<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 8-A/A
(AMENDMENT NO. 1)
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NORSTAN, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0835746
- ------------------------------------- -----------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
605 NORTH HIGHWAY 169, TWELFTH FLOOR,
PLYMOUTH, MINNESOTA 55441
- ------------------------------------- -----------------------------------
(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective upon filing pursuant to
General Instruction A.(c) please check the following box. / /
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d)(2) please check the following box. /X/
Securities Act registration statement file number to which this form relates:
Not Applicable
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
- ------------------- ------------------------------
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock Purchase Rights
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On May 17, 1988, the Board of Directors of Norstan, Inc. (the "Company")
declared a dividend of one Right for each outstanding share of Common Stock of
the Company to the stockholders of record at the close of business on June 13,
1988 (the "Record Date"). Effective as of April 1, 1998, the Company amended
and restated the Agreement in its entirety to (i) provide for an extension of
the term of the Agreement from May 17, 1998 to April 1, 2008; (ii) amend the
definition of "Acquiring Person" to exclude therefrom certain Persons who may
inadvertently have become Acquiring Persons as a result of various unrelated
events; (iii) reduce certain triggering thresholds set forth in the Agreement
for the determination of an Acquiring Person; (iv) establish a Distribution Date
that is ten (10) Business Days, rather than ten (10) calendar days, subsequent
to a triggering event; (v) provide for the elimination of certain self-dealing
requirements prior to the time at which certain "Flip-In" provisions of the
Agreement may be triggered; (vi) increase the adjusted Purchase Price following
a "Flip-In" event from 25% of the then current market price of the Common Stock
to 50% of the then current market price of the Common Stock; (vii) provide for
an exchange mechanism for each Right under certain instances; (viii) eliminate
the "Continuing Director" concept throughout the Agreement; and (ix) increase
the Purchase Price to $200.
Except as set forth below, each Right entitles the registered holder to
purchase from the Company one share of Common Stock, par value $.10 per share
(the "Common Stock"), at a price of $200.00 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, as amended and restated April 1, 1998 (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A., as Rights
Agent.
Pursuant to Rule 12b-15 promulgated under the Securities and Exchange Act
of 1934, the following sets forth the complete text of "Item 1. Description of
the Registrant's Securities to be Registered," of the Company's Form 8-A as
filed with the Securities and Exchange Commission on May 24, 1988, as amended by
this Form 8-A/A.
Initially, the Rights are attached implicitly to all Common Stock
certificates representing shares outstanding, and no separate Right certificates
will be distributed. Until the earlier to occur of ten (10) Business Days
following (i) a public announcement that, without the prior consent of the Board
of Directors, a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a public
announcement of an intention to make) a tender offer or exchange offer which
would result in any person or group and related persons having beneficial
ownership of voting securities having 15% or more of the voting power of the
Company without the prior consent of the Board of Directors, (the earlier of
such dates being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. The Rights
2
<PAGE>
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Stock certificates. From as soon as
practicable after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on April 1, 2008 unless earlier redeemed by the Company as described
below.
In the event that, at any time following the Distribution Date, any person
becomes the beneficial owner of 15% or more than of the then outstanding shares
of Common Stock (an "Acquiring Person"), the Purchase Price (except with respect
to Rights held by the Acquiring Person, its Affiliates and Associates and
certain transferees of the Acquiring Person or such Affiliates or Associates)
shall (subject to possible suspensions provided for in the Rights Agreement)
thereafter equal to the result obtained by (1) multiplying the then current
Purchase Price by the then number of shares of Common Stock for which a Right is
then exercisable and (2) dividing that product by 50% of the then current market
price per share of Common Stock as of the Stock Acquisition Date in question
(such right being called the "Flip-In Right"). A majority of the Board of
Directors (as determined in its discretion by the vote of a majority of the
Directors then in office) may elect to distribute cash, other securities or
other property in lieu of Common Stock to the Right holders upon the exercise of
their Rights following any such event. In the event that, at any time following
the Distribution Date, the Company is acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or in
the event that 50% or more of its assets or earning power is sold, proper
provision shall be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
of the Right, common stock of the acquiring entity which has a value of two
times the Purchase Price of the Right (such right being called the "Flip-Over
Right"). The holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises the Flip-In Right. Upon the occurrence of
any of the events giving rise to the exercisability of the Flip-In Right, any
Rights that are or were at any time owned by an Acquiring Person shall become
null and void insofar as they relate to the Flip-In Right.
For example, at a Purchase Price of $200 per Right, and assuming a current
market price of $24.00 per share, if (i) any person becomes an Acquiring Person
or (ii) the Company is the surviving corporation in a merger with an Acquiring
Person in which the Common Stock is not converted or exchanged, each Right other
than a Right owned by the Acquiring Person, would entitle its holder to purchase
a share of the Company's Common Stock for $12.00.
