Person becomes an Acquiring Person if such Rights were acquired by such Person or any of such
      Person&#146;s Affiliates or Associates prior to the Distribution Date or pursuant to Sections 2(b), 3(b), 8(i) or 8(p); or</FONT>
    </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(B) the right to vote (whether such right is exercisable immediately or only upon the occurrence of certain events or the passage of time or both) pursuant to any agreement, arrangement or
    understanding (whether or not in writing); </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that a Person shall not be deemed the &#147;Beneficial Owner&#148; of or to &#147;Beneficially Own&#148; any security under this clause
    (B) as a result of an agreement, arrangement or other understanding to vote such security if such agreement, arrangement or understanding (1) arises solely from a revocable proxy or consent given in response to a public proxy or consent solicitation
    made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and (2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or </FONT>
    </p>
  </blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) and with respect to which the Person or any of its Affiliates or Associates has
  any agreement, arrangement or other understanding (other than customary agreements with and between underwriters, initial purchasers and/or selling group members with respect to a bona fide public offering or distribution pursuant to Rule 144A under
  the Securities Act of such securities) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in clause (ii)(B) immediately above) or disposing of any such securities; </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">3 </FONT>
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<blockquote>
  <p>
    <I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif">, </FONT><I><FONT size=2 face="serif">however</FONT></I><FONT size=2 face="serif">, that no Person who is an officer, director or employee of an Exempt Person shall be deemed, solely by reason of such
    position, to be the &#147;Beneficial Owner&#148; of, to have &#147;Beneficial Ownership&#148; of or to &#147;Beneficially Own&#148; any securities that are &#147;Beneficially Owned&#148;, including, without limitation, in a fiduciary capacity, by an
    Exempt Person or by any other such officer, director or employee of an Exempt Person. </FONT>
  </p>
</blockquote>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</FONT><B><FONT size=2 face="serif">Board</FONT></B><FONT size=2 face="serif">&#148; means the Board of Directors of the Company. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Business Day</FONT></B><FONT size=2 face="serif">&#148; means any day other than a Saturday, Sunday or a day on which the New York Stock Exchange, the Nasdaq Stock Market
or banking institutions in the State of New York are generally authorized or obligated by law or executive order to close. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">close of business</FONT></B><FONT size=2 face="serif">&#148; on any given date means 5:00 p.m., New York City time, on such date; </FONT><I><FONT
size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that if such date is not a Business Day &#147;close of business&#148; means 5:00 p.m., New York City time, on the next succeeding Business Day. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Common Stock</FONT></B><FONT size=2 face="serif">&#148; means the Common Stock, par value $0.001 per share, of the Company, except that, when used with reference to any
Person other than the Company, &#147;Common Stock&#148; means the equity securities or other equity interest having power to control or direct the management of such Person. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Distribution Date</FONT></B><FONT size=2 face="serif">&#148; means the earlier of (i) the close of business on the tenth day after the Stock Acquisition Date and (ii) the
close of business on the tenth Business Day (or such later day as may be designated prior to the occurrence of a Section 8(a)(ii) Event by the Board) after the date of the commencement of a tender or exchange offer by any Person if, upon
consummation thereof, such Person would be an Acquiring Person; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif">, </FONT><I><FONT size=2 face="serif">however</FONT></I><FONT size=2 face="serif">, that if either of such dates occurs after the
date of this Agreement and on or prior to the Record Date, then the Distribution Date shall be the Record Date. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Exempt Person</FONT></B><FONT size=2 face="serif">&#148; means the Company or any Subsidiary of the Company (in each case including, without limitation, in any fiduciary
capacity), any employee benefit plan of the Company or of any Subsidiary of the Company or any entity or trustee holding Common Stock for or pursuant to the terms of any such plan or for the purpose of funding any such plan or other benefits for
employees of the Company or of any Subsidiary of the Company. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Exchange Act</FONT></B><FONT size=2 face="serif">&#148; means the Securities Exchange Act of 1934, as amended, unless otherwise expressly specified. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Expiration Date</FONT></B><FONT size=2 face="serif">&#148; means the earlier of (i) the Final Expiration Date and (ii) the time at which all Rights are redeemed as provided
in Section 19 or exchanged as provided in Section 20. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">4 </FONT>
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<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Final Expiration Date</FONT></B><FONT size=2 face="serif">&#148; means the close of business on September 2, 2014. </FONT>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</FONT><B><FONT size=2 face="serif">Person</FONT></B><FONT size=2 face="serif">&#148; means an individual, entity or organization. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Preferred Stock</FONT></B><FONT size=2 face="serif">&#148; means the Series A Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company, having
the terms set forth in the form of certificate of designation attached hereto as Exhibit A. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Purchase Price</FONT></B><FONT size=2 face="serif">&#148; means the price (subject to adjustment as provided herein) at which a holder of a Right may purchase one
one-thousandth of a share of Preferred Stock (subject to adjustment as provided herein) upon exercise of a Right, which price shall initially be $23.00. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Securities Act</FONT></B><FONT size=2 face="serif">&#148; means the Securities Act of 1933, as amended, unless otherwise expressly specified. </FONT>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</FONT><B><FONT size=2 face="serif">Specified Percentage</FONT></B><FONT size=2 face="serif">&#148; means 15% or more. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Stock Acquisition Date</FONT></B><FONT size=2 face="serif">&#148; means the date of the first public announcement (including the filing of a report on Schedule 13D under
the Exchange Act (or any comparable or successor report)) by the Company or an Acquiring Person indicating that an Acquiring Person has become such. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Subsidiary</FONT></B><FONT size=2 face="serif">&#148; of any Person means any other Person of which securities or other ownership interests having ordinary voting power, in
the absence of contingencies, to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such first Person. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Trading Day</FONT></B><FONT size=2 face="serif">&#148; means a day on which the principal national securities exchange or over-the-counter market on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange or over-the-counter market, a Business Day. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Each of the following terms is defined in the Section set forth opposite such term: </FONT>
</P>
<div align="center">
  <TABLE width="60%" border=0 cellspacing=0 cellpadding=0>
    <TR align="left">
      <TD width="50%"><B><FONT size=2 face="serif"><u>Term</u></FONT></B></TD>
      <TD width="50%"><u><FONT size=2 face="serif">Section</FONT></u></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Adjustment Shares</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">8</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Company</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">Preamble</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">equivalent preferred stock</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">8</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Exchange Ratio</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">20</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Principal Party</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">10</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Record Date</FONT></TD>
      <TD width="50%"><FONT size=2 face="serif">Recitals</FONT></TD>
    </TR>
  </TABLE>
</div>
<P align="center">
<FONT size=2 face="serif">5 </FONT>
</P>

