<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SOFTWARE SPECTRUM, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1878002
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
2140 MERRITT DRIVE 75-1878002
GARLAND, TEXAS 75041
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A(c)(1), please check the
following box: [ ]
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2), please check the following box: [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
<S> <C>
NONE NONE
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
PREFERRED SHARE PURCHASE RIGHTS
(Title of Class)
<PAGE> 2
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On December 13, 1996, the Board of Directors of SOFTWARE SPECTRUM,
INC. (the "Company") declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of Common Stock, $.01 par
value (the "Common Stock"), of the Company. The distribution is payable on
December 31, 1996 to the shareholders of record on December 16, 1996. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of the Company's Series A Junior Participating
Preferred Stock (the "Preferred Stock") at a price of $ 150.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and KeyCorp Shareholder
Services, Inc., as Rights Agent (the "Rights Agent"). A Summary of Right to
Purchase Preferred Stock will be sent to each recordholder of Common Stock as
soon as practicable on or after December 16, 1996 (the "Summary of Rights").
Until the earlier to occur of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") acquired beneficial ownership of 20% or more of the
outstanding shares of the Common Stock (the "Share Acquisition Date") or (ii)
the tenth business day (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or group of affiliated
or associated persons becomes an Acquiring Person) after the commencement of,
or announcement of an intention to commence, a tender offer or exchange offer
the consummation which would result in any person becoming an Acquiring Person
(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 December 16, 1996, by such Common Stock certificate with a
copy of a Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after December 16, 1996, 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 of the Common Stock certificates outstanding as
of December 16, 1996, even without a copy of the Summary of Rights attached
thereto, 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 ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on December 31, 2006, (the "Final Expiration Date") unless
the Final Expiration Date is extended or unless earlier redeemed or exchanged
by the Company, in each case, as described below.
<PAGE> 3
Each share of Preferred Stock purchasable upon exercise of the Rights
will have a minimum preferential quarterly dividend rate of $ 10.00 per share,
but will be entitled to an aggregate dividend of 1,000 times the dividend
declared on one share of the Common Stock. In the event of liquidation, the
holders of the Preferred Stock will receive a preferential liquidation payment
of $1,000 per share, but will be entitled to receive an aggregate liquidation
payment equal to 1,000 times the payment made on one share of Common Stock.
Each share of Preferred Stock will have 1,000 votes voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount received per
one share of Common Stock. The Rights are protected by customary anti-dilution
provisions. Because of the nature of the Preferred Stock dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
The Purchase Price payable, and the number of shares of the Preferred
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
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for shares of the Preferred Stock or
convertible securities at less than the then-current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends out of earnings or retained earnings at a rate not in excess of 125%
of the rate of the last cash dividend theretofore paid or dividends payable in
the Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations as of the Common Stock occurring,
in any such case, prior to the Distribution Date.
In the event that the Company is acquired in a merger or other
business combination transaction or that 50% or more of its assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction would have a market value of two times
the exercise price of the Right. In the event that any person or group of
affiliated or associated person becomes an Acquiring Person, proper provision
will be made so that each holder of a Right, other than Rights that were or are
beneficially owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that
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<PAGE> 4
number of shares of the Common Stock having a market value of two times the
exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void) in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-thousandth of a Preferred Share per Right (subject to
adjustment).
At any time prior to 5:00 P.M. Dallas, Texas time on the earliest of
(i) the Share Acquisition Date, (ii) the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the commencement of, or announcement of an intention to commence,
a tender offer or exchange offer the consummation of which would result in any
person becoming an Acquiring Person, or (iii) the Final Expiration Date, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors of the Company
electing to redeem or exchange the Rights, the Company shall make announcement
thereof, and upon such election, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price, or the shares of Common Stock or Preferred Stock exchangeable
for the Rights, as applicable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement between the Company and the Rights
Agent specifying the terms of the Rights, which includes the Form of Rights
Certificate and a description of the Preferred Stock is included as Exhibit 1
to this Registration Statement and is incorporated herein by reference. The
foregoing summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement.
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<PAGE> 5
ITEM 2. EXHIBITS.
99.1 Rights Agreement, dated as of December 13, 1996, by
and between Software Spectrum, Inc. and KeyCorp
Shareholder Services, Inc., as Rights Agent, which
includes the Form of Rights Certificate and a
description of the Preferred Stock. Pursuant to the
Rights Agreement, Rights Certificates will not be
mailed until after the Distribution Date (as that
term is defined in the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: December 16, 1996
SOFTWARE SPECTRUM, INC.