3
<PAGE>
If, following the Distribution Date, there occurs (i) a business
combination with another entity in which the Company's Common Stock is converted
or exchanged, or (ii) a sale of 50% or more of the Company's assets or earning
power, each Right would entitle its holder to purchase $50 worth of the
acquiring entity's stock for $25.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth Business Day
following a Stock Acquisition Date or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"), which redemption shall be effective upon the
action of the Board of Directors. Additionally, the Board of Directors (as
determined in its discretion by the vote of a majority of the Directors then in
office) may thereafter redeem the then outstanding Rights in whole, but not in
part, at the Redemption Price provided that (a) such redemption is incidental to
a merger or other business combination transaction or series of transactions
involving the Company but not involving an Acquiring Person or any person who
was an Acquiring Person, or (b) such redemption follows an event giving rise to,
and the expiration of the exercise period for, the Flip-In Right, and at the
time of such redemption, no Acquiring Person beneficially owns 15% or more of
the voting power of the Company. The Company's right to redeem the Rights shall
be reinstated if an Acquiring Person reduces his beneficial ownership to less
than 5% of the then outstanding shares of Common Stock. The redemption of
Rights described in the two preceding sentences shall be effective only as of
such time when the Flip-In Right is not exercisable, and in any event, only
after 10 Business Days prior notice. Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Additionally, the Board of Directors (as evidenced by the vote of a
majority of the Directors then in office) may also, at any time from and after a
Stock Acquisition Date, exchange one share of Common Stock for each Right held
by a stockholder other than the Acquiring Person during such time as the
Acquiring Person holds any amount of Common Stock between 15% and 50% of the
then outstanding shares.
4
<PAGE>
Until a Right is exercised, it will not entitle the holder to any rights as
a shareholder of the Company (other than those as an existing stockholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibits the form of
Rights Certificate and the form of Summary of Rights is filed as Exhibit 1 to
this Form 8-A/A. A copy of the 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 Agreement.
ITEM 2. EXHIBITS
1. Amended and Restated Rights Agreement, dated April 1, 1998 (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A., as Rights
Agent.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this amendment on Form 8-A/A to be
signed on its behalf by the undersigned, thereto duly authorized.
NORSTAN, INC.
By: /s/ Richard Cohen
----------------------------
Its: Vice Chairman
-----------------------
Dated: April 1, 1998
5
<PAGE>
- --------------------------------------------------------------------------------
NORSTAN, INC.
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Rights Agent
______
Amended and Restated Rights Agreement
Dated as of April 1, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. APPOINTMENT OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . 7
3. ISSUE OF RIGHTS CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . 7
4. FORM OF RIGHTS CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 10
5. COUNTERSIGNATURE AND REGISTRATION . . . . . . . . . . . . . . . . . . . 12
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. . . . . . . . 13
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS . . . . . 15
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES . . . . . . . . . . 19
9. RESERVATION AND AVAILABILITY OF COMMON STOCK. . . . . . . . . . . . . . 20
10. COMMON STOCK RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . 22
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES. . . . . . . 37
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER. . 37
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES . . . . . . . . . . . . . . . . 42
15. RIGHTS OF ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16. AGREEMENT OF RIGHTS HOLDERS . . . . . . . . . . . . . . . . . . . . . . 45
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. . . . . . . . . . . 46
18. CONCERNING THE RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . 46
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT . . . . . . . 47
20. DUTIES OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 49
<PAGE>
21. CHANGE OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 52
22. ISSUANCE OF NEW RIGHTS CERTIFICATES . . . . . . . . . . . . . . . . . . 54
23. REDEMPTION AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 54
24. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
25. NOTICE OF CERTAIN EVENTS. . . . . . . . . . . . . . . . . . . . . . . . 58
26. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
27. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . 60
28. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
29. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 61
30. ADMINISTRATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 62
31. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
32. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
33. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
34. DESCRIPTIVE HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 63
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of April 1, 1998 (the
"Agreement"), between Norstan, Inc., a Minnesota corporation (the "Company"),
and Norwest Bank Minnesota, National Association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on May 17, 1988, the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each outstanding share of common stock, par value $.l0
per share, of the Company (the "Common Stock") outstanding on June 13, 1988 (the
"Record Date"), each Right initially representing the right to purchase one
share of Common Stock upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
WHEREAS, the Company and the Rights Agent, have entered into a Rights
Agreement, dated as of May 17, 1988, (the "Agreement");
WHEREAS, the Company now wishes to amend and restate the Agreement in its
entirety to (i) provide for an extension of the term of the Agreement from May
17, 1998 to April 1, 2008; (ii) amend the definition of "Acquiring Person" to
exclude therefrom certain Persons who may inadvertently have become Acquiring
Persons as a result of various unrelated events; (iii) reduce certain triggering
thresholds set forth in the Agreement for the determination of an Acquiring
Person; (iv) establish a Distribution Date that is ten (10) Business Days,
rather than ten (10) calendar days, subsequent to a triggering event; (v)
provide for the elimination of certain self-dealing requirements prior to the
time at which the "Flip-In" provisions of the Agreement may be triggered; (vi)
increase the adjusted Purchase
<PAGE>
Price following a Flip-In event from 25% of the then current market price of the
Common Stock to 50% of the then current market price of the Common Stock; (vii)
provide for an exchange mechanism for each Right under certain instances; (viii)
eliminate the "Continuing Director" concept throughout the Agreement; and (ix)
increase the Purchase Price to $200.