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  <br>

  <TABLE width="60%" border=0 cellspacing=0 cellpadding=0>
    <TR align="left">
      <TD width="50%"><B><FONT size=2 face="serif"><u>Term</u></FONT></B></TD>
      <TD width="50%" align="left"><u><FONT size=2 face="serif">Section</FONT></u></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Redemption Price</FONT></TD>
      <TD align="left" width="50%"><FONT size=2 face="serif">19</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Right</FONT></TD>
      <TD width="50%" align="left"><FONT size=2 face="serif">Recitals</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Rights Agent</FONT></TD>
      <TD width="50%" align="left"><FONT size=2 face="serif">Preamble</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Right Certificate</FONT></TD>
      <TD align="left" width="50%"><FONT size=2 face="serif">3</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Section 8(a)(ii) Event</FONT></TD>
      <TD align="left" width="50%"><FONT size=2 face="serif">8(a)</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Section 10 Event</FONT></TD>
      <TD align="left" width="50%"><FONT size=2 face="serif">10</FONT></TD>
    </TR>
    <TR>
      <TD width="50%"><FONT size=2 face="serif">Substitution Period</FONT></TD>
      <TD align="left" width="50%"><FONT size=2 face="serif">8</FONT></TD>
    </TR>
  </TABLE>
</div>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 2. </FONT><I><FONT size=2 face="serif">Issuance of Rights and Right Certificates</FONT></I><FONT size=2 face="serif">. (a) As soon as practicable after the Record Date, the Company will send a summary of
the Rights substantially in the form of Exhibit B hereto, by first-class mail, postage prepaid, to each record holder of the Common Stock as of the close of business on the Record Date. Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date and the Expiration Date shall have printed or written on or otherwise affixed to them the following legend: </FONT>
</P>
<blockquote>
  <p>
    <FONT size=2 face="serif">This certificate also evidences certain Rights as set forth in a Rights Agreement between Callidus Software Inc. (the &#147;</FONT><B><FONT size=2 face="serif">Company</FONT></B><FONT size=2 face="serif">&#148;) and American Stock Transfer
&amp; Trust Company, as Rights Agent, dated as of September 2, 2004, and as amended from time to time (the &#147;</FONT><B><FONT size=2 face="serif">Rights Agreement</FONT></B><FONT size=2 face="serif">&#148;), the terms of which are hereby incorporated herein by
    reference and a copy of which is on file at the principal executive offices of the Company. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge promptly after receipt of a written request therefor.
    Under certain circumstances, as set forth in the Rights Agreement, such Rights may be evidenced by separate certificates instead of by this certificate and may be redeemed or exchanged or may expire. </FONT><B><FONT size=2 face="serif">As set forth in the
    Rights Agreement, Rights issued or transferred to, or held by, any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of
    such Person or by any subsequent holder, may be null and void.</FONT></B><FONT size=2 face="serif"> </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Prior to the Distribution Date, (i) the Rights will be evidenced by the certificates for the Common Stock and not by separate Right
Certificates (as hereinafter defined) and the registered holders of the Common Stock shall be deemed to be the registered holders of the associated Rights, and (ii) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">From and after the Distribution Date, the Rights will be evidenced solely by separate Right Certificates and will be transferable only in
connection with the transfer of the Right Certificates pursuant to Section 4. As soon as practicable after the Company has notified the Rights Agent of the occurrence of </FONT></P>
<P align="center"><FONT size=2 face="serif">6 </FONT>
</P>
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<FONT size=2 face="serif">the Distribution Date, the Rights Agent will send, by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date (other than any Acquiring Person or
any Affiliate or Associate thereof), one or more Right Certificates evidencing one Right (subject to adjustment as provided herein) for each share of Common Stock so held. If an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 8, the Company shall, at the time of distribution of the Right Certificates, make the necessary and appropriate rounding adjustments in accordance with Section 11(a) so that Right Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Rights shall be issued in respect of all shares of Common Stock outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the Expiration
Date, the Company (i) shall, with respect to shares of Common Stock so issued or sold (A) pursuant to the exercise of stock options or under any employee plan or arrangement or (B) upon the exercise, conversion or exchange of other securities issued
by the Company prior to the Distribution Date, and (ii) may, in any other case, if deemed appropriate by the Board, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; </FONT><I><FONT
size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that no such Right Certificate shall be issued if, and to the extent that, (i) the Company is advised by counsel that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate would be issued or (ii) appropriate adjustment shall otherwise be made in lieu of the issuance thereof. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 3</FONT><I><FONT size=2 face="serif">. Form of Right Certificates. </FONT></I><FONT size=2 face="serif">(a) The certificates evidencing the Rights (and the forms of assignment, election to purchase and
certificates to be printed on the reverse thereof) (the &#147;</FONT><B><FONT size=2 face="serif">Right Certificates</FONT></B><FONT size=2 face="serif">&#148;) shall be substantially in the form of Exhibit C hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law, rule or
regulation or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. The Right Certificates, whenever distributed, shall be dated as of the Record Date. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The
Right Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President or any Vice President, either  manually or by facsimile
signature, and shall have affixed thereto the Company&#146;s seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right  Certificates
shall be manually countersigned by the Rights Agent and shall not be</FONT></P>
<P align="center"><FONT size=2 face="serif">7 </FONT>
</P>
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<FONT size=2 face="serif">valid for any purpose unless so countersigned. In case any officer of the </FONT><FONT size=2 face="serif">Company whose manual or facsimile signature is affixed to the Right Certificates ceases to be such 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 with the same force and effect as though the Person who signed such Right Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any Person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of
this Rights Agreement any such Person was not such an officer. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares of stock issuable upon exercise of the Rights made in accordance with the
provisions of this Agreement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 4</FONT><I><FONT size=2 face="serif">. Registration; Transfer and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. </FONT></I><FONT size=2 face="serif">(a) Following
the Distribution Date, the Rights Agent shall keep or cause to be kept, at its principal office or offices designated as the place for surrender of Right Certificates upon exercise, transfer or exchange, books for registration and transfer of the
Right Certificates. Such books shall show with respect to each Right Certificate the name and address of the registered holder thereof, the number of Rights indicated on the certificate and the certificate number. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">At any time after the Distribution Date and prior to the Expiration Date, any Right Certificate or Certificates may, upon the terms and
subject to the conditions set forth in this Agreement, be transferred or exchanged for another Right Certificate or Certificates evidencing a like number of Rights as the Right Certificate or Certificates surrendered. Any registered holder desiring
to transfer or exchange any Right Certificate or Certificates shall surrender such Right Certificate or Certificates (with, in the case of a transfer, the form of assignment and certificate on the reverse side thereof duly executed) to the Rights
Agent at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Certificates until the registered holder of the Rights has complied with the requirements of Section 5(f). Upon satisfaction of the foregoing requirements, the Rights Agent shall, subject to Sections 5(e), 5(f), 7(e), 11 and 20,
countersign and deliver to the Person entitled thereto a Right Certificate or Certificates as so requested. The Company may require payment of a sum sufficient to cover any transfer tax or other governmental charge that may be imposed in connection
with any transfer or exchange of any Right Certificate or Certificates. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">8 </FONT>
</P>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company&#146;s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will issue and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 5</FONT><I><FONT size=2 face="serif">. Exercise of Rights. </FONT></I><FONT size=2 face="serif">(a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including Sections 5(e), 5(f), 7(c) and 8(a)) in whole or in part at any time after the Distribution Date and prior to the Expiration Date upon surrender of the Right Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment (in lawful money of the United States of America by certified
check or bank draft payable in immediately available or next day funds to the order of the Company) of the aggregate Purchase Price with respect to the Rights then to be exercised and an amount equal to any applicable transfer tax or other
governmental charge. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Upon satisfaction of the requirements of Section 5(a) and subject to Section 17(k), the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Stock (or make available, if the Rights Agent is the transfer agent therefor) certificates for the total number of one one-thousandths of a share of Preferred Stock to be purchased (and the
Company hereby irrevocably authorizes its transfer agent to comply with all such requests) or (B) if the Company shall have elected to deposit the shares of Preferred Stock issuable upon exercise of the Rights with a depositary agent, requisition
from the depositary agent depositary receipts representing interests in such number of one one-thousandths of a share of Preferred Stock to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall
be deposited by the transfer agent with the depositary agent and the Company will direct the depositary agent to comply with such request), (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 11 and (iii) after receipt of such certificates or depositary receipts and cash, if any, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate (with such certificates
or receipts registered in such name or names as may be designated by such holder). If the Company is obligated to deliver Common Stock or other securities or assets pursuant to this Agreement, the Company will make all arrangements necessary </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">9 </FONT>
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<FONT size=2 face="serif">so that such securities and assets are available for delivery by the Rights Agent, if and when appropriate. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Each Person (other than the Company) in whose name any certificate for Preferred Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of such Preferred Stock represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any transfer taxes or other governmental charges) was made; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that if the date of such surrender and payment is a date upon which the transfer books of the Company
relating to the Preferred Stock are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the applicable transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including the
right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company except as provided herein. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing the number of Rights remaining unexercised shall be issued by the Rights Agent and 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,
subject to the provisions of Section 11. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(e)</FONT> <FONT size=2 face="serif">Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 8(a)(ii) Event, any Rights  Beneficially Owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate of an Acquiring
Person) who (A) becomes a transferee after a Section  8(a)(ii) Event, (B) becomes
a transferee prior to or concurrently with a Section 8(a)(ii) Event and receives
such Rights pursuant to either (1) a transfer (whether or not for consideration)
from the Acquiring Person (or any such Associate or  Affiliate) to holders of
equity interests in such Acquiring Person (or in any such Associate or Affiliate)
or to any Person with whom the Acquiring Person (or any such Associate or Affiliate)
has any continuing agreement, arrangement or  understanding regarding the transferred
Rights or (2) a transfer which the Board determines in good faith is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 5(e), shall become null  and void without any further
action, and no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under this Agreement or otherwise. The Company shall
use all reasonable efforts to insure that the provisions of  this Section 5(e)
are complied with, but shall have no liability to any</FONT></P>
<P align="center"><FONT size=2 face="serif">10 </FONT>
</P>
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<FONT size=2 face="serif">holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates and Associates or any transferee of any of them hereunder. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(f)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to any purported transfer pursuant to Section 4 or exercise pursuant to this Section 5 unless the registered holder of the applicable Rights (i) shall have completed and signed the certificate contained in the form of assignment
or election to purchase, as the case may be, set forth on the reverse side of the Right Certificate surrendered for such transfer or exercise, as the case may be, (ii) shall not have indicated an affirmative response to clause 1 or 2 thereof and
(iii) shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 6</FONT><I><FONT size=2 face="serif">. Cancellation and Destruction of Right Certificates. </FONT></I><FONT size=2 face="serif">All Right Certificates surrendered for exercise, transfer or exchange shall,
if surrendered to the Company or to any of its agents, be delivered to the Rights Agent in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for cancellation, and the Rights Agent shall cancel, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. 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.
</FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 7</FONT><I><FONT size=2 face="serif">. Reservation and Availability of Capital Stock. </FONT></I><FONT size=2 face="serif">(a) The Company covenants and agrees that it will cause to be reserved and kept
available a number of authorized but not outstanding shares of Preferred Stock sufficient to permit the exercise in full of all outstanding Rights as provided in this Agreement.</FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">So long as the Preferred Stock issuable upon the exercise of Rights may be listed on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time as the Rights become exercisable, all securities reserved for such issuance to be listed on any such exchange upon official notice of issuance upon such exercise. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall (i) file, as soon as practicable following the earliest date after the occurrence of a Section 8(a)(ii) Event and
determination of the consideration to be delivered by the Company upon exercise of the Rights in accordance with Section 8(a)(iii), or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under
the Securities Act with respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration statement to become effective as soon as practicable after such </FONT></P>
<P align="center"><FONT size=2 face="serif">11 </FONT>
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<FONT size=2 face="serif">filing and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company shall also take such action as may be appropriate to ensure compliance with the securities or blue sky laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to exceed 90 days after the date set forth in Section 7(c)(i), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement when the suspension is no longer in effect.
Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable for securities in any jurisdiction if the requisite qualification in such jurisdiction has not been obtained, such exercise is not permitted
under applicable law or a registration statement in respect of such securities has not been declared effective. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall take all such action as may be necessary to insure that all one one-thousandths of a share of Preferred Stock issuable
upon exercise of Rights shall, at the time of delivery of the certificates for such securities (subject to payment of the Purchase Price), be duly authorized, validly issued, fully paid and nonassessable. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(e)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall pay when due and payable any and all federal and state transfer taxes and other governmental charges which may be payable
in respect of the issuance or delivery of the Right Certificates and of any certificates for Preferred Stock upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax or other governmental charge which may be
payable in respect of any transfer involved in the issuance or delivery of any Right Certificates or any certificates for Preferred Stock to a Person other than the registered holder of the applicable Right Certificate. Prior to any such issuance or
delivery of any Right Certificates or any certificates for Preferred Stock, any such transfer tax or other governmental charge shall have been paid by the holder of such Right Certificate or it shall have been established to the Company&#146;s
satisfaction that no such tax or other governmental charge is due. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 8</FONT><I><FONT size=2 face="serif">. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. </FONT></I><FONT size=2 face="serif">(a) (i) If the Company at any time after the date of
this Agreement (A) pays a dividend on the Preferred Stock in shares of Preferred Stock, (B) subdivides the outstanding Preferred Stock into a greater number of shares, (C) combines the outstanding Preferred Stock into a smaller number of shares or
(D) issues any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger involving the Company), the Purchase Price in effect immediately prior to the
record date for such dividend or the effective date of </FONT></P>
<P align="center"><FONT size=2 face="serif">12 </FONT>
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<FONT size=2 face="serif">such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or other capital stock issuable on such date, shall be proportionately adjusted so that each holder of a Right shall (except
as otherwise provided herein, including Section 5(e)) thereafter be entitled to receive, upon exercise of such Right at the Purchase Price in effect immediately prior to such date, the aggregate number and kind of shares of Preferred Stock or other
capital stock, as the case may be, which such holder would have been entitled to receive upon such exercise and by virtue of such dividend, subdivision, combination or reclassification as if such Right had been exercised immediately prior to the
record date for such dividend or the effective date of such subdivision, combination or reclassification. If an event occurs which requires an adjustment under both this Section 8(a)(i) and Section 8(a)(ii), the adjustment provided for in this
Section 8(a)(i) shall be made prior to, and in addition to, any adjustment required pursuant to Section 8(a)(ii). </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If any Person, alone or together with its Affiliates and Associates, becomes, at any time after the date of this Agreement, an Acquiring
    Person (a &#147;</FONT><B><FONT size=2 face="serif">Section 8(a)(ii) Event</FONT></B><FONT size=2 face="serif">&#148;), then each holder of a Right shall (except as otherwise provided herein, including Section 5(e)) thereafter be entitled to receive, upon
    exercise thereof at the Purchase Price in effect immediately prior to the first occurrence of a Section 8(a)(ii) Event, in lieu of Preferred Stock, such number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock
    of the Company (such shares being referred to herein as the &#147;</FONT><B><FONT size=2 face="serif">Adjustment Shares</FONT></B><FONT size=2 face="serif">&#148;) equal to the result obtained by dividing </FONT>
  </p>
  <blockquote>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(x) the product obtained by multiplying the Purchase Price in effect immediately prior to the first occurrence of a Section 8(a)(ii) Event by the number of one one-thousandths of a share of Preferred
      Stock for which a Right was exercisable immediately prior to such first occurrence (such product being from such time on the &#147;Purchase Price&#148; for each Right and for all purposes of this Agreement) by </FONT>
    </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(y) 50% of the current market price per share of Common Stock (determined pursuant to Section 8(d)(i)) on the date of such first occurrence; </FONT>
    </p>
  </blockquote>
  <p>
  <I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif">, </FONT><I><FONT size=2 face="serif">however</FONT></I><FONT size=2 face="serif">, that the Purchase Price (as so adjusted pursuant to the foregoing clause (ii)(x)) and the number of Adjustment Shares
  so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 8(f). From and after the occurrence of a Section 10 Event, any Rights that have not theretofore been exercised pursuant to this
  Section 8(a)(ii) shall thereafter be exercisable only in accordance with Section 10 and not pursuant to this Section 8(a)(ii). </FONT>
  </p>
</blockquote>
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<FONT size=2 face="serif">13 </FONT>
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<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If the number of shares of Common Stock which are authorized by the Company&#146;s certificate of incorporation but not outstanding or
    reserved for issuance other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with Section 8(a)(ii), the Company shall, with respect to each Right, make adequate provision to substitute for
    the Adjustment Shares, upon payment of the Purchase Price then in effect, (A) (to the extent available) Common Stock, then (B) (to the extent available) such number of one one-thousandths of a share of Preferred Stock as are then equivalent in value
    to the value of the Adjustment Shares and then (C) other equity or debt securities of the Company, cash or other assets, a reduction in the Purchase Price or any combination of the foregoing, having an aggregate value (as determined by the Board
    based upon the advice of a nationally recognized investment banking firm) equal to the value of the Adjustment Shares; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that (1) the Company may, and (2) if the Company shall not
    have made adequate provision as required above to deliver value within 30 days following the first occurrence of a Section 8(a)(ii) Event (the &#147;</FONT><B><FONT size=2 face="serif">Substitution Period</FONT></B><FONT size=2 face="serif">&#148;), then the
    Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, (x) (to the extent available) Common Stock, then (y) (to the extent available) one-thousandths of a share of
    Preferred Stock and then, (z) other equity or debt securities of the Company, cash or other assets or any combination of the foregoing, having an aggregate value (as determined by the Board based upon the advice of a nationally recognized investment
    banking firm) equal to the excess of the value of the Adjustment Shares over the Purchase Price. To the extent that the Company determines that some action is to be taken pursuant to the preceding sentence, the Company (A) shall provide, subject to
    Section 5(e), that such action shall apply uniformly to all outstanding Rights and (B) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to decide the appropriate form and value of any
    consideration to be delivered as referred to in such sentence. If any such suspension occurs, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public
    announcement at such time as the suspension is no longer in effect. For purposes of this Section 8(a)(iii), the value of the Common Stock shall be the current market price per share of Common Stock (as determined pursuant to Section 8(d)(i)) on the
    date of the first occurrence of a Section 8(a)(ii) Event; any common stock equivalent shall be deemed to have the same value as the Common Stock on such date; and the value of other securities or assets shall be determined pursuant to Section
    8(d)(iii). </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If the Company fixes a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or </FONT>
</P>
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<FONT size=2 face="serif">14 </FONT>
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<FONT size=2 face="serif">purchase (for a period expiring within 45 calendar days after such record date) Preferred Stock (or securities having the same rights, privileges and preferences as the shares of Preferred Stock (&#147;</FONT><B><FONT