(Registrant)
By:/s/ JUDY O. SIMS
-------------------------------------------
Judy O. Sims, Chief Executive Officer
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<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Page
- -------------- ----------- ----
<S> <C> <C>
99.1 Rights Agreement, dated as of December 13, 1996, by and
between Software Spectrum, Inc. and KeyCorp Shareholder
Services, Inc., as Rights Agent, which includes the Form of
Rights Certificate and a description of the Preferred Stock.
Pursuant to the Rights Agreement, Rights Certificates will not
be mailed until after the Distribution Date (as that term is
defined in the Rights Agreement).
</TABLE>
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<PAGE> 1
EXHIBIT 99.1
RIGHTS AGREEMENT
<PAGE> 2
SOFTWARE SPECTRUM, INC.
AND
KEYCORP SHAREHOLDER SERVICES, INC., RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF
DECEMBER 13, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . 3
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . 3
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . 5
Section 5. Countersignature and Registration . . . . . . . . . . . . . 5
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7. Exercise of Rights: Purchase Price; Expiration Date of Rights 6
Section 8. Cancellation and Destruction of Right Certificates . . . . . 7
Section 9. Reservation and Availability of Shares of Preferred Stock . 7
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . 8
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . 15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . 17
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . 18
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . 19
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . 19
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . 19
Section 19. Merger or Consolidation or Change of Name of Rights Agent . 20
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . 20
</TABLE>
(i)
<PAGE> 4
<TABLE>
<S> <C>
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . 22
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . 23
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . 25
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . 27
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . . 27
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 27
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
Exhibit A
Statement of Designation
Exhibit B
Form of Right Certificate
Form of Assignment
Form of Election to Purchase
Exhibit C
Summary of Rights to Purchase Preferred Stock
(ii)
<PAGE> 5
RIGHTS AGREEMENT
This Agreement, dated as of December 13, 1996, between SOFTWARE
SPECTRUM, INC., a Texas corporation (the "Company"), and KEYCORP SHAREHOLDER
SERVICES, INC., a Delaware corporation (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend distribution (the "Distribution") of one preferred share
purchase right (a "Right") for each outstanding share of the Common Stock, $.01
par value, of the Company outstanding on December 16, 1996 and has authorized
the issuance of one Right in respect of each share of Common Stock of the
Company issued between December 16, 1996 and the earlier of the Distribution
Date, the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined) and under certain other circumstances, each Right
representing the right to purchase one-thousandth (1/1,000th) of one share of
Series A Junior Participating Preferred Stock of the Company having the rights
and preferences set forth in the form of Statement of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
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, shall be the Beneficial Owner (as such term is
hereinafter defined) of 20% or more of the shares of Common Stock of the
Company then outstanding, but shall not include any employee benefit
plan of the Company or of any subsidiary of the Company, or any entity
organized, appointed or established pursuant to the terms of any such
plan, or the Company or any subsidiary of the Company; provided,
however, that if the Board of Directors of the Company determines in
good faith that a Person that would otherwise be an "Acquiring Person"
has become such inadvertently (including, without limitation, because
(i) such Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an "Acquiring
Person," or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the Company,
and if such Person as promptly as practicable divested or divests itself
of Beneficial Ownership of a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," then such
Person shall not be deemed to be or have become an "Acquiring Person"
for any purposes of this Agreement.
<PAGE> 6
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") as in effect on December 13, 1996.
(c) 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 to acquire (whether
such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise, provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender 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,
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 then reportable 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 with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (B) of subparagraph (ii)
of this paragraph (c)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding", when used with
reference to a Person's Beneficial Ownership of Securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
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<PAGE> 7
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
or the State of Texas are authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean 5:00
p.m., Dallas, Texas time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Dallas, Texas time,
on the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the Common Stock, $.01 par value (or as such par value may be
changed from time to time), of the Company and, when used with reference
to any Person other than the Company, shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or,
if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(g) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(h) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(i) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock of the Company having the rights and
preferences set forth in the form of Statement of Designation attached
hereto as Exhibit A.