WHEREAS, Section 26 of the current Agreement provides, among other things,
that prior to the Distribution Date (as such term is defined in the Agreement)
the Company and the Rights Agent may, if the Company deems necessary or
desirable to effectuate the purpose of the Agreement and if the Company so
directs, change or supplement any provision of the Agreement without the
approval of any holders of Rights Certificates; and
WHEREAS, the Distribution Date (as defined herein) has not occurred.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby amend and restate the Agreement and agree
as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of a majority of the
Board of Directors shall be the Beneficial Owner (as such term is
hereinafter defined) of voting securities having 15% or more of the then
voting power of the Company or who was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be the
Beneficial Owner of voting securities having 15% or more of the then voting
power of
2
<PAGE>
the Company. Notwithstanding the foregoing, (A) the term Acquiring Person
shall not include (i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company,
or any entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan or (ii) any Person, who or which
together with all Affiliates of such Person becomes the Beneficial Owner of
15% or more of the then outstanding shares of Common Stock as a result of
the acquisition of Common Stock directly from the Company (provided,
however, that if, after such acquisition, such Person or any Affiliate of
such Person becomes the Beneficial Owner of any additional shares of Common
Stock in an acquisition not made directly from the Company, then such
Person shall be deemed an Acquiring Person), and (B) no Person shall be
deemed to be an Acquiring Person either (X) as a result of the acquisition
of Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate number of shares
Beneficially Owned by such Person together with all Affiliates of such
Person; except that if (i) such Person would become an Acquiring Person
(but for the operation of this subclause (X)) as a result of the
acquisition of Common Stock by the Company, and (ii) after such share
acquisition by the Company, such Person or any Affiliate of such Person
becomes the Beneficial Owner of any additional shares of Common Stock, then
such Person shall be deemed an Acquiring Person or (Y) if (i) such Person
or any Affiliate of such Person inadvertently becomes the Beneficial Owner
of 15% or more of the outstanding shares of Common Stock, and (ii) within
eight (8) calendar days thereafter such Person notifies the Board of
Directors
3
<PAGE>
that such Person did so inadvertently and (iii) within two (2) days after
such notification, such Person is the Beneficial Owner of less than 15% of
the outstanding shares of Common Stock. For purposes of this Agreement,
any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining 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) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on the date of
this Agreement (the "Exchange Act").
(b) "Acquisition Event" shall mean either the event described in
Section 11(a)(ii) or Section 13(a) hereof.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not
4
<PAGE>
in writing) or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights at any time prior to the
occurrence of an Acquisition Event, but thereafter including the
Rights acquired from and after the Distribution Date (as defined in
Section 3(a) below) other than pursuant to Section 3(a) below),
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security: (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of 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
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring,
5
<PAGE>
holding, voting (except pursuant to a revocable proxy as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or disposing of
any voting securities of the Company.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of
Minnesota are authorized or obligated by law or executive order to
close.
(f) "Close of business" on any given date shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on such date; PROVIDED, HOWEVER, that if
such date is not a Business Day it shall mean 5:00 P.M., Minneapolis,
Minnesota time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the common stock, par value $.l0
per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person or, if such Person is a subsidiary of
another Person, the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding capital
stock, equity securities or equity interests.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
6
<PAGE>
(i) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(j) "Subsidiary" shall mean, with reference to any other Person,
any corporation of which a majority of any class of equity security is
beneficially owned, directly or indirectly, by such other Person.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board in their good faith judgment, which
determination shall be final and binding on the Rights Agent.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) 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. In the event the Company appoints one or
more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agent shall be as the Company shall determine.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on
the tenth Business Day after the Stock Acquisition Date, or (ii) the
close of business on the tenth Business Day after the date of the
commencement of, or first public announcement of the intent of any
Person (other than the Company, any
7
<PAGE>
Subsidiary of the Company or any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity organized, appointed
or established by the Company for or pursuant to the terms of any such
plan), to commence (which intention to commence remains in effect for
five Business Days after such announcement), a tender or exchange
offer which would result in such person becoming the Beneficial Owner
of 15% or more of the then outstanding shares of Common Stock
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights), (the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall
be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a
transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the
close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the
"Rights Certificates"), evidencing one Right for each share of
8
<PAGE>
Common Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) The Company sent a copy of a Summary of Rights, in
substantially the form of Exhibit B attached hereto, to each record
holder of the Common Stock as of the Record Date. The Summary of
Rights attached hereto as Exhibit B is now revised to reflect all
amendments effected as of April 1, 1998. With respect to certificates
for the Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date (as such
term is defined in Section 7 hereof), the surrender for transfer of
any of the certificates for the Common Stock outstanding on the Record
Date shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the date
of this Agreement, but prior to the earlier of the Distribution Date
or the Expiration Date, shall be deemed also to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Amended and
Restated Rights Agreement between Norstan, Inc. and Norwest
Bank Minnesota, N.A. dated as of April 1, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal offices of Norstan, Inc. Under certain
circumstances, as set forth in the Rights
9
<PAGE>
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Norstan, Inc. 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, Rights issued to, or held by,
Acquiring, Persons or Affiliates or Associates thereof (as
such terms are defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and the registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
exercise and of assignment to be printed on the reverse thereof) shall
each be substantially in the form attached hereto as Exhibit A 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 or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the
10
<PAGE>
Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to
purchase such number of shares of Common Stock as shall be set forth
therein at the price per share set forth therein (the "Purchase
Price"), but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or such Associate
or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to or on behalf of holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors
otherwise concludes in good faith (as determined in its discretion by
the vote of a majority of the Directors then in office) is part of a
plan, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any
11
<PAGE>
Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible and reasonably identifiable as such) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in that certain
Amended and Restated Rights Agreement between Norstan, Inc.
and Norwest Bank Minnesota, N.A. dated as of April 1, 1998
(the "Rights Agreement"). Accordingly, this Rights
Certificate and the Rights represented hereby may become
void in the circumstances specified in Section 7(e) of the
Rights Agreement.