size=2 face="serif">equivalent preferred stock</FONT></B><FONT size=2 face="serif">&#148;)) or securities convertible into or exercisable for Preferred Stock (or equivalent preferred stock) at a price per share of Preferred Stock (or equivalent preferred stock)
(in each case, taking account of any conversion or exercise price) less than the current market price per share of Preferred Stock (as determined pursuant to Section 8(d)(ii)), then on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately prior to such date by a fraction, the numerator of which shall be the sum of (i) the number of shares of Preferred Stock outstanding on such record date plus
(ii) the number of shares of Preferred Stock which the aggregate price (taking account of any conversion or exercise price) of the total number of shares of Preferred Stock (and/or equivalent preferred stock) so to be offered would purchase at such
current market price and the denominator of which shall be the sum of (i) number of shares of Preferred Stock outstanding on such record date plus (ii) the number of additional shares of Preferred Stock (and/or equivalent preferred stock) so to be
offered. If such subscription price may be paid by delivery of consideration part or all of which will be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and if such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date
had not been fixed. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If the Company fixes a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution in
connection with a consolidation or merger involving the Company) of evidences of indebtedness, equity securities other than Preferred Stock, assets (other than a regular periodic cash dividend out of the earnings or retained earnings of the Company)
or rights, options or warrants (excluding those referred to in Section 8(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price per share of Preferred Stock (as determined pursuant to Section 8(d)(iii)) on such record date, less the value (as determined pursuant to Section 8(d)(iii)) of such evidences of
indebtedness, equity securities, assets, rights, options or warrants so to be distributed with respect to one share of Preferred Stock and the denominator of which shall be such current market price per share of Preferred Stock. Such adjustment
shall be made successively whenever such a record date is fixed, and if such distribution is not so made, the Purchase Price shall be adjusted to be the </FONT>
</P>
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<FONT size=2 face="serif">Purchase Price which would then be in effect if such record date had not been fixed. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">(i) For purposes of computations hereunder other than computations made pursuant to Sections 8(a)(iii) or 11, the &#147;current market
price&#148; per share of Common Stock on any date shall be the average of the daily closing prices per share of such Common Stock at the close of the regular session of trading for the 30 Trading Days immediately prior to such date; for purposes of
computations made pursuant to Section 8(a)(iii), the &#147;current market price&#148; per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock at the close of the regular
session of trading for the 10 Trading Days immediately following such date; and for purposes of computations made pursuant to Section 11, the &#147;current market price&#148; per share of Common Stock for any Trading Day shall be the closing price
per share of Common Stock at the close of the regular session of trading for such Trading Day; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that if the current market price per share of the Common Stock is determined during a
period that is in whole or in part following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities exercisable for or convertible into shares
of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the ex-dividend date for such dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the &#147;current market price&#148; shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, at the close of the
regular session of trading or, if 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 at the close of the regular
session of trading with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use or, if on any such date the shares of Common Stock are
not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board (in each case prices which are not identified as having been
reported late to such system). If on any such date, no market maker is making a market in the Common Stock or the Common Stock is not publicly held or not so listed or traded, the &#147;current market value&#148; of such shares on such date shall be
as determined in good faith by the </FONT>
</P>
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<FONT size=2 face="serif">16 </FONT>
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<FONT size=2 face="serif">Board (or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board) which determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">For the purpose of any computation hereunder, the &#147;current market price&#148; per share of Preferred Stock shall be determined in the
    same manner as set forth above for the Common Stock in Section 8(d)(i) (other than the last sentence thereof). If the current market price per share of Preferred Stock cannot be determined in such manner, the &#147;current market price&#148; per
    share of Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring
    after the date of this Agreement) multiplied by the current market price per share of Common Stock (as determined pursuant to Section 8(d)(i)). For all purposes of this </FONT><FONT size=2 face="serif">Agreement,
    the &#147;current market price&#148; of one one-thousandth of a share of Preferred Stock shall be equal to the &#147;current market price&#148; of
    one share of Preferred Stock divided by 1,000. </FONT>
</p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">For the purpose of any computation hereunder, the value of any securities or assets other than Common Stock or Preferred Stock shall be
  the fair value as determined in good faith by the Board, or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board, which determination shall be described in a
  statement filed with the Rights Agent and shall be conclusive for all purposes. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(e)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Notwithstanding any provision of this Agreement to the contrary, no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase Price; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that any adjustments which by reason of this Section 8(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All calculations under this Section 8 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(f)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If at any time, as a result of an adjustment made pursuant to Sections 8(a)(ii) or 10(a), the holder of any Right is entitled to receive
upon exercise of such Right any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 8, and the provisions of Sections 5, 7, 10 and 11 with respect to the Preferred Stock shall apply on like terms
to any such other shares. </FONT>
</P>
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<FONT size=2 face="serif">17 </FONT>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(g)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">All Rights originally issued by the Company subsequent to any adjustment made hereunder shall evidence the right to purchase, at the
Purchase Price then in effect, the then applicable number of one one-thousandths of a share of Preferred Stock and other capital stock issuable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(h)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Unless the Company has exercised its election as provided in Section 8(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 8(b) and 8(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths of a share of Preferred Stock issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which such 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 ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 8(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 11, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner </FONT>
</P>
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<FONT size=2 face="serif">18 </FONT>
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<FONT size=2 face="serif">provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public
announcement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(j)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Irrespective of any adjustment or change in the Purchase Price or the number of one one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-thousandth of a share and the number of shares which were expressed in the initial Right Certificates
issued hereunder. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(k)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Before taking any action that would cause an adjustment reducing the Purchase Price below the par value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid
and nonassessable such number of one one-thousandths of a share of Preferred Stock at such adjusted Purchase Price. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(l)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">In any case in which this Section 8 shall require that an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of one one-thousandths of a share of Preferred Stock or other capital stock, if
any, issuable upon such exercise over and above the number of one one-thousandths of a share of Preferred Stock or other capital stock, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;
</FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder&#146;s right to receive such additional shares upon the occurrence of
the event requiring such adjustment. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(m)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Anything in this Section 8 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 8, as and to the extent that it, in its sole discretion, determines to be advisable so that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any
Preferred Stock at less than the current market price, issuance wholly for cash of any Preferred Stock or securities which by their terms are convertible into or exercisable for Preferred Stock, stock dividends or issuance of rights, options or
warrants referred to in this Section 8 hereafter made by the Company to the holders of its Preferred Stock, shall not be taxable to such stockholders. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(n)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall not at any time after the Distribution Date (i) consolidate, merge or otherwise combine with, or (ii) sell or otherwise
transfer (or permit any of its Subsidiaries to sell or otherwise transfer), directly or indirectly in one transaction or a series of related transactions, assets or earning power </FONT></P>
<P align="center"><FONT size=2 face="serif">19 </FONT>
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<FONT size=2 face="serif">aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries, taken as a whole, to, any other Person or Persons if (x) at the time of or immediately after such consolidation, merger, combination,
sale or transfer there are any rights, warrants or other instruments or securities outstanding or any agreements or arrangements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such consolidation, merger, combination, sale or transfer, the stockholders of a Person who constitutes, or would constitute, the &#147;Principal Party&#148; for the purposes of Section 10
shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(o)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company agrees that after the Distribution Date, it will not, except as permitted by Sections 19, 20 or 23, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(p)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Notwithstanding anything in this Agreement to the contrary, if at any time after the date hereof and prior to the Distribution Date the
Company (i) pays a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding Common Stock into a larger number of shares or (iii) combines the outstanding Common Stock into a smaller number
of shares, the number of Rights associated with each share of Common Stock then outstanding, or issued or delivered thereafter as contemplated by Section 2, shall be proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event equals the product obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. </FONT>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 9</FONT><I><FONT size=2 face="serif">. Certificate of Adjusted Purchase Price or Number of Shares.</FONT></I>
<FONT size=2 face="serif">Whenever an adjustment is made as provided in Sections 8 or 10, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in the manner set forth in Section 22. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">20 </FONT>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 10</FONT><I><FONT size=2 face="serif">. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. </FONT></I><FONT size=2 face="serif">(a) If, following the occurrence of a Section 8(a)(ii)
Event, directly or indirectly, </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(x) the Company consolidates with, merges into or otherwise combines with, any Acquiring Person or any Affiliate or Associate of an Acquiring Person, and the Company is not the continuing or surviving
    corporation of such consolidation, merger or combination; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(y) any Acquiring Person or any Affiliate or Associate of an Acquiring Person merges into, or otherwise combines with, the Company, and the Company is the continuing or surviving corporation of such
    merger or combination and, in connection with such merger or combination, all or part of the outstanding shares of Common Stock is changed into or exchanged for other stock or securities of the Company or of any Acquiring Person or any Affiliate or
    Associate of an Acquiring Person, cash or any other property; or </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(z) the Company and/or one or more of its Subsidiaries sells or otherwise transfers, in one transaction or a series of related transactions, to any Acquiring Person or any Affiliate or Associate of an
    Acquiring Person, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries, taken as a whole, </FONT>
  </p>
</blockquote>
<P>
<FONT size=2 face="serif">(each of the above, a &#147;</FONT><B><FONT size=2 face="serif">Section 10 Event</FONT></B><FONT size=2 face="serif">&#148;) then, and in each such case, proper provision shall promptly be made so that </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">each holder of a Right shall thereafter be entitled to receive, upon exercise thereof at the Purchase Price in effect immediately prior to
    the first occurrence of a Section 8(a)(ii) Event, such number of duly authorized, validly issued, fully paid and nonassessable shares of freely tradeable Common Stock of the Principal Party (as hereinafter defined), not subject to any rights of call
    or first refusal, liens, encumbrances or other claims, as shall be equal to the result obtained by dividing </FONT>
  </p>
  <blockquote>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(A)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">the product obtained by multiplying the Purchase Price in effect immediately prior to the first occurrence of a Section 8(a)(ii) Event by
      the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such first occurrence (such product being from such time on the &#147;Purchase Price&#148; for each Right and for all purposes of
      this Agreement) by </FONT>
    </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(B)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">50% of the current market price (determined pursuant to Section 8(d)(i)) per share of the Common Stock of </FONT>
    </p>
  </blockquote>
</blockquote>
<P align="center">
<FONT size=2 face="serif">21 </FONT>
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  <blockquote>
    <p>
      <FONT size=2 face="serif">such Principal Party on the date of consummation of such consolidation, merger, combination, sale or transfer; </FONT>
    </p>
  </blockquote>
  <p>
  <I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif">, </FONT><I><FONT size=2 face="serif">however</FONT></I><FONT size=2 face="serif">, that the Purchase Price (as so adjusted pursuant to the foregoing clause (i)(A)) and the number of shares of Common
  Stock of such Principal Party so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 8(f) to reflect any events occurring in respect of the Common Stock of such Principal Party after
  the occurrence of such consolidation, merger, sale or transfer; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">the Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, combination, sale or
  transfer, all the obligations and duties of the Company pursuant to this Agreement; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">the term &#147;</FONT><B><FONT size=2 face="serif">Company</FONT></B><FONT size=2 face="serif">&#148; shall thereafter be deemed to refer to such
  Principal Party, it being specifically intended that the provisions of Section 8 shall apply only to such Principal Party following the first occurrence of a Section 10 Event; and </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iv)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">such Principal Party shall take such steps (including the authorization and reservation of a sufficient number of shares of its Common
  Stock to permit exercise of all outstanding Rights in accordance with this Section 10(a)) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly
  as reasonably may be, in relation to the shares of its Common Stock thereafter deliverable upon the exercise of the Rights. </FONT>
  </p>
</blockquote>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Principal Party</FONT></B><FONT size=2 face="serif">&#148; means </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">in the case of any transaction described in Sections 10(a)(x) or 10(a)(y), the Person that is the issuer of any securities into which
    shares of Common Stock of the Company are converted in such merger, consolidation or combination, and if no securities are so issued, the Person that survives or results from such merger, consolidation or combination; or </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">in the case of any transaction described in Section 10(a)(z), the Person that is receiving the greatest portion of the assets or earning
    power transferred pursuant to such transaction or transactions; </FONT>
  </p>
  <p>
    <I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that in any such case, (A) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the
  Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the </FONT></p>
  <p align="center"><FONT size=2 face="serif">22 </FONT>
  </p>
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  <p>
    <FONT size=2 face="serif">Common Stock of which is and has been so registered, &#147;Principal Party&#148; shall refer to such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of
    two or more of which are and have been so registered, &#147;Principal Party&#148; shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall not consummate any such consolidation, merger, combination, sale or transfer unless the Principal Party has a sufficient
number of authorized shares of its Common Stock which are not outstanding or otherwise reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 10 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Sections 10(a) and 10(b) and providing that, as soon as practicable after the date of any consolidation, merger, combination,
sale or transfer mentioned in Section 10(a), the Principal Party shall (i) prepare and file a registration statement under the Securities Act with respect to the securities issuable upon exercise of the Rights, and shall use its best efforts to
cause such registration statement (A) to become effective as soon as practicable after such filing and (B) to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date, and (ii)
deliver to holders of the Rights historical financial statements for the Principal Party which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 11</FONT><I><FONT size=2 face="serif">. Fractional Rights and Fractional Shares. </FONT></I><FONT size=2 face="serif">(a) The Company is not required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 8(p), or to distribute Right Certificates which evidence fractional Rights. In lieu of any such fractional Rights, the Company shall pay to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market price of a whole Right. For purposes of this Section 11(a), the current market price of a whole Right shall be the closing
price of a Right at the close of the regular session of trading for the Trading Day immediately prior to the date on which such fractional Rights would otherwise have been issuable. The closing price of a Right for any day shall be determined in the
manner set forth for the Common Stock in Section 8(d)(i). </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company is not required to issue fractions of shares of Preferred Stock (other than fractions which are multiples of one
one&#150;thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are multiples of one one-thousandth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the </FONT></P>
<P align="center"><FONT size=2 face="serif">23 </FONT>
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<FONT size=2 face="serif">current market price of one one-thousandth of a share of Preferred Stock. For purposes of this Section 11(b), the current market price of one one-thousandth of a share of Preferred Stock shall be one one-thousandth of the closing
price of a share of Preferred Stock (as determined pursuant to Section 8(d)) for the Trading Day immediately prior to the date of such exercise. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Following the occurrence of any Section 8(a)(ii) Event or Section 10 Event or upon any exchange pursuant to Section 20, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised or exchanged as herein provided an amount in cash equal to the same fraction of the current market price of a share of Common Stock. For purposes of this Section 11(c),
the current market price of a share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section 8(d)) for the Trading Day immediately prior to the date of such exercise or exchange. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Each holder of a Right, by his acceptance of the Right, expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 11. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 12</FONT><I><FONT size=2 face="serif">. Rights of Action. </FONT></I><FONT size=2 face="serif">All rights of action in respect of this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of certificates representing Common Stock); and any such holder, without the consent of any other such holder or the Rights Agent, may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of, any Person subject to this Agreement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 13</FONT><I><FONT size=2 face="serif">. Agreement of Right Holders. </FONT></I><FONT size=2 face="serif">Each holder of a Right, by his acceptance of the Right, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that: </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(a)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">prior to the Distribution Date, the Rights will be evidenced by and transferable only in connection with the transfer of Common Stock;
    </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">24 </FONT>
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  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">after the Distribution Date, the Rights will be evidenced by Right Certificates and transferable only on the registry books of the Rights
    Agent pursuant to Section 4; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">subject to Sections 4 and 5, the Company and the Rights Agent may deem and treat the Person in whose name a Right Certificate (or, prior to
    the Distribution Date, a certificate representing shares of Common Stock) is registered as the absolute owner of such certificate and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or
    the certificate representing shares of Common Stock made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 5(e), shall be affected
    by any notice to the contrary; and </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">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 or ruling issued by a court of competent jurisdiction or by a
    governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligation;
    </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 14</FONT><I><FONT size=2 face="serif">. Right Certificate Holder Not Deemed a Stockholder. </FONT></I><FONT size=2 face="serif">No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of capital stock which may at any time be issuable on 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 Certificate, as such, any of the rights of a stockholder of the Company (including 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 21), or to receive dividends or subscription rights, or otherwise) until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 15</FONT><I><FONT size=2 face="serif">. Appointment of Rights Agent. </FONT></I><FONT size=2 face="serif">(a) The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of
the Rights 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. If the Company </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">25 </FONT>
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<FONT size=2 face="serif">appoints one or more co-rights agents, the respective duties of the Rights Agent and any co-rights agents shall be as the Company shall determine. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company shall pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the execution or administration of this Agreement and the exercise and performance of its duties hereunder. The Company also
shall indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the administration of this Agreement or the exercise or performance of its duties hereunder, including the costs and expenses of defending against any claim of liability. </FONT>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 16</FONT><I><FONT size=2 face="serif">. Merger or Consolidation or Change of Name of Rights Agent.</FONT></I>