(j) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(l) "Subsidiary" of a Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 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.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the tenth day after the Share Acquisition Date or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time that any Person becomes an Acquiring Person)
after the date of the commencement of, or first public
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<PAGE> 8
announcement of the intent to commence, by any Person (other than the Company,
any wholly-owned Subsidiary of the Company, or any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan), a tender or
exchange offer the consummation of which would result in any Person becoming an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of the dates in
subsections (i) and (ii) hereof 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 the Common Stock
registered in the names of the holders thereof (which certificates shall be
deemed also to be Right Certificates) and not by separate Right Certificates,
and (y) the right to receive Right Certificates will be transferable only in
connection with the transfer of the Common Stock. As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send), by first class, insured, 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, a Right Certificate, in substantially the form of Exhibit B hereto,
evidencing one Right for each share of the Common Stock so held. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On December 16, 1996 or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C hereto (the "Summary of
Rights"), by first class, postage-prepaid mail, to each record holder of the
Common Stock as of the close of business on December 16, 1996, at the address
of such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of December 16, 1996, until
the Distribution Date, the Rights will be evidenced by such certificates for
the Common Stock registered in the names of the holders of the Common Stock
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any of the certificates for the
Common Stock outstanding on December 16, 1996, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the Common Stock represented thereby.
(c) Certificates for the Common Stock issued after December 16, 1996
but prior to the earliest of the Distribution Date or the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between SOFTWARE
SPECTRUM, INC. and KeyCorp Shareholder Services, Inc., dated as of
December 13, 1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of SOFTWARE SPECTRUM, INC. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. KeyCorp Shareholder
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<PAGE> 9
Services, Inc., will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, 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. In the event that the Company purchases or acquires any shares
of Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such shares of Common Stock shall be deemed cancelled
and retired so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotations system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 22 hereof, the Right
Certificates, in each case, on their face shall entitle the holders thereof to
purchase such number of shares of the Preferred 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.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company in the manner provided in the By-
Laws of the Company for Common Stock Certificates. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, issued and delivered with the same force and
effect as though the person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal offices, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the
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<PAGE> 10
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and prior to the close of business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or
Right Certificates (other than Right Certificates representing Rights that have
become void pursuant to paragraph (a)(ii) of Section 11 hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of the
Preferred Stock as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Thereupon
the Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in the case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights: Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the offices of the Rights Agent in
Dallas, Texas, together with payment of the Purchase Price for each one-
thousandth of one share of the Preferred Stock as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on December
31, 2006 (the "Final Expiration Date"), or (ii) the time at which the Rights
are redeemed as provided in Section 23 ("Redemption Date"), or (iii) the time
at which such Rights are exchanged as provided for in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of one share of
the Preferred Stock pursuant to the exercise of a Right shall initially be $
150.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof, and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
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(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for shares to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by certified check
or cashier's check payable to the order of the Company, the Rights Agent shall
thereupon (i) (A) promptly requisition from any transfer agent of the Preferred
Stock of the Company certificates for the number of shares of the Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one one-
thousandths of a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (ii)
when appropriate, promptly requisition from the Company the amount of cash to
be paid in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts,
promptly cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Stock or its authorized
and issued Preferred Stock held in its treasury, the number of shares of the
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7 hereof.
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So long as the Preferred Stock issuable upon the exercise of Rights may
be listed on any national securities exchange or automated quotations system,
the Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to be
listed or admitted for trading on such exchange or automated quotations system
upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of the Preferred Stock delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such (subject to payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable shares.
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 Right Certificates or of
any shares of the Preferred Stock upon the exercise of Rights. The Company
shall not, however, be required (a) to pay any transfer tax which may be
payable in respect of any transfer involved in the transfer or delivery of
Right Certificates or the issuance or delivery of certificates for the
Preferred Stock in a name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or (b) to issue or
deliver any certificates for shares of the Preferred Stock upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for shares of the Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
business day on which the Preferred Stock transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder 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 of Shares or Number of
Rights. The Purchase Price, the number of shares of Preferred Stock covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine
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the outstanding Preferred Stock into a smaller number of shares
of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the Preferred 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), the Purchase
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, 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
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of Preferred Stock issuable upon exercise of one
Right. If an event occurs which would require an adjustment
under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of a
Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of shares
of Preferred Stock, such number of shares of Common Stock as
shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable
and dividing that product by (y) 50% of the then current per
share market price of the Company's Common Stock (determined
pursuant to Section 11(d) hereof) on the date of the occurrence
of such event; provided, however, that if the transaction that
would otherwise give rise to the adjustment is also subject to
the provisions of Section 13, then only the provisions of Section
13 shall apply and no adjustment shall be made pursuant to this
Section 11 (a)(ii). In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights
that are or were acquired or beneficially owned by any Acquiring
Person (or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter have
no right to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued pursuant to
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Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person or any Associate or
Affiliate whose Rights would be void pursuant to the preceding
sentence shall be cancelled.