The provisions of Section 7(e) of the Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Vice Chairman
of the Board or its President, either manually or by facsimile
signature, which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be
countersigned by the
12
<PAGE>
Rights Agent, and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any
Rights Certificates may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its offices in South St. Paul,
Minnesota or New York, New York, books for registration and transfer
of the Rights Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of
the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of shares of Common
Stock as the Rights Certificate or Certificates surrendered
13
<PAGE>
then entitled such holder to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate
shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office or offices
of the Rights Agent designated for such purpose. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection
with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
14
<PAGE>
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e), the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to exercise on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price for each share of Common Stock (or, if applicable, such
other number of shares or other securities) as to which the Rights are
exercised, at or prior to the earlier of (i) the close of business on
April 1, 2008 (the "Final Expiration Date"), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (such earlier
time being herein referred to as the "Expiration Date"). Any Person
who prior to the Distribution Date becomes a record holder of shares
of Common Stock may exercise all of the rights of a registered holder
of a Rights Certificate with respect to the Rights associated with
such shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of Section 7(e)
hereof, as of the date such Person becomes a record holder of shares
of Common Stock.
(b) The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall initially be $200, and shall
be subject to
15
<PAGE>
adjustment from time to time as provided in Section 11 hereof and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to exercise duly
executed, accompanied by payment (in cash, or by certified check or
bank draft payable to the order of the Company) of the Purchase Price
for the shares to be purchased and an amount equal to any applicable
transfer tax, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Common Stock (or
make available, if the Rights Agent is the transfer agent for such
shares) certificates for the number of shares of Common Stock to be
purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company, in its
sole discretion, shall have elected to deposit the shares of Common
Stock issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary receipts
representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common 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) when appropriate, requisition
from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts,
16
<PAGE>
cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as
may be designated by such holder, and (iv) when appropriate, after
receipt thereof, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a)(iii)
hereof, the Company will make all arrangements necessary so that such
other securities, cash, and/or property are available for distribution
by the Rights Agent, if and when appropriate. In addition, in the
case of an exercise of the Rights by a holder pursuant to Section
11(a)(ii), the Rights Agent shall return such Rights Certificate to
the registered holder thereof after imprinting, stamping or otherwise
indicating thereon that the Rights represented by such Rights
Certificate no longer include the Rights provided by Section 11(a)(ii)
of the Rights Agreement and if less than all the Rights represented by
such Rights Certificate were so exercised, the Rights Agent shall
indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the Rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Rights
Certificate shall exercise (except pursuant to Section 11(a)(ii)) less
than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall
be issued by the Rights Agent and delivered
17
<PAGE>
to the registered holder of such Rights Certificate or to such
holder's duly authorized assigns, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of the event described in
Section 11(a)(ii), any Rights beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) except
as provided below, a transferee of an Acquiring Person (or such
Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, and (c) except as provided below, a transferee of
an Acquiring Person (or such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (i) a transfer
(whether or not for consideration) from the Acquiring Person to or on
behalf of holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (ii) a transfer which the Board of Directors otherwise
concludes in good faith (as determined in its discretion by the vote
of a majority of the Directors then in office) is part of a plan,
arrangement or understanding which has as a primary purpose or effect
of avoidance of this Section 7(e), shall become null and void without
any further action, and any holder of such Rights shall thereupon have
no right to exercise such Rights. The Board of Directors (as
determined in its discretion by the vote of a majority of the
Directors then in office) may in appropriate circumstances
18
<PAGE>
waive application of this Section 7(e) and the requirements of Section
4(b) to any transfer by an Acquiring Person in connection with a
transfer or series of transfers which cause an Acquiring Person to
become the Beneficial Owner of voting securities having 5% or less of
the voting power of the Company. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) hereof are
complied with, but shall have no liability to any holder of Rights for
the inability to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder of any
Rights Certificate upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the
appropriate form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such exercise shall have
been completed and signed by the registered holder thereof and the
Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of such
Rights Certificate or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights
19
<PAGE>
Agent for cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates after any retention period required by
the Securities and Exchange Commission has lapsed, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF COMMON STOCK.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Common Stock, the number of shares of Common Stock
that, except as provided in Section 11(a)(iii) and subject to Section
7(e) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights. In the event that there shall not be sufficient
authorized but unissued shares of Common Stock to permit such
exercise, the Company shall use its best efforts to have the
stockholders of the Company take such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exercise
of Rights.
(b) If the Company's Common Stock is 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 shares reserved for
20
<PAGE>
issuance upon the exercise of the Rights to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as practicable following the Distribution Date, a
registration statement under the Securities Act of 1933 (the "Act"),
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the date of the expiration of the
Rights. The Company will also take such action as may be appropriate
under the blue sky laws of the various states. The Company may
temporarily suspend, for a period of time not to exceed ninety (90)
days, the exercisability of the Rights in order to prepare and file
any required registration statement. Upon any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
Common Stock delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
21
<PAGE>
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for shares
of Common Stock upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of the shares of Common Stock
in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for shares of Common Stock in a name
other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no
such tax is due.