<FONT size=2 face="serif">(a) Any corporation into or with which the Rights Agent or any successor Rights Agent may be merged, consolidated or combined, any corporation resulting from any merger, consolidation or combination to which the Rights Agent or
any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust or stock transfer business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any party hereto; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that such corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 18. If at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Right Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right Certificates so countersigned; and if at that time any of the Right Certificates have not been countersigned, any successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates 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 have not been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">26 </FONT>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 17</FONT><I><FONT size=2 face="serif">. Duties of the Rights Agent. </FONT></I><FONT size=2 face="serif">The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(a)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full
    and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary that any fact or matter (including,
    without limitation, the identity of any &#147;Acquiring Person&#148; and the determination of &#147;current market price&#148;) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
    matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the President, any Vice President, or the Secretary of
    the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken, suffered or omitted in good faith by it under the provisions of this Agreement in reliance upon such
    certificate. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">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. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(e)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent shall not be responsible (i) in respect of the validity of this Agreement or the execution and delivery hereof (except the
    due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof), (ii) for any breach by the Company of any covenant or condition contained in this Agreement or in
    any Right Certificate, (iii) for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 5(e)) or (iv) any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided
    herein or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment). The Rights </FONT>
  </p>
</blockquote>
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<FONT size=2 face="serif">27 </FONT>
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  <p>
    <FONT size=2 face="serif">Agent shall not by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Stock or other securities to be issued pursuant to this Agreement or any Right
    Certificate or as to whether any shares of Preferred Stock or other securities will, when issued, be duly authorized, validly issued, fully paid and nonassessable. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(f)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company agrees that it will perform, execute, acknowledge and deliver, or cause to be performed, executed, acknowledged and delivered,
    all such 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. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(g)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the
    Chairman of the Board, the President, any Vice President or the Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken, suffered or omitted to
    be taken by it in good faith in accordance with instructions of any such officer. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(h)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other
    securities of the Company or become pecuniarily interested in any transaction in which the Company 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. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">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 or to any holders of Rights resulting from any
    such act, default, neglect or misconduct;</FONT><I><FONT size=2 face="serif"> provided</FONT></I><FONT size=2 face="serif"> that reasonable care was exercised in the selection and continued employment thereof. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(j)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">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 reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to
    it. </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">28 </FONT>
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  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(k)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If, with respect to any Right 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 cases may be, has either not been completed or indicates an affirmative response to clause 1 or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise
    or transfer without first consulting with the Company. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(l)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in
    connection with the administration of this Agreement or the exercise or performance of its duties hereunder in reliance upon any Right Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or
    transfer, power of attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement or other paper or document reasonably believed by it to be genuine and to be signed, executed and, where necessary, verified
    or acknowledged, by the proper Person or Persons. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 18</FONT><I><FONT size=2 face="serif">. Change of Rights Agent. </FONT></I><FONT size=2 face="serif">The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days&#146; notice to the Company and to each transfer agent of the Common Stock and Preferred Stock, and, after the Distribution Date, to the holders of the Right Certificates. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days&#146; notice to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock by registered or certified mail, and, after the Distribution Date,
to the holders of the Right Certificates. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of
30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized, in good standing and doing business under the laws of the United States or of any state of the United States, authorized under such laws to exercise stock transfer or corporate trust
powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a corporation described in
Section 18(a). 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 </FONT>
</P>
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<FONT size=2 face="serif">29 </FONT>
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<FONT size=2 face="serif">Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and,
subsequent to the Distribution Date, mail a notice thereof to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 18, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 19</FONT><I><FONT size=2 face="serif">. Redemption. </FONT></I><FONT size=2 face="serif">(a) At any time prior to the occurrence of a Section 8(a)(ii) Event, the Board may, at its option, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the &#147;</FONT><B><FONT size=2 face="serif">Redemption Price</FONT></B><FONT size=2 face="serif">&#148;). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board
in its sole discretion may establish. The Redemption Price shall be payable, at the option of the Company, in cash, shares of Common Stock, or such other form of consideration as the Board shall determine. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Immediately upon the action of the Board electing to redeem the Rights (or at such later time as the Board may establish for the
effectiveness of such redemption) and without any further action and without any notice, the right to exercise the Rights will terminate and thereafter the only right of the holders of Rights shall be to receive the Redemption Price for each Right
so held. The Company shall promptly thereafter give notice of such redemption to the Rights Agent and the holders of the Rights in the manner set forth in Section 22; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the
failure to give, or any defect in, such notice shall not affect the validity of such redemption. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price will be made. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 20</FONT><I><FONT size=2 face="serif">. Exchange. </FONT></I><FONT size=2 face="serif">(a) At any time after the occurrence of a Section 8(a)(ii) Event, the Board may, at its option, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to Section 5(e)) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the &#147;</FONT><B><FONT size=2 face="serif">Exchange Ratio</FONT></B><FONT size=2 face="serif">&#148;). The exchange of the
Rights by the Board may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Notwithstanding the foregoing, (i) the Board shall not be </FONT>
</P>
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<FONT size=2 face="serif">empowered to effect such exchange at any time after an Acquiring Person, together with all Affiliates and Associates of such Acquiring Person, becomes the Beneficial Owner of 50% or more of the shares of Common Stock then
outstanding and (ii) from and after the occurrence of a Section 10 Event, any Rights that theretofore have not been exchanged pursuant to this Section 20(a) shall thereafter be exercisable only in accordance with Section 10 and may not be exchanged
pursuant to this Section 20(a). </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">Immediately upon the effectiveness of the action of the Board to exchange any Rights pursuant to Section 20(a) (or at such later time as
the Board may establish) and without any further action and without any notice, the right to exercise such Rights will terminate and thereafter the only right of a holder of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly thereafter give notice of such exchange to the Rights Agent and the holders of the Rights to be exchanged in the manner set forth in
Section 22; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of Rights for shares of Common Stock will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to Section 5(e)) held by each holder of Rights. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">The Company may at its option substitute, and, if there shall not be sufficient shares of Common Stock authorized but not outstanding to
permit the exchange of Rights for Common Stock in accordance with Section 20(a), shall substitute to the extent of such insufficiency, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of one
one-thousandths of a share of Preferred Stock such that the current market price (determined pursuant to Section 8(d)) of such number of one one-thousandths of a share of Preferred Stock is equal to the current market price (determined pursuant to
Section 8(d)) of one share of Common Stock as of the date of such exchange. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 21</FONT><I><FONT size=2 face="serif">. Notice of Proposed Actions. </FONT></I><FONT size=2 face="serif">(a) If the Company proposes, at any time after the Distribution Date, (i) to pay any dividend payable
in stock of any class or to make any other distribution (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company) to the holders of Preferred Stock, (ii) to offer to the holders of its Preferred Stock rights
or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding shares of Preferred Stock), (iv) to effect, or permit any of its Subsidiaries to effect, any consolidation, merger or </FONT></P>
<P align="center"><FONT size=2 face="serif">31 </FONT>
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<FONT size=2 face="serif">combination with any other Person, or to effect any sale or other transfer, in one transaction or a series of related 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, or (v) to effect the liquidation, dissolution or winding-up of the Company, then, in each such case, the Company shall give to each holder of a Right, a notice of such proposed action specifying the record
date for the purposes of any such dividend, distribution or offering of rights or warrants, or the date on which any such reclassification, consolidation, merger, combination, sale, transfer, liquidation, dissolution or winding-up is to take place
and the date of participation therein by the holders of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by Sections 21(a)(i) or 21(a)(ii) above at least 20 days prior to the
record date for determining holders of the Preferred Stock entitled to participate in such dividend, distribution or offering, and in the case of any such other action, at least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever shall be earlier. The failure to give notice required by this Section or any defect therein shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b)</FONT><FONT face="sans-serif"> </FONT><FONT size=2 face="serif">If a Section 8(a)(ii) Event or Section 10 Event occurs, then, in any such case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Right, in accordance with Section 22, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Sections 8(a)(ii) or 10, as the case may be, and (ii)
all references in Section 21(a) to Preferred Stock shall be deemed thereafter to refer to Common Stock or other capital stock, as the case may be. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 22</FONT><I><FONT size=2 face="serif">. Notices. </FONT></I><FONT size=2 face="serif">Except as set forth below, all notices, requests and other communications to any party hereunder and to the holder of
any Right shall be in writing unless otherwise expressly specified herein. Notices or demands authorized by this Agreement to be given or made to or on the Company or (subject to Section 18) the Rights Agent shall be sufficiently given or made if
sent by registered or certified mail (postage prepaid) to the addresses set forth below (or such other address as such party specifies in writing to the other party): </FONT>
</P>
<blockquote>
  <p>
    <FONT size=2 face="serif">if to the Company, to: </FONT>
  </p>
  <blockquote>
    <p>
      <FONT size=2 face="serif">Callidus Software Inc.<br>
      160 West Santa Clara St.<br>
      Suite
      1500<br>
      San Jose, CA 95113<br>
      Attention: Secretary<br>
      </FONT><FONT size=2 face="serif">Facsimile Number: (408) 808-6400 </FONT>
    </p>
  </blockquote>
</blockquote>
<P align="center">
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  <p>
    <FONT size=2 face="serif">if to the Rights Agent, to: </FONT>
  </p>
  <blockquote>
    <p>
      <FONT size=2 face="serif">American Stock Transfer &amp; Trust Company<br>
      59 Maiden
      Lane<br>
      Plaza Level<br>
      Attention: Corporate Secretary<br>
      Facsimile Number: (718) 236-4588 </FONT>
    </p>
  </blockquote>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Except as otherwise expressly set forth in this Agreement, 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
any certificate representing shares of Common Stock is sufficiently given or made if sent by first-class mail (postage prepaid) to each record holder of such Certificate at the address of such holder shown on the registry books of the Company.
Notwithstanding anything in this Agreement to the contrary, prior to the Distribution Date a public filing by the Company with the Securities and Exchange Commission shall constitute sufficient notice to the holders of securities of the Company,
including the Rights, for purposes of this Agreement and no other notice need be given to such holders. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 23</FONT><I><FONT size=2 face="serif">. Supplements and Amendments. </FONT></I><FONT size=2 face="serif">At any time prior to the occurrence of a Section 8(a)(ii) Event, the Company may, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of certificates representing shares of Common Stock. At any time after the occurrence of a Section 8(a)(ii)
Event, the Company may, and the Rights Agent shall if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights; </FONT><I><FONT size=2 face="serif">provided, however,</FONT></I><FONT size=2 face="serif"> that no
such supplement or amendment may (a) adversely affect the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), (b) cause this Agreement again to become amendable other than
in accordance with this sentence or (c) cause the Rights again to become redeemable. Upon the delivery of a certificate from the Chairman of the Board, the President, any Vice President or the Secretary of the Company stating that the proposed
supplement or amendment is in compliance with the terms of this Agreement, the Rights Agent shall execute such supplement or amendment. Notwithstanding the foregoing, the Company may not amend this Agreement as it relates to the duties, rights or
liabilities of the Rights Agent without the Rights Agent&#146;s prior written consent. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 24</FONT><I><FONT size=2 face="serif">. Successors. </FONT></I><FONT size=2 face="serif">All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns hereunder. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 25</FONT><I><FONT size=2 face="serif">. Determinations and Actions by the Board, etc. </FONT></I><FONT size=2 face="serif">For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of determining </FONT></P>
<P align="center"><FONT size=2 face="serif">33 </FONT>
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<FONT size=2 face="serif">the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on the
date of this Agreement. The Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to
redeem or exchange or not to redeem or exchange the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board to any liability to the holders of the
Rights. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 26</FONT><I><FONT size=2 face="serif">. Benefits of This Agreement. </FONT></I><FONT size=2 face="serif">Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the certificates representing the shares of Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the certificates representing the shares of Common Stock). </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 27</FONT><I><FONT size=2 face="serif">. Severability. </FONT></I><FONT size=2 face="serif">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. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 28</FONT><I><FONT size=2 face="serif">. Governing Law. </FONT></I><FONT size=2 face="serif">This Agreement, each Right 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 to be made and performed entirely within such State, except that the rights and obligations
of the Rights Agent shall be governed by the laws of the State of New York. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 29</FONT><I><FONT size=2 face="serif">. Counterparts. </FONT></I><FONT size=2 face="serif">This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. </FONT>
</P>
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<FONT size=2 face="serif">34 </FONT>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 30</FONT><I><FONT size=2 face="serif">. Descriptive Headings. </FONT></I><FONT size=2 face="serif">The captions herein are included for convenience of reference only, do not constitute a part of this
Agreement and shall be ignored in the construction and interpretation hereof. </FONT>
</P>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. </FONT>
</P>
<div align="right">
  <TABLE width="55%" border=0 cellspacing=0 cellpadding=0>
    <TR align="left">
      <TD colspan=3><FONT size=2 face="serif">CALLIDUS SOFTWARE INC.</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%">&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR align="left">
      <TD width="4%"><FONT size=2 face="serif">By:</FONT></TD>
      <TD colspan=2><FONT size=2 face="serif">/s/ Ronald J. Fior</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD colspan=2><HR align="left" width="50%" size=1 noshade></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%"><FONT size=2 face="serif">Name:</FONT></TD>
      <TD width="90%"><FONT size=2 face="serif">Ronald J. Fior</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%"><FONT size=2 face="serif">Title:</FONT></TD>
      <TD width="90%"><FONT size=2 face="serif">Vice President, Finance and</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%">&nbsp;</TD>
      <TD width="90%"><FONT size=2 face="serif">Chief Financial Officer</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%">&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR align="left">
      <TD colspan=3><FONT size=2 face="serif">AMERICAN STOCK TRANSFER &amp;</FONT></TD>
    </TR>
    <TR align="left">
      <TD colspan=3><FONT size=2 face="serif">&nbsp;&nbsp;TRUST COMPANY</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%">&nbsp;</TD>
      <TD width="90%">&nbsp;</TD>
    </TR>
    <TR align="left">
      <TD width="4%"><FONT size=2 face="serif">By:</FONT></TD>
      <TD colspan=2><FONT size=2 face="serif">/s/ Herbert J. Lemmer</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD colspan=2><HR align="left" width="50%" size=1 noshade></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%"><FONT size=2 face="serif">Name:</FONT></TD>
      <TD width="90%"><FONT size=2 face="serif">Herbert J. Lemmer</FONT></TD>
    </TR>
    <TR align="left">
      <TD width="4%">&nbsp;</TD>
      <TD width="6%"><FONT size=2 face="serif">Title:</FONT></TD>
      <TD width="90%"><FONT size=2 face="serif">Vice President</FONT></TD>
    </TR>
  </TABLE>
  <br>
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<P align="right">
<B><FONT size=2 face="serif">EXHIBIT A</FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">CERTIFICATE OF DESIGNATION<br>
</FONT></B><B><FONT size=2 face="serif">OF<br>
</FONT></B><B><FONT size=2 face="serif">SERIES A PARTICIPATING CUMULATIVE<br>
</FONT></B><B><FONT size=2 face="serif">PREFERRED STOCK </FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">OF </FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">CALLIDUS SOFTWARE INC. </FONT></B>
</P>
<P align="center">
<FONT size=2 face="serif">Pursuant to Section 151 of the<br>
General Corporation Law
of the<br>
State of Delaware </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">I, David Pratt, interim President and Chief Executive Officer of Callidus Software Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware
(&#147;</FONT><B><FONT size=2 face="serif">Delaware Law</FONT></B><FONT size=2 face="serif">&#148;), in accordance with the provisions thereof, HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors by the Amended and Restated
Certificate of Incorporation of the Corporation, the Board of Directors on August 31, 2004, adopted the following resolution creating a series of Preferred Stock in the amount and having the designation, voting powers, preferences and relative,
participating, optional and other special rights and qualifications, limitations and restrictions thereof as follows: </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 1. </FONT><I><FONT size=2 face="serif">Designation and Number of Shares</FONT></I><FONT size=2 face="serif">. The shares of such series shall be designated as &#147;Series A Participating Cumulative
Preferred Stock&#148; (the &#147;</FONT><B><FONT size=2 face="serif">Series A Preferred Stock</FONT></B><FONT size=2 face="serif">&#148;), and the number of shares constituting such series shall be 100,000. Such number of shares of the Series A Preferred Stock
may be increased or decreased by resolution of the Board of Directors; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares issuable upon exercise or conversion of outstanding rights, options or other securities issued by the Corporation. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 2. </FONT><I><FONT size=2 face="serif">Dividends and Distributions</FONT></I><FONT size=2 face="serif">. (a) The holders of shares of Series A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable on March 31, June 30, September 30 and December 31 of each year (each such date being referred to herein as a &#147;</FONT><B><FONT
size=2 face="serif">Quarterly Dividend Payment Date</FONT></B><FONT size=2 face="serif">&#148;), commencing on the first Quarterly Dividend Payment Date after the first issuance of any share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (i) $1.00 and </FONT></P>
<P align="center"><FONT size=2 face="serif">A-1 </FONT>
</P>
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<FONT size=2 face="serif">(ii) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends or other distributions and 1,000 times the aggregate per share amount of all non-cash dividends
or other distributions (other than (A) a dividend payable in shares of Common Stock, par value $0.001 per share, of the Corporation (the &#147;</FONT><B><FONT size=2 face="serif">Common Stock</FONT></B><FONT size=2 face="serif">&#148;) or (B) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. If the Corporation, at any time after September 2, 2004, 2004 (the &#147;</FONT><B><FONT size=2 face="serif">Rights Declaration Date</FONT></B><FONT size=2 face="serif">&#148;), pays any
dividend on Common Stock payable in shares of Common Stock or effects a subdivision or combination of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under Section 2(a)(ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in Section 2(a) above immediately after it declares a dividend or distribution on the Common
    Stock (other than as described in Sections 2(a)(ii)(A) and 2(a)(ii)(B) above); </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that if no dividend or distribution shall have been declared on the Common Stock during the period
    between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date (or, with respect to the first Quarterly Dividend Payment Date, the period between the first issuance of any share or fraction of a share of Series A
    Preferred Stock and such first Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of such shares of
    Series A Preferred Stock, unless the date of issuance of such shares is on or before the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue and be cumulative from the date of issue
    of such shares, or unless the date of issue is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and on or before such Quarterly Dividend Payment Date, in
    which case </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">A-2 </FONT>
</P>