(iii) In the event that there shall not be sufficient
Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
additional Common Stock for issuance upon exercise of the Rights.
In the event the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize
such additional Common Stock, the Company shall substitute, for
each share of Common Stock that would otherwise be issuable upon
exercise of a Right, a number of shares of Preferred Stock or
fractions thereof such that the current per share market price of
one share of Preferred Stock multiplied by such number or
fraction is equal to the current per share market price of one
share of Common Stock as of the date of issuance of such shares
of Preferred stock or fractions thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or
shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or equivalent preferred stock (or
having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the current per
share market price of the Preferred Stock (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or equivalent preferred stock so to be offered
(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 Preferred
Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate
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<PAGE> 15
par value of the shares of Preferred Stock issuable upon exercise of one
Right. In case such subscription price may be paid in consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and 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 the making
of a distribution to all holders of Preferred 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
or assets (other than (i) a regular periodic cash dividend the record
date for which occurs at a time when there is no Acquiring Person or
(ii) a regular periodic cash dividend, the record date for which occurs
at a time when there is an Acquiring Person, at a rate not in excess of
125% of the rate of the last cash dividend theretofore paid or (iii) a
dividend payable in Preferred 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 per share market
price of the Preferred Stock (as defined in Section 11(d)) on such
record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred
Stock and the denominator of which shall be such current per share
market price of the Preferred Stock; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of Preferred Stock
issuable upon exercise of one Right. 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 again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price per share" of any security (a "Security") on any
date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current market price per share of
the Security is determined during the period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible
into shares of such Security, or (B) any sub-division, combination or
reclassification of such Security, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
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<PAGE> 16
distribution, or the record date for such sub-division, combination or
reclassification, then, and in each such case, the current market price
per share shall be appropriately 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 Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if on any such
date the Security is not quoted by such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for Common Stock in clause (i) of
this Section 11(d). If the Preferred Stock is not publicly traded or if
the current market price per share of Preferred Stock cannot be
determined in the manner provided above, the "current market price" per
share of Preferred Stock shall be conclusively deemed to be the current
market price per share of Common Stock (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "current market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least
1% in the Purchase Price; provided, however, that any adjustments which
by reason of this section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent
or to the nearest ten-thousandth of a share of Common Stock or other
share (other than Preferred Stock) or one-millionth of a share of
Preferred 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 (A) three years from the date of
the transaction which mandates such adjustment or (B) the date of the
expiration of the right to exercise any Rights.
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<PAGE> 17
(f) If as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other
than shares of the Preferred 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 with respect to the shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the shares of the Preferred
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 one
one-thousandths of a share of the Preferred 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 per one one-thousandths of a share of Preferred Stock, that number
of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-thousandths of
a share of the Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred 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 one-millionth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after the 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 to be made and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record
date Right
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<PAGE> 18
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 Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of the Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandth of a share of Preferred Stock and the
number of one one-thousandths of a share which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par
value, if any, of the shares of the Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable
shares of such Preferred 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 issuing to the holder of any Right
exercised after such record date the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of the Preferred 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 it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly for
cash of any shares of the Preferred Stock at less than the current
market price, issuance wholly for cash of any shares of the Preferred
Stock or securities which by their terms are convertible into or
exchangeable for Preferred Stock, dividends on the Preferred Stock
payable in Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in
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<PAGE> 19
this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this
Agreement and Prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in Common Stock
or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
Common Stock) into a greater or lesser number of shares of Common Stock,
then in any such case (i) the number of one one-thousandths of a share
of Preferred Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one one-
thousandths of a share of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number
of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding
immediately after such event, and (ii) each share of Common Stock
outstanding immediately after such event shall have issued with respect
to it that number of Rights which each share of Common Stock outstanding
immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an event
occurs which would require an adjustment under Section 11(a)(ii) and
this Section 11(n), the adjustments provided for in this Section 11(n)
shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).