Section 10. COMMON STOCK RECORD DATE. Each Person in whose name
any certificate for shares of Common Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Common Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the Common Stock (or other
securities, as the case may be) transfer books of the
22
<PAGE>
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Common Stock transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Common
Stock payable in shares of Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine the outstanding Common Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and
23
<PAGE>
kind of shares of Common Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of Common Stock or
capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person (other than the Company,
any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the
Company, or any entity organized, appointed or
established by the Company for or pursuant to the terms
of any such plan), alone or together with its
Affiliates and Associates, shall become an Acquiring
Person, then, except as provided below and in Section
7(e) hereof, the Purchase Price for each share of
Common Stock, upon the exercise of each Right which has
not theretofore been exercised, shall thereafter be
equal to the result obtained by (1) multiplying
24
<PAGE>
the then current Purchase Price by the then number of
shares of Common Stock for which a Right is then
exercisable and (2) dividing that product by 50% of the
current market price (determined pursuant to Section
11(d) hereof) per share of Common Stock as of the Stock
Acquisition Date in question (unless such Purchase
Price would be higher than the Purchase Price under
Section 7(b), as adjusted without regard to this
Section 11(a)(ii)); PROVIDED, HOWEVER, that if the
transaction that would otherwise give rise to the
foregoing adjustment also constitutes an event
described in Section 13(a), then only the provisions of
Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing shares of Common Stock
in accordance with Section 11(a)(ii) hereof, the
Company's Board of Directors may, if the Board of
Directors determines in its discretion (as evidenced by
the vote of a majority of the Directors then in office)
that such action is necessary or appropriate and not
contrary to the interests of holders of Rights, elect
to issue or pay, upon the exercise of the Rights, cash
(including an offset against the Purchase Price),
property, shares of Common Stock, other securities or
any combination thereof having an aggregate value equal
to the value of the shares of Common Stock which
25
<PAGE>
otherwise would have been issuable pursuant to Section
11(a)(ii), which value shall be determined by a
nationally recognized investment banking firm selected
by the Company's Board of Directors (as determined by
the Board in its discretion by the vote of a majority
of the Directors then in office). For purposes of the
preceding sentence, the value of any preferred stock
which the Board of Directors determines to be a "common
stock equivalent" shall be deemed to have the same
value as the Common Stock. Any such election by the
Board of Directors must be made and publicly announced
within 90 days of the relevant Stock Acquisition Date.
Following the occurrence of an event described in
Section 11(a)(ii), the Board of Directors may (as
determined in its discretion by the vote of a majority
of the Directors then in office) suspend the
exercisability of the Rights for a period of up to 90
days following the occurrence of such event to the
extent that the Board of Directors has not determined
whether to exercise its rights of election under this
paragraph (a)(iii). In the event of any such
suspension, the Company shall issue a public
announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is
no longer in effect.
26
<PAGE>
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of Common
Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Common Stock (or securities convertible into Common Stock) at a price
per share of Common Stock (or having a conversion price per share of
Common Stock, if a security convertible into Common Stock) less than
the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for subscription
or purchase (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the
number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible). In case such subscription
price may be paid in a consideration part or all of which shall be in
a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors (as
27
<PAGE>
evidenced by the vote of a majority of the Directors then in office)
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Shares of
Common 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 in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per
share of Common Stock on such record date, less the fair market value,
as determined in good faith by the
28
<PAGE>
Board of Directors (as evidenced by the vote of a majority of the
Directors then in office) whose determination shall be described in a
statement filed with the Rights Agent, of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Common Stock
and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of Common
Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not
so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been
fixed.
(d) For the purpose of any computation hereunder, the
"current market price" 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 for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; PROVIDED,
HOWEVER, that in the event that the current market price per share of
the Common Stock is determined during a period 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 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 expiration of
the thirty (30) Trading Day period after the ex-dividend date for such
dividend or
29
<PAGE>
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market
price" 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, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the 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 sale
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
("NASDAQ") National Market 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. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on
such date, as determined in good faith by the
30
<PAGE>
Board of Directors (as evidenced by the vote of a majority of the
Directors then in office), shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange
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, a Business Day. If the Common Stock is not publicly held or
not so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board of
Directors (as evidenced by the vote of a majority of the Directors
then in office) whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; PROVIDED, HOWEVER, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment,
or (ii) the Expiration Date.
31
<PAGE>
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Common Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price,
the number of shares of Common Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b)
and (c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of shares (calculated to the
nearest ten-thousandth) of Common Stock obtained by (i) multiplying
(x) the number of shares covered by the Right immediately prior to
this adjustment, by (y) the Purchase Price in effect immediately prior
to such
32
<PAGE>
adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Common
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to the 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 Rights Certificates
have been issued, shall be at least ten (10) days later than the date
of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights
33
<PAGE>
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner 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 Rights Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Common Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of shares which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if
any, of the shares of Common 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
34
<PAGE>
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the shares of Common Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board of
Directors shall determine in its discretion (as evidenced by the vote
of a majority of the Directors then in office) to be advisable in
order that any (i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at less
than the current market price, (iii) issuance wholly for cash of
shares of
35
<PAGE>
Common Stock or securities which by their terms are convertible into
or exchangeable for shares of Common Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Common
Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with,
(ii) merge with or into, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any
other Person if at the time of or immediately after such
consolidation, merger or sale (x) there are any rights, warrants or
other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) there are not sufficient
unissued, unreserved shares of Common Stock of the Company to permit
the exercise in full of the Rights (except to the extent cash,
property, or other securities have been substituted pursuant to
Section 11(a)(iii)).