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<blockquote>
  <p>
    <FONT size=2 face="serif">dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on shares of Series A Preferred Stock in an amount less than the
    total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of
    holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall not be more than 60 days prior to the date fixed for the payment thereof. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 3. </FONT><I><FONT size=2 face="serif">Voting Rights</FONT></I><FONT size=2 face="serif">. In addition to any other voting rights required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights: </FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
    stockholders of the Corporation. If the Corporation shall at any time after the Rights </FONT>
  </p>
  <p>
    <FONT size=2 face="serif">Declaration Date pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or combination of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser
    number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction
    the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as a single class on all matters
    submitted to a vote of stockholders of the Corporation. </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(c) (i) If at any time dividends on any Series A Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning
    of a period (herein called a &#147;</FONT><B><FONT size=2 face="serif">default period</FONT></B><FONT size=2 face="serif">&#148;) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the
    current quarterly dividend period on all shares of Series A Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock and any other series of Preferred
    Stock then entitled as a class to elect directors, voting together as a single class, irrespective of series, shall have the right to elect two Directors. </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">A-3 </FONT>
</P>

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<blockquote>
  <blockquote>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii) 	During any default period, such voting right of the holders of Series A Preferred Stock may be exercised initially at a special meeting called pursuant to Section 3(c)(iii) hereof or at any
      annual meeting of stockholders, and thereafter at annual meetings of stockholders;</FONT><I><FONT size=2 face="serif"> provided</FONT></I><FONT size=2 face="serif"> that neither such voting right nor the right of the holders of any other series of Preferred
      Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of
      holders of Common Stock shall not affect the exercise by holders of Preferred Stock of such voting right. At any meeting at which holders of Preferred Stock shall initially exercise such voting right, they shall have the right, voting as a class, to
      elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting
      does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the
      Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as
      herein provided or pursuant to the rights of any equity securities ranking senior to or </FONT><I><FONT size=2 face="serif">pari passu</FONT></I><FONT size=2 face="serif"> with the Series A Preferred Stock. </FONT>
    </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii) Unless the holders of Preferred Stock shall have previously exercised their right to elect Directors during an existing default period, the Board of Directors may order, or any stockholder or
      stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of holders of Preferred Stock, which meeting shall thereupon
      be called by the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Section 3(c)(iii) shall be given to each
      holder of record of Preferred Stock by mailing such notice to him at the address of such holder shown on the registry books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such
      order or request or in default of the calling of such meeting within 60 days after </FONT>
    </p>
  </blockquote>
</blockquote>
<P align="center">
<FONT size=2 face="serif">A-4 </FONT>
</P>