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
and the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Distribution Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person, (y) any Person shall consolidate with or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) 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 other
Person (other than the Company or one or more of its wholly-owned
subsidiaries), then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at the then-
current Purchase Price multiplied by the
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number of one one-thousandths of a share of Preferred Stock for which a right
is then exercisable, in accordance with the terms of this Agreement and in lieu
of shares of Preferred Stock, such number of shares of validly issued, fully
paid, non-assessable and freely tradable Common Stock of the Principal Party
(as hereinafter defined) (including the Company as successor thereto or as the
surviving corporation), unencumbered and not subject to any liens,
encumbrances, rights of call or first refusal or other adverse claims, as shall
be equal to the result obtained by (A) multiplying the then current Purchase
Price by the then number of one one-thousandths of share of Preferred Stock for
which a Right is then exercisable and dividing that Product by (B) 50% of the
current market price per share of the Common Stock of such Principal Party
(determined in the manner described in Section 11(d)) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party following the occurrence of such consolidation, merger, sale or transfer;
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
accordance with Section 9) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(1) 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 the merger or
consolidation; and
(2) in the case of any transaction described in (z) of the
first sentence in this Section 13(a), the Person that is
the other party to such transaction or, if more than one,
the Person that is the party receiving the greatest
portion of the assets or earning power transferred
pursuant to such transaction;
provided, however, that in any such case, (x) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding 12-
month period registered under Section 12 of the Securities Exchange Act of
1934, 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; (y) in case such Person is a subsidiary, directly
or indirectly, of more than one Person, the Common Stocks of all 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 of shares held by the public, and (z) 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
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<PAGE> 21
the same Person, the rules set forth in (x) and (y) 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 prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale or transfer of assets mentioned in paragraph (a)
of this Section 13, the Principal Party will;
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Act") with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts (A) to cause such
registration statement to become effective as soon as practicable after
such filing, (B) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the date of expiration of the Rights, and (C) to
similarly comply with applicable state securities laws, and use its best
efforts to list (or continue the listing of) the rights and the
securities purchasable upon exercise of the rights on a national
securities exchange; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 (or any successor form) under the Securities Exchange Act of
1934, as amended.
The Company shall not enter into any transaction of the kind referred to in
this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current market value
of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities
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<PAGE> 22
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 the Rights are not
listed or admitted to trading on-any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported 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 of the Company. If on any such date no such market maker is
making a market in the Rights the fair market value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of shares of Preferred Stock. In lieu of
fractional shares that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a
share of the Preferred Stock. For purposes of this Section 14(b), the current
market value of a share of the Preferred Stock shall be the closing price of a
share of the Preferred Stock (as determined pursuant to the second sentence of
Section 11(d)(i) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as above provided).
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Right 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 Right Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
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<PAGE> 23
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, 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 the Right 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 notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificates 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. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred 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 Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. 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 other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold 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 in the premises.
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<PAGE> 24
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred 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 or
otherwise upon the advice of counsel as set forth in Section 20 hereof. In no
case shall the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the possibility
of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
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 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 that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with the legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
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<PAGE> 25
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking 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 any one of the Chairman of the Board,
the President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of Rights (including any
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23, or 24 hereof, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of the Preferred Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of the Preferred Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Secretary or the 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 or for any delay in acting
while waiting for those instructions.