(o) The Company covenants and agrees that, after the
Stock Acquisition Date, it will not, except as permitted by Section
23, 24 or 27 hereof, take (or permit any Subsidiary to take) any
action the purpose or effect
36
<PAGE>
of which is to diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a) (ii)
shall only result in the loss of rights under Section 11(a) (ii) to
the extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Rights Agreement, including the
rights represented by Section 13.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such certificate, and (c) mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person, and the Company shall not be
the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and,
37
<PAGE>
in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or
any Subsidiary of the Company), then, and in each such case, proper
provision shall be made so that: (i) following the Distribution Date,
each holder of a Right, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable
shares of Common Stock of the Principal Party (as hereinafter
defined), free and clear of liens, rights of call or first refusal,
encumbrances or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the
then number of shares of Common Stock for which a Right is then
exercisable (without giving effect to the occurrence, if any, of any
transaction described in Section 11(a)(ii) hereof) and (2) dividing
that product by 50% of the current market price (determined pursuant
to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall thereafter
38
<PAGE>
be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall
apply to such Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) 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 possible, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
(x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are
so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in
(z) of the first sentence in Section 13(a), the Person
that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or transactions;
39
<PAGE>
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person, the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; (2) 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, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest
aggregate market value; and (3) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules
set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party
shall have a sufficient number of authorized shares of its Common
Stock which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and
40
<PAGE>
such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable after the date of any consolidation, merger or
sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will:
(i) prepare and file a registration statement
under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on
an appropriate form, and will use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the
Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise
of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party
and each of its Affiliates which comply in all material
respects with the requirements for registration on Form
10 under the Exchange Act.
41
<PAGE>
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise
Rights and adjustments under Section 11(a)(ii) and shall survive any
exercise thereof.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable The
closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if
42
<PAGE>
the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted sale 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 NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors (as evidenced by the vote of a
majority of the Directors then in office). If on any such date no
such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of
Directors (as evidenced by the vote of a majority of the Directors
then in office) shall be used.
(b) 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 may
pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share of Common Stock.
For purposes of this Section 14(b), the current market value of a
share of Common Stock shall be the closing sale price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
43
<PAGE>
(c) Following the occurrence of an Acquisition Event,
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 may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock.
For purposes of this Section 14(c), the current market value of one
(1) share of Common Stock shall be the closing sale price of a share
of Common Stock (as determined pursuant to Section 11(d) hereof) for
the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the
Rights expressly waives such holder's right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may in such holder's own behalf and for
such holder's own benefit, enforce, and may institute and maintain any suit,
action or
44
<PAGE>
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any
45
<PAGE>
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and
46
<PAGE>
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without 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 acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly
or indirectly.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement
in reliance upon any Rights 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, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor
47
<PAGE>
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; PROVIDED, HOWEVER, that
such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases
48
<PAGE>
such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it
in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of "current market
price") be proved or established by the Company prior to taking or
suffering 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 Vice Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or
49
<PAGE>
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment 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); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any shares of Common Stock to be
50
<PAGE>
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) 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, any Vice Chairman of the
Board, the Chief Executive Officer, the President, any Vice President,
the Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights
51
<PAGE>
Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, or omission,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, or omission,
default, neglect or misconduct; PROVIDED, HOWEVER, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties 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.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
52
<PAGE>
the case may be, and to each transfer agent of the Common Stock, by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of Minnesota or New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of Minnesota or New York), in good standing, having a
principal office in the States of Minnesota or New York, which is authorized
under such laws to exercise 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
$250,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any
53
<PAGE>
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, the Company may,
if deemed necessary or appropriate by the Board, issue Rights Certificates in
connection with the sale of shares of Common Stock following the Distribution
Date.
Section 23. REDEMPTION AND TERMINATION.
(a)(i) Subject to the provisions of Section 24 and
27, the Board of Directors may, at its option, at any time prior to
5:00 P.M., Minneapolis, Minnesota time, on the earlier of (i) the
tenth Business Day following the related Stock Acquisition Date, or
(ii) the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar
54
<PAGE>
transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
(ii) In addition, the Board of Directors may redeem
all, but not less than all than all, of the then outstanding Rights at
the Redemption Price following the occurrence of a Stock Acquisition
Date but prior to any event described in Section 13(a) either (x) if
each of the following shall have occurred and remain in effect: (1) a
Person who is an Acquiring Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in a transaction, or
series of transactions, such that such Person is thereafter a
Beneficial Owner of voting securities have 5% or less of the voting
power of the Company and (2) there are no other Persons, immediately
following the occurrence of the event described in clause (1), who are
Acquiring Persons or (y) in connection with any event specified in
Section 13(a), not involving an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
(b) In the case of a redemption permitted under
Section 23(a), immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within ten Business
Days after the action of the Board of Directors ordering any
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the
55
<PAGE>
holders of the then outstanding Rights by mailing such notice to the
Rights Agent and to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. 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.