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<blockquote>
  <blockquote>
    <p>
      <FONT size=2 face="serif">such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of
      series.</FONT>
      <FONT size=2 face="serif">Notwithstanding the provisions of this Section 3(c)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of stockholders. </FONT>
  </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the
      holders of Preferred Stock shall have exercised their right to elect two Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors
      shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in Section 3(c)(ii) hereof) be filled by vote of a majority of the remaining Directors
      theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this Section 3(c) to Directors elected by the holders of a particular class of stock shall include Directors
      elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. </FONT>
    </p>
    <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(v) 	Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the
      holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or bylaws irrespective of any increase made pursuant to the provisions of Section
      3(c)(ii) (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the
      preceding sentence may be filled by a majority of the remaining Directors. </FONT>
    </p>
  </blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(d) The Certificate of Incorporation of the Corporation shall not be amended in any manner (whether by merger or otherwise) so as to adversely affect the powers, preferences or special rights of the
  Series A Preferred Stock without the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting separately as a class. </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">A-5 </FONT>
</P>

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<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(e) Except as otherwise provided herein, holders of Series A Preferred Stock shall have no special voting rights, and their consent shall not be required for taking any corporate action. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 4. </FONT><I><FONT size=2 face="serif">Certain Restrictions</FONT></I><FONT size=2 face="serif">. (a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock
as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding shares of Series A Preferred Stock shall have been paid in full, the Corporation shall not:
</FONT>
</P>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i) 	declare or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Series A
    Preferred Stock; </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii) 	declare or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Series A
    Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such other parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
    </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iii) redeem, purchase or otherwise acquire for value any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Series A Preferred Stock;
    </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of stock of the Corporation ranking junior (as to
    dividends and upon dissolution, liquidation or winding-up) to the Series A Preferred Stock; or </FONT>
  </p>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(iv) redeem, purchase or otherwise acquire for value any shares of Series A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or
    winding-up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of Series A Preferred Stock and all such other parity stock upon
    such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable
    treatment among the respective series or classes. </FONT>
  </p>
</blockquote>
<P align="center">
<FONT size=2 face="serif">A-6 </FONT>
</P>

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<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for value any shares of stock of the Corporation unless the Corporation could, under paragraph
    4(a), purchase or otherwise acquire such shares at such time and in such manner. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 5. </FONT><I><FONT size=2 face="serif">Reacquired Shares</FONT></I><FONT size=2 face="serif">. Any shares of Series A Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock without designation as to series and may be reissued as
part of a new series of Preferred Stock to be created by the Board of Directors as permitted by the Certificate of Incorporation or as otherwise permitted under Delaware Law. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 6. </FONT><I><FONT size=2 face="serif">Liquidation, Dissolution and Winding-up</FONT></I><FONT size=2 face="serif">. Upon any liquidation, dissolution or winding-up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have
received $1.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; </FONT><I><FONT size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that the holders of
shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of Common
Stock, or (b) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such other
parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding-up. If the Corporation shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 7. </FONT><I><FONT size=2 face="serif">Consolidation, Merger, etc</FONT></I><FONT size=2 face="serif">. If the Corporation shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock or securities, cash or any other property, then in any such case the shares of Series A Preferred Stock </FONT></P>
<P align="center"><FONT size=2 face="serif">A-7 </FONT>
</P>
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<P>
<FONT size=2 face="serif">shall at the same time be similarly exchanged for or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash or any
other property, as the case may be, into which or for which each share of Common Stock is changed or exchanged. If the Corporation shall at any time after the Rights Declaration Date pay any dividend on Common Stock payable in shares of Common Stock
or effect a subdivision or combination of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 8. </FONT><I><FONT size=2 face="serif">No Redemption</FONT></I><FONT size=2 face="serif">. The Series A Preferred Stock shall not be redeemable. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 9. </FONT><I><FONT size=2 face="serif">Rank</FONT></I><FONT size=2 face="serif">. The Series A Preferred Stock shall rank junior (as to dividends and upon liquidation, dissolution and winding-up) to all
other series of the Corporation&#146;s preferred stock except any series that specifically provides that such series shall rank junior to the Series A Preferred Stock. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Section 10. </FONT><I><FONT size=2 face="serif">Fractional Shares</FONT></I><FONT size=2 face="serif">. Series A Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion
to such holder&#146;s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">A-8</FONT>
</P>