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<PAGE> 26
(h) The Rights Agent and any shareholder, 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
interested 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 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, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates that the Rights are beneficially owned by an
Acquiring Person or an Affiliate or Associate thereof, the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(k) The Rights Agent shall have no responsibility to the Company, any
holders of Rights or any holders of shares of Preferred Stock or other
securities for interest or earnings on any monies held by the Rights Agent
pursuant to this Agreement, except as otherwise specifically agreed in a
separate writing by the Company and the Rights Agent.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any event or condition hereunder, including, but not
limited to, a Distribution Date, a Redemption Date, any adjustment of the
Purchase Price of the Preferred Stock, the existence of an Acquiring Person or
any other event or condition that may require action by the Rights Agent,
unless the Rights Agent shall be specifically notified in writing of such event
or condition by the Company, and all notices or other instruments required by
this Agreement to be delivered to the Rights Agent must, in order to be
effective, be received by the Rights Agent as specified in Section 26 hereof,
and in the absence of such notice so delivered, the Rights Agent may
conclusively assume no such event or condition exists.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
mail, and to the holders of the Right Certificates by first class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and the Preferred
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
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<PAGE> 27
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation (or an
affiliate of such a corporation) organized and doing business under the laws of
the United States or of the State of Texas or New York (or of any other state
of the United States so long as such corporation is authorized to do business
as a banking institution in the State of Texas or New York), in good standing,
having a principal office in the State of Texas or the State of New York, which
is authorized under such laws to exercise corporate trust powers or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. 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 such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred 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 Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company,
at its option, may issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to 5:00 P.M., Dallas, Texas time, on the
earliest of (x) the Share Acquisition Date, (y) the tenth business day (or such
later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring Person) after the
date of the commencement of, or first public announcement of the intent to
commence, by any Person (other than the Company, any wholly-owned subsidiary of
the Company, or any employee benefit plan of the Company or any Subsidiary of
the Company or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan) a tender offer or exchange offer the consummation of
which would result in any Person becoming an Acquiring Person (including any
such date which is after the date of this Agreement and prior to the issuance
of the Rights), or (z) the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
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<PAGE> 28
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23 and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of
such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights 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. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the repurchase of Common
Stock prior to the Distribution Date.
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 11(a)(ii) 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 shares of Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the voting power
of the shares of 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 paragraph (a) of
this Section 24 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of
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 promptly shall mail a notice of
any such exchange by first class mail to all
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<PAGE> 29
of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the
method by which the exchange of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
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 shares of Common Stock for issuance upon exchange of the
Rights. In the event the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize such
additional shares of Common Stock, the Company shall substitute, for
each share of Common Stock that would otherwise be issuable upon
exchange of a Right, a number of shares of Preferred Stock or fraction
thereof such that the current per share market price of one share of
Preferred Stock multiplied by such number or fraction is equal to the
current per share market price of one share of Common Stock as of the
date of issuance of such shares of Preferred Stock or fraction thereof.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares,
the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise
be issuable an amount in cash equal to the same fraction of the current
market value of a whole share of Common Stock. For purposes of this
paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. In case the Company shall
propose at any time following the Distribution Date (a) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular periodic cash dividend at a rate not in excess of 125% of the rate of
the last cash dividend theretofore paid), or (b) to offer,to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of the Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (c) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred 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, (e) to
effect the liquidation, dissolution or winding up of the Company, or (f) to
declare or pay any dividend on the shares of Common Stock payable
-25-
<PAGE> 30
in shares of Common Stock or to the effect a subdivision, combination or
consolidation of the shares of Common Stock (by reclassification or otherwise
than by payment of dividends in shares of Common Stock), then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26, 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 to take place and the date of participation therein by the holders of the
Common Stock and/or the Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a)
or (b) above at least ten days prior to the record date for determining holders
of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Stock and/or the Preferred Stock, whichever shall be the earlier. In
case the event set forth in Section 11(a)(ii) of this Agreement shall occur,
then, the Company shall as soon as practicable thereafter give to each holder
of a Right, in accordance with Section 26, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Software Spectrum, Inc.
2140 Merritt Drive
Garland, Texas 75041
Attention: Chief Executive Officer
With a copy to:
Don M. Glendenning
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
KeyCorp Shareholder Services, Inc.
1201 Elm Street
Dallas Texas 75270
-26-
<PAGE> 31
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, or (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, or
(iii) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that from and after such time as any Person becomes an Acquiring
Person, this Agreement shall not be changed or supplemented in any manner which
would adversely affect the interests of the holders of Right Certificates in
any way (other than pursuant to clauses (i) and (ii) above). 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.
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 Right Certificates (and, prior to the
Distribution Date, the 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 Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Texas and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
-27-
<PAGE> 32
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective seals to be hereunto affixed and attested,
all as of the day and year first above written.
Attest: SOFTWARE SPECTRUM, INC.
By: By:
------------------------- ----------------------------------
Title: Title:
Attest: KEYCORP SHAREHOLDER SERVICES, INC.
By: By:
------------------------- ----------------------------------
Title: Title:
-28-
<PAGE> 33
EXHIBIT A
STATEMENT OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
SOFTWARE SPECTRUM, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is Software Spectrum, Inc.