Section 24. EXCHANGE
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) 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 "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Stock for
or pursuant to the terms of any such plan or any trust agreement
entered into by the Company to secure benefits payable under any
employee benefit plan of the Company or any
56
<PAGE>
Subsidiary of the Company), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of
Common Stock representing 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant
to subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to all of
the holders of the then outstanding Rights at their last address as
they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any
partial exchange, the number and kind of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on
the number of Rights being exchanged (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) and the
number of Rights held by each holder.
57
<PAGE>
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding, or authorized but unissued,
to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exchange of the Rights.
Section 25. NOTICE OF CERTAIN EVENTS. In case the Company shall
propose, at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(b) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (d) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, or (e) 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
Rights Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is
58
<PAGE>
to take place and the date of participation therein by the holders of the shares
of Common Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least
twenty (20) days prior to the record date for determining holders of the shares
of Common Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock whichever shall be the earlier.
In case of the occurrence of the event set forth in Section 11(a)(ii)
of this Agreement, (i) the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Common Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Norstan, Inc.
605 North Highway 169
Plymouth, Minnesota 55441
Attention: Chief Executive Officer
59
<PAGE>
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
P.O. Box 738
South St. Paul, Minnesota 55075-0738
Attention: Corporate Agency Division
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company and the Rights
Agent shall from time to time, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates (or,
prior to the Distribution Date, the associated Common Stock certificates) in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to extend the period for redemption provided in Section
23 or the Final Expiration Date, notwithstanding anything to the contrary
provided in clause (v) hereof, (iv) prior to the Distribution Date, to change or
supplement any of the provisions hereunder which the Company may deem necessary
or desirable to effectuate the purposes of this Agreement or (v) following the
Distribution Date, to change or supplement any of the provisions hereunder in
any manner which the Company may deem
60
<PAGE>
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); PROVIDED, HOWEVER, that this Agreement
shall not be supplemented or amended in any way following the Distribution Date
unless such amendment is approved by a majority of the Board of Directors (as
determined in its discretion by the vote of a majority of the Directors then in
office) whose determination shall be final. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment unless the Rights Agent
shall have determined in good faith that such supplement or amendment would
adversely affect its interests under this Agreement. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the 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 Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
61
<PAGE>
Section 30. ADMINISTRATION OF 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 the Company or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to interpret the Agreement and to make
all determinations deemed necessary or advisable for the administration of this
Agreement. All such acts, interpretations and determinations done or made by
the Board in good faith shall be final, conclusive and binding on the Company,
the Rights Agent and the holders of the Rights. Accordingly, the Board shall
not be liable to the holders of Rights Certificates or any other party for any
determination made, action taken, or action omitted to be taken pursuant to the
terms of this Agreement, if such determination, action or omitted action was
made or taken in good faith.
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement or the Rights
to the contrary, if any such term, provision, covenant, or restriction is held
by such court or authority to be invalid, void, or unenforceable and the Board
of Directors determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the close of business on the 15th calendar
day following the date of such determination.
62
<PAGE>
Section 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NORSTAN, INC.
By /s/ Ken MacKenzie
---------------------------------
Its EVP & CFO
-----------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Lisa Dornburg
---------------------------------
Its Officer
-----------------------------
63
<PAGE>
Exhibit A
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER APRIL 1, 2008 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT REFERRED TO HEREIN. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.](1)
Rights Certificate
NORSTAN, INC.
This certifies that __________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 17, 1988, and as subsequently amended and
restated in its entirety as of April 1, 1998,
- ----------------
(1)The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE>
(as so amended and restated, the "Rights Agreement"), between Norstan, Inc., a
Minnesota corporation (the "Company"), and Norwest Bank Minnesota, National
Association (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (Minneapolis, Minnesota time) on April 1, 2008 at the office
or offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one fully paid, non-assessable share of Common Stock (the "Common
Stock") of the Company, at a purchase price of $200 per share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of April 1, 1998, based on the
Common Stock as constituted at such date.
If the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
transferees of any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances, transferees of persons who became an Acquiring Person,
Affiliate or Associate following such transfer, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events.
A-2
<PAGE>
This Rights 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 Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised (other than pursuant
to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
A-3
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-4
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of _______________, 19__
ATTEST: NORSTAN, INC.
By
- ------------------------- ---------------------------
Secretary Title:
Countersigned:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By
-----------------------
Authorized Signature
A-5
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto ________________________
--------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
or
[ ] is not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement); and
<PAGE>
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ____________, 19__
-------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: NORSTAN, INC.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of Common
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 shares be issued in the name of:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please insert social security
or other identifying number)
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to Section 11(a)(ii) of the Rights
Agreement shall be returned to the undersigned unless such person requests that
the Rights Certificate be registered in the name of and delivered to: (complete
only if Rights Certificate is to be registered in a name other than the
undersigned)
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please insert social security
or other identifying number)
<PAGE>
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
or
[ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ________________, 19__
-------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Exercise must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
SUMMARY OF SHAREHOLDERS' RIGHTS PLAN
On May 17, 1988, the Board of Directors of Norstan, Inc. (the "Company")
declared a dividend of one Right for each outstanding share of Common Stock of
the Company to the stockholders of record at the close of business on June 13,
1988 (the "Record Date"). Effective as of April 1, 1998, the Company amended
and restated the Agreement in its entirety to (i) provide for an extension of
the term of the Agreement from May 17, 1998 to April 1, 2008; (ii) amend the
definition of "Acquiring Person" to exclude therefrom certain Persons who may
inadvertently have become Acquiring Persons as a result of various unrelated
events; (iii) reduce certain triggering thresholds set forth in the Agreement
for the determination of an Acquiring Person; (iv) establish a Distribution Date
that is ten (10) Business Days, rather than ten (10) calendar days, subsequent
to a triggering event; (v) provide for the elimination of certain self-dealing
requirements prior to the time at which certain "Flip-In" provisions of the
Agreement may be triggered; (vi) increase the adjusted Purchase Price following
a "Flip-In" event from 25% of the then current market price of the Common Stock
to 50% of the then current market price of the Common Stock; (vii) provide for
an exchange mechanism for each Right under certain instances; (viii) eliminate
the "Continuing Director" concept throughout the Agreement; and (ix) increase
the Purchase Price to $200.