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<P align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">IN WITNESS WHEREOF, we have executed and subscribed this Certificate this 3 day of September, 2004. </FONT>
</P>
<div align="right">
  <TABLE width="55%" border=0 cellspacing=0 cellpadding=0>
    <TR>
      <TD colspan=2><FONT size=2 face="serif">/s/ David Pratt</FONT></TD>
    </TR>
    <TR>
      <TD colspan=2><HR align="left" width="50%" size=1 noshade></TD>
    </TR>
    <TR>
      <TD width="8%"><FONT size=2 face="serif">Name:</FONT></TD>
      <TD width="92%"><FONT size=2 face="serif">David Pratt</FONT></TD>
    </TR>
    <TR>
      <TD width="8%"><FONT size=2 face="serif">Title:</FONT></TD>
      <TD width="92%"><FONT size=2 face="serif">Interim President and Chief</FONT></TD>
    </TR>
    <TR>
      <TD width="8%">&nbsp;</TD>
      <TD width="92%"><FONT size=2 face="serif">Executive Officer</FONT></TD>
    </TR>
  </TABLE>
</div>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0>
<TR>
   <TD width="6%"><FONT size=2 face="serif">Attest:</FONT></TD>
   <TD width="94%">&nbsp;</TD>
</TR>
<TR>
   <TD width="6%">&nbsp;</TD>
   <TD width="94%">&nbsp;</TD>
</TR>
<TR>
   <TD colspan=2><FONT size=2 face="serif">/s/ Ronald Fior</FONT></TD>
  </TR>
<TR>
   <TD colspan=2><HR align="left" width="20%" size=1 noshade></TD>
  </TR>
<TR>
   <TD width="6%"><FONT size=2 face="serif">Name:</FONT></TD>
   <TD width="94%"><FONT size=2 face="serif">Ronald Fior</FONT></TD>
</TR>
<TR>
   <TD width="6%"><FONT size=2 face="serif">Title:</FONT></TD>
   <TD width="94%"><FONT size=2 face="serif">Secretary</FONT></TD>
</TR>
</TABLE>

<br>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>

<P align="right">
<B><FONT size=2 face="serif">EXHIBIT B</FONT></B>
</P>
<blockquote>
  <blockquote>
    <blockquote>
      <p>
        <B><FONT size=2 face="serif">AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED OR TRANSFERRED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
        WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID. </FONT></B>
      </p>
    </blockquote>
  </blockquote>
</blockquote>
<P align="center">
<B><U><FONT size=2 face="serif">SUMMARY OF TERMS</FONT></U></B><B><FONT size=2 face="serif"> </FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">CALLIDUS SOFTWARE INC. </FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">STOCKHOLDER RIGHTS PLAN </FONT></B>
</P>
<P>&nbsp;
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Form of Security</FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">The Board of Directors has declared
        a dividend of one preferred stock purchase right for each outstanding
        share of the Company&#146;s Common Stock, payable to holders of record
        as of the close of business on September 10, 2004 (each a &#147;</FONT><B><FONT size=2 face="serif">Right</FONT></B><FONT size=2 face="serif">&#148; and
    collectively, the &#147;</FONT><B><FONT size=2 face="serif">Rights</FONT></B><FONT size=2 face="serif">&#148;). </FONT> </td>
  </tr>
  <tr>
    <td width="37%">&nbsp;</td>
    <td width="6%">&nbsp;</td>
    <td width="57%">&nbsp;</td>
  </tr>
</table>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">B-1</FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>

<P>&nbsp;
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Issuance of Right Certificates;
    Transfer</FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">Prior to the Distribution Date</FONT><SUP><FONT size=2 face="serif">1</FONT></SUP><FONT size=2 face="serif">,
        (i) the Rights will be evidenced by the certificates for the common stock,
        par value $0.001 per share (&#147;</FONT><B><FONT
size=2 face="serif">Common Stock</FONT></B><FONT size=2 face="serif">&#148;)
        of the Company and not separate certificates evidencing the Rights (a &#147;</FONT><B><FONT size=2 face="serif">Right
        Certificate</FONT></B><FONT size=2 face="serif">&#148;), and the registered
        holders of the Common Stock shall be deemed to be the registered holders
        of the associated Rights; and (ii) the Rights will be transferable only
    in connection with the transfer of the underlying shares of Common Stock. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="serif">After the Distribution Date, the Rights Agent
        will mail separate Right Certificates to each record holder of the Common
        Stock as of the close of business on the Distribution Date, and thereafter
    the Rights will be transferable separately from the Common Stock. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Exercise </FONT></B></td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">Prior to the Distribution Date,
    the Rights are not exercisable. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="serif">After the Distribution Date, but prior to
        the occurrence of an event described below under &#147;Flip-In&#148; or &#147;Flip-Over&#148;,
        each Right shall be exercisable to purchase, for $23.00, subject to adjustment
        (the &#147;</FONT><B><FONT size=2 face="serif">Purchase Price</FONT></B><FONT size=2 face="serif">&#148;),
        one one-thousandth of a share of Series A Participating Cumulative Preferred
    Stock, par value $0.001 per share, of the Company. </FONT> </td>
  </tr>
</table>
<P>&nbsp;</P>
<P>&nbsp;
</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr align="left" valign="top">
    <td colspan="2"><hr align="left" width="10%" size=1 noshade color=GRAY></td>
  </tr>
  <tr align="left" valign="top">
    <td colspan="2"><sup><font size=2 face="serif">1</font></sup>&nbsp;<font size=2 face="serif">Distribution
    Date generally means the earlier of: </font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="5%"><font size=2 face="serif">(1) </font></td>
    <td width="95%"> <font size=2 face="serif">the 10th day after public
        announcement that any person or group has become an Acquiring Person
    (as defined below), and </font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td><font size=2 face="serif">(2) </font></td>
    <td> <font size=2 face="serif">the 10th business day after the date of
        the commencement of a tender or exchange offer by any person that would,
    if consummated, result in such person becoming an Acquiring Person. </font> </td>
  </tr>
</table>

<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">B-2 </FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>

<P>&nbsp;
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Acquiring Person</FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">Subject to certain exceptions,
        an &#147;</FONT><B><FONT size=2 face="serif">Acquiring Person</FONT></B><FONT size=2 face="serif">&#148; is
        any person or group who becomes the beneficial owner of 15% or more of
        the Common Stock. The exceptions include: (i) the Company&#146;s employee
        benefit plans, (ii) any person that the Company&#146;s Board of Directors
        determines exceeded the threshold inadvertently and then promptly divests
        the excess shares, (iii) any person who becomes an Acquiring Person because
        the Company repurchases outstanding shares of Common Stock unless such
        person acquires additional shares of Common Stock and (iv) subject to
    certain limitation, Crosspoint Venture Partners and their affiliates. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="37%"> <B><FONT size=2 face="serif">Flip-In </FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">If any person or group becomes
        an Acquiring Person, then each Right (other than Rights beneficially
        owned by the Acquiring Person and certain affiliated persons) will entitle
        the holder to purchase, for the Purchase Price, a number of shares of
        the Company&#146;s Common Stock having a market value of twice the Purchase
    Price. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td> <B><FONT size=2 face="serif">Flip-Over </FONT></B> </td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="serif">If, after any person or group becomes an Acquiring
        Person, (1) the Company is involved in a merger or other business combination
        in which the Company is not the surviving corporation or its Common Stock
        is exchanged for other securities or assets or (2) the Company and/or
        one or more of its subsidiaries sell or otherwise transfer assets or
        earning power aggregating more than 50% of the assets or earning power
        of the Company and its subsidiaries, taken as a whole, then each Right
        will entitle the holder to purchase, for the Purchase Price, a number
        of shares of common stock of the other party to such business combination
        or sale (or in certain circumstances, an affiliate) having a market value
    of twice the Purchase Price. </FONT> </td>
  </tr>
</table>
<P>&nbsp;</P>
<P align="center"><FONT size=2 face="serif">B-3 </FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>

<P>&nbsp;
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Exchange </FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">At any time after any person becomes
        an Acquiring Person (but before any person becomes the beneficial owner
        of 50% or more of the Company&#146;s Common Stock or the occurrence of
        a merger, combination, sale or transfer described in &#147;Flip-Over&#148; above),
        the Board of Directors may exchange all or part of the Rights (other
        than the Rights beneficially owned by the Acquiring Person and certain
        affiliated persons) for shares of Common Stock at an exchange ratio of
    one share of Common Stock per Right. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Redemption</FONT></B></td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">The Board of Directors may redeem
        all of the Rights at a price of $0.001 per Right at any time prior to
    the time that any person becomes an Acquiring Person. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td> <B><FONT size=2 face="serif">Expiration </FONT></B> </td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="serif">The Rights will expire on September 2, 2014,
    unless earlier exchanged or redeemed. </FONT> </td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><B><FONT size=2 face="serif">Amendments </FONT></B></td>
    <td>&nbsp;</td>
    <td><P><FONT size=2 face="serif">Prior to any person becoming an Acquiring
          Person, the Rights Agreement may be amended in any respect. </FONT> </P>
      <P> <FONT size=2 face="serif">After any person has become an Acquiring
          Person, the Rights Agreement may not be amended in any respect that
          would adversely affect the Rights holders (other than any Acquiring
          Person and certain affiliated persons) or cause the Rights again to
    become redeemable. </FONT></P></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><B><FONT size=2 face="serif">Voting Rights</FONT></B></td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="serif">Rights holders have no stockholder rights,
    including no right to vote or to receive dividends. </FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><B><FONT size=2 face="serif">Antidilution Provisions </FONT></B></td>
    <td>&nbsp;</td>
    <td> <FONT size=2 face="serif">The Rights Agreement includes standard antidilution
    provisions designed to protect the efficacy of the Rights. </FONT> </td>
  </tr>
</table>
<P>&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">B-4</FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>

<P>&nbsp;
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="37%"><B><FONT size=2 face="serif">Taxes</FONT></B> </td>
    <td width="6%">&nbsp;</td>
    <td width="57%"> <FONT size=2 face="serif">While the dividend of the Rights
        will not be taxable to stockholders or to the Company, stockholders or
        the Company may, depending upon the circumstances, recognize taxable
    income in the event that the Rights become exercisable. </FONT> </td>
  </tr>
</table>
<br>
<br>
<hr align=center width=15% size=1 noshade color="#000000">
<blockquote>
  <blockquote>
    <p align="left"><FONT size=2 face="serif">A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is available free of charge from the Company. This
        summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, as amended from time to time, the complete terms of which are hereby incorporated by reference. </FONT></p>
  </blockquote>
</blockquote>
    <hr align=center width=15% size=1 noshade color="#000000">
    <p align="left">&nbsp;</p>
<P align="center">
<FONT size=2 face="serif">B-5</FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>