2. The following resolution was duly adopted on December 13, 1996 by
the Board of Directors of the Corporation pursuant to Article 2.13 of the Texas
Business Corporation Act and in accordance with Article Four of the
Corporation's Restated Articles of Incorporation, as amended:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Corporation's Restated Articles of Incorporation, as amended (the "Articles of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock of the Corporation and hereby states the designation and number-of
shares, and fixes the relative rights and preferences thereof (in addition to
the provisions set forth in the Articles of Incorporation which are applicable
to the Preferred Stock of all classes and series) as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
I. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
20,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors, provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than that of the shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.
II. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series A Preferred Stock and with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (or as such par value
may be changed from time to time), of the Corporation (the "Common
Stock") and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
last day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A
<PAGE> 34
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $ 10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time on or after the Distribution
Date (as such term is defined in the Rights Agreement dated as of
December 13, 1996 between the Corporation and KeyCorp Shareholder
Services, Inc., as Rights Agent) declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $ 10.00 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated
-2-
<PAGE> 35
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which
record date shall be not more than 60 days prior to the date fixed for
the payment thereof.
III. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time on or after the
Distribution Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Articles of
Incorporation, in any other Statement of Designations creating a series of
Preferred Stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
IV. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section II are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on or make any other distributions
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution
-3-
<PAGE> 36
or winding up) with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section IV, purchase or otherwise acquire such shares at such time and in
such manner.
V. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set forth herein,
in the Articles of Incorporation, or in any other Statement of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
VI. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock-shall
have received $1,000.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, or (2)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock
-4-
<PAGE> 37
in proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VII. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
VIII. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
IX. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to (i) all
other series of the Preferred Stock unless the terms of any such series shall
provide otherwise.
X. Amendment. The Articles of Incorporation shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a single series.
3. The Articles of Incorporation, as amended, of the Corporation is
amended so that the designation and number of shares of the class and series
acted upon in the
-5-
<PAGE> 38
foregoing resolution, and the relative rights and preferences of such class and
series, are as stated in the resolution.
IN WITNESS WHEREOF, this Statement of Designation is executed on behalf
of the Corporation by its Chief Executive Officer this 13th day of December,
1996.
SOFTWARE SPECTRUM, INC.
By:
------------------------------------------
Title:
---------------------------------------
ATTEST:
By:
------------------------------------------
Title:
---------------------------------------
-6-
<PAGE> 39
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- Rights
----------------
NOT EXERCISABLE AFTER December 31, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT, AT THE OPTION OF THE COMPANY,
TO REDEMPTION AT $0.001 PER RIGHT OR TO EXCHANGE, ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
SOFTWARE SPECTRUM, 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 December 13, 1996 (the "Rights Agreement")
between SOFTWARE SPECTRUM, INC., a Texas corporation (the "Company"), and
KEYCORP SHAREHOLDER SERVICES, INC. (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. Dallas, Texas time on December 31,
2006 at the office of the Rights Agent, or its successors as Rights Agent, in
Dallas, Texas, one one-thousandth of one fully paid and non-assessable share of
the Series A Junior Participating Preferred Stock (the "Preferred Stock") of
the Company, at a purchase price of $ 150.00 per one one-thousandth of one
share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-
thousandths of a share of Preferred Stock 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 December 16, 1996, based on the shares of
the Preferred Stock of the Company as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-thousandths of a share of the Preferred Stock which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
<PAGE> 40
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of the Preferred Stock as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may, but are not required to, be (i) redeemed by the
Company at its option at a redemption price of $0.001 per Right or (ii) may be
exchanged by the Company in whole or in part for shares of Preferred Stock or
Common Stock, $.01 par value, of the Company.
No fractional shares of the Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of one share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred 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
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
-2-
<PAGE> 41
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of , 19 .
--------------- ----
ATTEST: SOFTWARE SPECTRUM, INC.
By:
- ----------------------------------- ----------------------------------
Secretary Title:
-------------------------------
Countersigned:
- ----------------------------
By:
--------------------------------
Authorized Signature
-3-
<PAGE> 42
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
----------------------------
Attorney, to transfer the within right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ,
-------------------------- ------
------------------------------
Signature
(Signature must conform in all
respects to the name of holder
as written upon the face of
this Right Certificate,
without alteration or
enlargement or any change
whatsoever.)