Except as set forth below, each Right entitles the registered holder to
purchase from the Company one share of Common Stock, par value $.10 per share
(the "Common Stock"), at a price of $200 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, as amended and restated on April 1, 1998 (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A., as Rights
Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten (10)
Business Days following (i) a public announcement that, without the prior
consent of the Board of Directors, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of voting securities having 15% or more of the voting power
of the Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a
public announcement of an intention to make) a tender offer or exchange offer
which would result in any person or group and related persons having beneficial
ownership of voting securities having 15% or more of the voting power of the
Company without the prior consent of the Board of Directors, (the earlier of
such dates being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. The Rights Agreement provides
that, until the Distribution Date, the Rights will be transferred with and only
with Common Stock certificates. From as soon as practicable after the Record
Date and until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the
<PAGE>
Record Date upon transfer or new issuance of the Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on April 1, 2008 unless earlier redeemed by the Company as described
below.
In the event that, at any time following the Distribution Date, any person
becomes the beneficial owner of 15% or more of the then outstanding shares of
Common Stock (an "Acquiring Person"), the Purchase Price (except with respect to
Rights held by the Acquiring Person, its Affiliates and Associates and certain
transferees of the Acquiring Person or such Affiliates or Associates) shall
(subject to possible suspensions provided for in the Rights Agreement)
thereafter equal to the result obtained by (1) multiplying the then current
Purchase Price by the then number of shares of Common Stock for which a Right is
then exercisable and (2) dividing that product by 50% of the current market
price per share of Common Stock as of the Stock Acquisition Date in question
(such right being called the "Flip-In Right"). A majority of the Board of
Directors (as determined in its discretion by the vote of a majority of the
Directors then in office) may elect to distribute cash, other securities or
other property in lieu of Common Stock to the Right holders upon the exercise of
their Rights following any such event. In the event that, at any time following
the Distribution Date, the Company is acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or in
the event that 50% or more of its assets or earning power is sold, proper
provision shall be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
of the Right, common stock of the acquiring entity which has a value of two
times the Purchase Price of the Right (such right being called the "Flip-Over
Right"). The holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises the Flip-In Right. Upon the occurrence of
any of the events giving rise to the exercisability of the Flip-In Right, any
Rights that are or were at any time owned by an Acquiring Person engaging in any
of such transactions or receiving the benefits thereof on or after the time the
Acquiring Person became such shall become null and void.
For example, at a Purchase Price of $200 per Right, and assuming a current
market price of $24.00 per share, if (i) any person becomes an Acquiring Person
or (ii) the Company is the surviving corporation in a merger with an Acquiring
Person in which the Common Stock is not converted or exchanged, each Right other
than a Right owned by the Acquiring Person, would entitle its holder to purchase
a share of the Company's Common Stock for $12.00.
B-2
<PAGE>
If, following the Distribution Date, there occurs (i) a business
combination with another entity in which the Company's Common Stock is converted
or exchanged, or (ii) a sale of 50% or more of the Company's assets or earning
power, each Right would entitle its holder to purchase $50 worth of the
acquiring entity's stock for $25.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth Business Day
following a Stock Acquisition Date or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"), which redemption shall be effective upon the
action of the Board of Directors. Additionally, the Board of Directors (as
determined in its discretion by the vote of a majority of the Directors then in
office) may thereafter redeem the then outstanding Rights in whole, but not in
part, at the Redemption Price provided that (a) such redemption is incidental to
a merger or other business combination transaction or series of transactions
involving the Company but not involving an Acquiring Person or any person who
was an Acquiring Person, or (b) such redemption follows an event giving rise to,
and the expiration of the exercise period for, the Flip-In Right, and at the
time of such redemption, no Acquiring Person beneficially owns 15% or more of
the voting power of the Company. The Company's right to redeem the Rights shall
be reinstated if an Acquiring Person reduces his beneficial ownership to less
than 5% of the then outstanding shares of Common Stock. The redemption of
Rights described in the two preceding sentences shall be effective only as of
such time when the Flip-In Right is not exercisable, and in any event, only
after 10 business days prior notice. Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Additionally, the Board of Directors (as evidenced by the vote of a
majority of the Directors then in office) may also, at any time from and after a
Stock Acquisition Date, exchange one share of Common Stock for each Right held
by a stockholder other than the
B-3
<PAGE>
Acquiring Person during such time as the Acquiring Person holds any amount of
Common Stock between 15% and 50% of the then outstanding shares.
Until a Right is exercised, it will not entitle the holder to any rights as
a stockholder of the Company (other than those as an existing stockholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to an amendment to the Company's Registration
Statement on Form 8-A/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.
B-4