<P align="right">
<B><FONT size=2 face="serif">EXHIBIT C </FONT></B>
</P>
<P align="center">
<B><FONT size=2 face="serif">[FORM OF RIGHT CERTIFICATE] </FONT></B>
</P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="50%"><font size=2 face="serif">No. R - </font></td>
    <td width="50%" align="right"><FONT size=2 face="serif">____________ Rights </FONT></td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
</table>
<P><FONT size=2 face="serif"><BR>
</FONT>
  <FONT size=2 face="serif">NOT EXERCISABLE AFTER THE EARLIER OF SEPTEMBER 2,
  2014 AND THE DATE ON WHICH THE RIGHTS EVIDENCED HEREBY ARE </FONT><FONT size=2 face="serif">REDEEMED
  OR EXCHANGED BY THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH
  IN THE RIGHTS </FONT><FONT size=2 face="serif">AGREEMENT, RIGHTS ISSUED TO,
  OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN FFILIATE
  OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
  CURRENTLY HELD BY OR ON BEHALF OF  SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
  MAY BE NULL AND VOID. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">RIGHT CERTIFICATE </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">CALLIDUS SOFTWARE INC. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This Right Certificate
certifies that ______________________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the holder
(upon the terms and subject to the conditions set forth in the Rights Agreement
dated as of September 2, 2004 (the &#147;</FONT><B><FONT size=2 face="serif">Rights
Agreement</FONT></B><FONT size=2 face="serif">&#148;) between Callidus Software
Inc., a Delaware  corporation (the &#147;</FONT><B><FONT size=2 face="serif">Company</FONT></B><FONT size=2 face="serif">&#148;),
and American Stock Transfer &amp; Trust Company (the &#147;</FONT><B><FONT size=2 face="serif">Rights
Agent</FONT></B><FONT size=2 face="serif">&#148;)) to purchase
from the Company, at any time after the Distribution Date and prior to the Expiration
Date, ___ one-thousandths of a fully paid, nonassessable share of Series A Participating
Cumulative Preferred Stock (the &#147;</FONT><B><FONT
size=2 face="serif">Preferred Stock</FONT></B><FONT size=2 face="serif">&#148;)
of the Company at a purchase price of $23.00 per one one-thousandth of a share
(the &#147;</FONT><B><FONT size=2 face="serif">Purchase Price</FONT></B><FONT size=2 face="serif">&#148;),
payable in  lawful money of the United States of America, upon surrender of this
Right Certificate, with the form of election to purchase and related certificate
duly executed, and payment of the Purchase Price at an office of the Rights Agent
designated for  such purpose. </FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Terms used herein and not otherwise defined herein shall have the meanings given to them in the Rights Agreement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The number of Rights
evidenced by this Right Certificate (and the number and kind of shares issuable
upon exercise of each Right) and the Purchase Price set forth above are as of
____________,
2004, and may have been or in the future be adjusted as a result of the occurrence
of certain events, as more fully provided in the Rights Agreement. </FONT></P>
<P align="center">
<FONT size=2 face="serif">C-1 </FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>
<P>
  <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Upon the first occurrence of a Section 8(a)(ii) Event, if the Rights evidenced by this Right Certificate are beneficially owned by (a) an Acquiring Person or an Associate or Affiliate of such
Acquiring Person, (b) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who (i) becomes a transferee after a Section 8(a)(ii) Event, (ii) becomes a transferee prior to or concurrently with a Section 8(a)(ii) Event and
receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or in any Associate or Affiliate) or to
any Person with whom the Acquiring Person (or any such Associate or Affiliate) has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of these transfer restrictions, such Rights shall become null and void without any further action, and no holder hereof shall have any rights whatsoever with respect to such Rights. </FONT></font>
</P>
<P>
  <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates,
which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. </FONT></font>
</P>
<P>
  <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">At any time after the Distribution Date and prior to the Expiration Date, any Right Certificate or Certificates may, upon the terms and subject to the conditions set forth below in the Rights
Agreement, be transferred or exchanged for another Right Certificate or Certificates evidencing a like number of Rights as the Right Certificate or Certificates surrendered. Any registered holder desiring to transfer or exchange any Right
Certificate or Certificates shall surrender such Right Certificate or Certificates (with, in the case of a transfer, the form of assignment and certificate on the reverse side thereof duly executed) to the Rights Agent at the principal office or
offices of the Rights Agent designated for such purpose. </FONT></font>
</P>
<P>
  <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Subject to the provisions of the Rights Agreement, the Board of Directors of the Company may, at its option, </FONT></font>
</P>
<blockquote>
  <p>
    <font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) 	at any time prior to the occurrence of a Section 8(a)(ii) Event redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right as such amount may be
    appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of the Rights Agreement; or </FONT></font>
  </p>
</blockquote>
<P align="center">
  <FONT size="2" face="serif">C-2 </FONT>
</P>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>
<blockquote>
  <p> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(b) 	at any time after the occurrence of a Section 8(a)(ii) Event exchange all or part of the then outstanding Rights (which shall not include Rights that have become void pursuant to Section 5(e))
    for shares of Common Stock at an exchange ratio of one share of Common Stock per Right appropriately adjusted as more fully provided in the Rights Agreement to reflect any stock split, stock dividend or similar transaction. If the Rights shall be
    exchanged in part, the holder of this Right Certificate shall be entitled to receive upon surrender hereof another Right Certificate or Certificates for the number of whole Rights not exchanged. </FONT>
  </p>
</blockquote>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are multiples of one one-thousandth of a share of Preferred Stock) upon the exercise of
the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are multiples of one one-thousandth of a share of Preferred Stock). In lieu of any such fractional shares of Preferred Stock,
the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised an amount in cash equal to the same fraction of the current market price of one one-thousandth of a share of Preferred Stock. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Certificates for the number of whole Rights not exercised. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">No holder of this Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of capital stock which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company (including any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), to receive
dividends or subscription rights, or otherwise) until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. </FONT>
</P>
<P align="center">
<FONT size=2 face="serif">C-3</FONT>
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>

<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal by its authorized officers. </FONT>
</P>
<P>
<FONT size=2 face="serif">Dated as of ____________________,  2004 </FONT></P>
<div align="right">
  <table width="50%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td colspan="3"><FONT size=2 face="serif">CALLIDUS SOFTWARE INC.</FONT></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">By:</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td colspan="2"><hr align="left" width=60% size=1 noshade color="#000000"></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Name:</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Title:</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
  </table>
</div>

<div align="left">
  <table width="50%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td colspan="3"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font><font size="2" face="Times New Roman, Times, serif">&nbsp;</font><FONT size=2 face="serif">[SEAL]</FONT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3"><FONT size=2 face="serif">Attest:</FONT></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%">&nbsp;</td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td colspan="2"><hr align="left" width=60% size=1 noshade color="#000000"></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Name:</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Title:</font></td>
      <td width="84%"><FONT size=2 face="serif">Secretary</FONT><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
  </table>
</div>

<div align="left">
  <table width="50%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3"><FONT size=2 face="serif">Countersigned:</FONT></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td colspan="3"><FONT size=2 face="serif">AMERICAN STOCK TRANSFER &amp;<br>
TRUST COMPANY,<br>
as Rights Agent</FONT></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">By:</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td colspan="2"><hr align="left" width=60% size=1 noshade color="#000000"></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Name:</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
    <tr>
      <td width="6%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
      <td width="10%"><font size="2" face="Times New Roman, Times, serif">Title:</font></td>
      <td width="84%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    </tr>
  </table>
</div>
<P>&nbsp;</P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<br>
<br>

<P align="center">
<FONT size=2 face="serif">Form of Reverse Side of Right Certificate</FONT>
</P>
<P align="center">
<B><FONT size=2 face="serif">FORM OF ASSIGNMENT </FONT></B>
</P>
<P align="center">
<FONT size=2 face="serif">(To be executed if the registered holder<br>
desires to
transfer the Right Certificate.)</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="20%"><FONT size=2 face="serif">FOR VALUE RECEIVED</FONT></td>
    <td colspan="2"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr>
    <td width="20%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="75%">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"> <FONT size=2 face="serif">hereby sells, assigns and transfers
    unto</FONT></td>
    <td width="75%"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr>
    <td colspan="3"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr align="center">
    <td colspan="3"> <FONT size=2 face="serif">(Please print name and address
    of transferee)</FONT> </td>
  </tr>
  <tr>
    <td colspan="3"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
</table>
<P><FONT size=2 face="serif">this Right Certificate, together with all right,
    title and interest therein, and does hereby irrevocably constitute and appoint
    ___________________ Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of substitution. </FONT></P>
<P>
<FONT size=2 face="serif">Dated:___________________,  20__ </FONT></P>
<P>&nbsp;
</P>
<div align="right">
  <table width="50%"  border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><hr align="left" width="50%" size=1 noshade color=GRAY></td>
    </tr>
    <tr>
      <td><FONT size=2 face="serif">Signature</FONT></td>
    </tr>
  </table>
</div>
<P><FONT size=2 face="serif">Signature Guaranteed:</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<br>
<br>

<P align="center">
<B><FONT size=2 face="serif">CERTIFICATE </FONT></B>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby certifies by checking the appropriate boxes that: </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(1) 	the Rights evidenced by this Right Certificate ___are ___are not being assigned by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement); and </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(2) 	after due inquiry and to the best knowledge of the undersigned, it ___did ___did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person. </FONT>
</P>
<P><FONT size=2 face="serif">Dated: __________________, 20__</FONT></P>
<div align="right">
  <table width="50%"  border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><hr align="left" width="50%" size=1 noshade color=GRAY></td>
    </tr>
    <tr>
      <td><FONT size=2 face="serif">Signature</FONT></td>
    </tr>
  </table>
</div>
<P><FONT size=2 face="serif"> </FONT><br>
</P>
<hr align=center width=15% size=1 noshade color="#000000">
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The signatures to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any
change whatsoever. </FONT></P>
<hr align=center width=15% size=1 noshade color="#000000">
<br>
<br>
<hr size=3 color=GRAY noshade>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<br>
<br>

<P align="center">
<B><FONT size=2 face="serif">FORM OF ELECTION TO PURCHASE </FONT></B>
</P>
<P align="center">
<FONT size=2 face="serif">(To be executed if the registered holder desires to
exercise Rights<br>
represented by the Right Certificate.) </FONT>
</P>
<P>
<FONT size=2 face="serif">To: Callidus Software Inc. </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The undersigned hereby
irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="30%"><font size=2 face="serif">Please insert social security or
        other identifying number</font> </td>
    <td width="70%"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr>
    <td colspan="2"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr align="center">
    <td colspan="2"><font size=2 face="serif">(Please print name and address)</font> </td>
  </tr>
  <tr>
    <td colspan="2"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
</table>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance of such Rights shall be registered in the name of and delivered to:</FONT></P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="30%"><FONT size=2 face="serif">Please insert social security or
        other identifying number</FONT> </td>
    <td width="70%"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr>
    <td colspan="2"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
  <tr align="center">
    <td colspan="2"><FONT size=2 face="serif">(Please print name and address)</FONT> </td>
  </tr>
  <tr>
    <td colspan="2"><div style="BORDER-BOTTOM: 1px solid">&nbsp;</div></td>
  </tr>
</table>
<P><FONT size=2 face="serif">Dated: __________________, 20__</FONT></P>
<div align="right">
  <table width="50%"  border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><hr align="left" width="50%" size=1 noshade color=GRAY></td>
    </tr>
    <tr>
      <td><FONT size=2 face="serif">Signature</FONT></td>
    </tr>
  </table>
</div>
<P><FONT size=2 face="serif"> Signature</FONT> <FONT size=2 face="serif">Guaranteed: </FONT>
</P>
<P>&nbsp;
</P>

<br>
<br>
<hr size=3 color=GRAY noshade>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<br>
<br>

<P align="center">
<B><FONT size=2 face="serif">CERTIFICATE </FONT></B>
</P>
<P>
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby certifies by checking the appropriate boxes that: </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(1) 	the Rights evidenced by this Right Certificate ___are ___are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement); and </FONT>
</P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(2) 	after due inquiry and to the best knowledge of the undersigned, it ___did ___did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person. </FONT>
</P>
<P>
  <FONT size=2 face="serif">Dated: __________________, 20__</FONT></P>
<div align="right">
  <table width="50%"  border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td><hr align="left" width="50%" size=1 noshade color=GRAY></td>
    </tr>
    <tr>
      <td><FONT size=2 face="serif">Signature</FONT></td>
    </tr>
  </table>
</div>
<P><FONT size=2 face="serif"> </FONT></P>
<hr align=center width=15% size=1 noshade color="#000000">

<P>
<FONT size=2 face="serif">The signature to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever. </FONT></P>
<hr align=center width=15% size=1 noshade color="#000000">
<P>&nbsp; </P>
<HR noshade align="center" width="100%" size=3>
</BODY>
</HTML>


</TEXT>
</DOCUMENT>