-4-
<PAGE> 43
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- --------------------------------------------------------------------------------
(to be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
------------------------------
-5-
<PAGE> 44
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
exercise the Right Certificate.)
TO: SOFTWARE SPECTRUM, INC.
The undersigned hereby irrevocably elects to exercise __________________ Rights
represented by this Right Certificate to purchase the shares of the Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
[Please insert social security or
other identifying number]
---------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
[Please insert social security
or other identifying number]
---------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
Dated: ,
----------------------------- ------
-------------------------------------
Signature
(Signature must conform in all
respects to the name of holder as
written on the face of this Right
Certificate, without alteration or
enlargement or any change
whatsoever.)
-6-
<PAGE> 45
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- --------------------------------------------------------------------------------
(to be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
------------------------------
Signature
-7-
<PAGE> 46
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On December 13, 1996, the Board of Directors of SOFTWARE SPECTRUM, INC.
(the "Company") declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of Common Stock, $.01 par
value (the "Common Stock"), of the Company. The distribution is payable on
December 31, 1996 to the shareholders of record on December 16, 1996. Each
Right entitles the registered holder to purchase from the Company one one-
thousandth of a share of the Company's Series A Junior Participating Preferred
Stock (the "Preferred Stock") at a price of $ 150.00 per one one-thousandth of
a share of Preferred Stock (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and KeyCorp Shareholder Services, Inc.,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") acquired beneficial ownership of 20% or more of the
outstanding shares of the Common Stock (the "Share Acquisition Date") or (ii)
the tenth business day (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or group of affiliated
or associated persons becomes an Acquiring Person) after the commencement of,
or announcement of an intention to commence, a tender offer or exchange offer
the consummation which would result in any person becoming an Acquiring Person
(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 December 16, 1996, by such Common Stock certificate with a
copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after December 16, 1996, 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 of the Common Stock certificates outstanding as
of December 16, 1996, even without a copy of this Summary of Rights attached
thereto, 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 ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on December 31, 2006, (the "Final Expiration Date") unless the
Final Expiration Date is extended or unless earlier redeemed or exchanged by
the Company, in each case, as described below.
<PAGE> 47
Each share of Preferred Stock purchasable upon exercise of the Rights
will have a minimum preferential quarterly dividend rate of $ 10.00 per share,
but will be entitled to an aggregate dividend of 1,000 times the dividend
declared on one share of the Common Stock. In the event of liquidation, the
holders of the Preferred Stock will receive a preferential liquidation payment
of $1,000 per share, but will be entitled to receive an aggregate liquidation
payment equal to 1,000 times the payment made on one share of Common Stock.
Each share of Preferred Stock will have 1,000 votes voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount received per
one share of Common Stock. The Rights are protected by customary anti-dilution
provisions. Because of the nature of the Preferred Stock dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
The Purchase Price payable, and the number of shares of the Preferred
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
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for shares of the Preferred Stock or
convertible securities at less than the then-current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends out of earnings or retained earnings at a rate not in excess of 125%
of the rate of the last cash dividend theretofore paid or dividends payable in
the Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations as of the Common Stock occurring,
in any such case, prior to the Distribution Date.
In the event that the Company is acquired in a merger or other business
combination transaction or that 50% or more of its assets or earning power are
sold after a person or group has become an Acquiring Person, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction would have a market value of two times the
exercise price of the Right. In the event that any person or group of
affiliated or associated person becomes an Acquiring Person, proper provision
will be made so that each holder of a Right, other than Rights that were or are
beneficially owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of shares
of the Common Stock having a market value of two times the exercise price of
the Right.
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<PAGE> 48
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void) in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-thousandth of a Preferred Share per Right (subject to
adjustment).
At any time prior to 5:00 P.M. Dallas, Texas time on the earliest of (i)
the Share Acquisition Date, (ii) the tenth business day (or such later date as
may be determined by action of the Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring
Person) after the commencement of, or announcement of an intention to commence,
a tender offer or exchange offer the consummation of which would result in any
person becoming an Acquiring Person, or (iii) the Final Expiration Date, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors of the Company
electing to redeem or exchange the Rights, the Company shall make announcement
thereof, and upon such election, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price, or the shares of Common Stock or Preferred Stock exchangeable
for the Rights, as applicable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
December 16, 1996. A copy of the Rights Agreement is available free of charge
from the Rights Agent, KeyCorp Shareholder Services, Inc. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
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